The Foreign Account Tax Compliance Act (FATCA) Articles

07/01/2014

Financial Advisory CEO Green: New Foreign Tax Law 'Imperialistic' 

Wednesday, 02 Jul 2014 06:13 AM

By Dan Weil

The Foreign Account Tax Compliance Act (FATCA), designed to ensure that Americans with foreign investments and/or living overseas, pay all their taxes, took effect Tuesday.

And that makes it a "dark day for the 7 million Americans living overseas and for U.S. firms that operate globally," says Nigel Green, CEO of deVere Group, a financial advisory firm that has 80,000 mainly ex-patriot and international investor clients.

FATCA is "imperialistic," he says.

The law requires foreign financial institutions to provide the IRS the financial information of American clients who have accounts with more than $50,000.

"It is claimed by its proponents that this new tax act is designed to catch tax evaders who illegally shelter money offshore," Green says. "This is a noble aim. But FATCA cannot possibly tackle this important global issue effectively due to its dragnet, untargeted approach."

What it does instead is to label Americans who live and/or work abroad as "financial pariahs," he says. Americans living overseas "are now routinely rejected from foreign financial institutions, . . . because FATCA’s costly and onerous regulations mean Americans are now typically deemed more trouble than they are worth."

U.S. businesses operating overseas also "are now often branded with a leprosy-like status," Green says. "Clearly, this can only be detrimental to their global competiveness and could, in turn, hit American jobs and the long-term growth of the U.S. economy."

Meanwhile, Uncle Sam stands to recover only an estimated $1 billion a year, "enough to run the federal government for less than two hours," Green says.

The new law has led many Americans to renounce .....

Read more here.  http://www.moneynews.com/Personal-Finance/FATCA-Foreign-tax-law-overseas/2014/07/01/id/580287/?ns_mail_uid=4176515&ns_mail_job=1575863_07062014&promo_code=sdquadmh

 

US Offshore Tax Evaders Beware: FATCA Starts

Tuesday, 01 Jul 2014 09:51 AM

UUUS tax evaders will find it much harder to hide money abroad starting Tuesday, when a sweeping new law enters into effect requiring foreign banks to report their offshore accounts.

Banking centers like Switzerland and Luxembourg that agreed to the US Foreign Account Tax Compliance Act (FATCA) will have to begin turning over account names and other data to U.S. financial authorities so that they can tax unreported income.

The U.S. Treasury has spent much of the past several years pressing the issue on some of the world's most powerful and secret banking centers with threats of punitive action if they do not join in.

That means Americans will have far fewer options to stash their cash offshore away from the eyes and hands of the US tax agency, the Internal Revenue Service.

And the effort to track down tax evaders has already pushed thousands of U.S. expatriates to give up their citizenship in order to escape the IRS's claims.

But it is also having a big impact on the business of offshore banking centers, which have long marketed account secrecy to depositors from around the world.

"It is the earthquake that has collapsed the dam," said Pascal Saint-Amans, who heads the unit fighting tax havens at the Organisation for Economic Cooperation and Development.

The United States has already carried out long campaigns against banks like UBS and Credit Suisse for helping Americans hide money, and both have been hit with large fines.

But they and other Swiss banks, and thousands of others around the world, have now agreed to file reports on accounts exceeding $50,000 held by U.S. citizens to U.S. authorities.

It a bank does not comply with the U.S. rules, the United States has threatened to .....

Read more here.  http://www.moneynews.com/StreetTalk/FATCA-offshore-tax-evasion/2014/07/01/id/580212/

Offshore Crackdown Kicks Off With 30 Percent Penalties for Banks

Monday, 30 Jun 2014 12:44 PM

The Internal Revenue Service is about to get an unprecedented look at bank accounts and investments U.S. citizens hold abroad, through a law that is making it harder to hide assets from the tax collector.

Tomorrow, the U.S. government will start imposing 30 percent taxes on many overseas payments to financial institutions that don’t share information with the IRS.

That new burden has frustrated overseas banks and U.S. expatriates. It’s also created a new standard of global bank-to-government information sharing designed to throw light on often difficult-to-trace accounts.

No one knows yet how successful the law will be in combating tax evasion. Still, it allows the U.S. to scoop up data from more than 77,000 financial institutions and 80 governments about its citizens’ overseas financial activities.

“I don’t think anything on this scale has ever been tried before,” said John Harrington, a former international tax counsel at the Treasury Department who is now a partner at Dentons in Washington. “The idea that it would go off without a hitch is sort of hard to imagine.”

What led to the 2010 Foreign Account Tax Compliance Act, or Fatca, was the inability of federal tax authorities to obtain clear information about financial accounts that U.S. citizens have outside the country. That’s especially important for the U.S., because unlike many other countries, it taxes citizens on their worldwide income regardless .....

Read more here.  http://www.moneynews.com/StreetTalk/offshore-crackdown-IRS-taxes/2014/06/30/id/580018/

 

WSJ: How to Deal With the IRS' Crackdown on Foreign Income

Tuesday, 24 Jun 2014 10:02 AM

By Dan Weil

The Foreign Account Tax Compliance Act (FATCA), which the government is using to chase down taxes from people with investment overseas or living overseas, goes into effect July 1.

"FATCA is an ambitious effort to root out wealthy U.S. taxpayers hiding money offshore and put an end to tax evasion as a profitable line of business for banks," Michael Graetz, a Columbia University law professor and former top U.S. Treasury Department official, tells The Wall Street Journal. "But U.S. authorities need to make an effort to avoid catching innocent middle-class citizens in its net."

The Journal offers a list of issues .....

Read more here.  http://www.moneynews.com/StreetTalk/IRS-tax-foreign-income/2014/06/23/id/578745/

 

IRS Eases Rules for Taxpayers Wanting to Disclose Offshore Cash

Wednesday, 18 Jun 2014 11:50 AM

The Internal Revenue Service is making it easier for U.S. taxpayers to disclose some offshore accounts.

The changes open the simplified version of the IRS voluntary disclosure program to people with larger tax debts, eliminate a questionnaire and require taxpayers to say that any violations weren’t willful.

The tax agency announced the details of the plan today in Washington. Typically, taxpayers who come forward must pay .....

Read more here.  http://www.moneynews.com/Personal-Finance/IRS-taxpayers-offshore-accounts/2014/06/18/id/577798/

 

IRS Heightens Pressure for Taxpayers to Report Offshore Accounts

Thursday, 19 Jun 2014 06:49 AM

U.S. clients of 106 Swiss banks face dramatically steeper penalties under new rules announced by the agency if they don’t disclose their accounts to the Internal Revenue Service by August.

The penalties are among changes to the IRS’s offshore voluntary disclosure program, which has drawn 45,000 account holders who paid $6.5 billion since 2009. Starting Aug. 4, taxpayers making such disclosures will have to pay a penalty of 50 percent of an account’s value, not the current 27.5 percent.

The 106 Swiss banks are seeking to avoid U.S. Justice Department prosecution by disclosing how they helped Americans evade taxes. The U.S. can use that information to seek taxpayers’ identities under a U.S.-Swiss tax treaty. Clients who disclose their accounts after Aug. 4 will face a 50 percent penalty whether or not the U.S. has already learned their names.

“If you’re engaged in willful tax evasion, time is getting quite short for you to come in,” Mike Danilack, an IRS deputy commissioner, said in a telephone call with reporters. “Enforcement efforts in this area are continuing to thrive. We are very intent on stamping out noncompliance in this area.”

The IRS also could learn taxpayers’ identities from data provided by Credit Suisse Group AG, which pleaded guilty in May and paid a $2.6 billion penalty, or from any bank worldwide turning over information under the Foreign Account Tax Compliance Act, or FATCA, which takes effect July 1.

Noose ‘Tightening’

“The noose is tightening around people with undisclosed offshore accounts,” said Seth Entin, a tax attorney at Greenberg Traurig LLP. “What they’re saying is ......

Read more here.  http://www.newsmax.com/Newsfront/irs-heightens-pressure-offshore/2014/06/19/id/577957/