Do you have money invested overseas or sitting in a foreign bank account? In today’s global economy, more and more people do. And while most folks have legitimate reasons for these holdings, there have always been a certain group of people who are “hiding” money in offshore accounts for more duplicitous purposes, including tax evasion. That’s why the government requires that any “person who has a financial interest in, signature authority, or other authority over one of more accounts in a foreign country” and if “the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year” must file a Report of Foreign Bank and Financial Authority (FBAR) – even if those assets generate no income.
If the above guidelines apply to you, we trust that you have been filing your FBAR in a timely manner in order to avoid some rather hefty penalties. If, by some oversight or omission, you have not been doing so, you may now have yet another reason to correct the problem.
The Foreign Account Tax Compliance Act (FATCA), which was passed in 2010 requires foreign financial institutions (FFIs) to enter into agreements with the IRS by June 2013 and then begin to report directly to the IRS information regarding financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a significant ownership interest.
There had already been a good number of signed intergovernmental agreements in place, but over the past few months many more countries have reached agreements in substance and at this point, nearly 100 countries have agreed to comply with FATCA. Because of this, we may begin seeing many more cases of people being prosecuted for failure to disclose their foreign accounts. If you have money in a foreign bank, it’s just a matter of time before it is found. Contact us for advice.
Click here to see which countries are participating – so far: