FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
FFIs are encouraged to either directly register with the IRS to comply with the FATCA regulations (and FFI agreement, if applicable) or comply with the FATCA Intergovernmental Agreements (IGA) treated as in effect in their jurisdictions.
For jurisdiction status on intergovernmental agreements and relayed agreements and date jurisdiction agreements are treated as having an IGA in effect read below:
The context: Form 8938 was created by the IRS to meet the reporting requirements mandated by Internal Revenue Code S. 6038D. S. 6038D was mandated by S. 511 of the HIRE Act.
Following yesterday’s Panama Papers Leak it can be seen that at least 1,700 legal entities on that list are also on the IRS list that “includes all foreign financial institutions and branches with approved FATCA registration at the time the list is compiled”.
Ancient Greek thinker Heraclitus is famous, at least in some circles, for his rather perplexing observation that “the only constant in the universe is change.” Murphy’s Law, a much more familiar axiom, states that “if anything can go wrong, it will.” If these two phrases are combined into some sort of latter-day Frankenstein’s monster of philosophy, you may get something like “change never happens as quickly as you want it to happen.”
Dodd-Frank, the massive 2010 financial reform law which Republicans and their banker allies have taken a blood oath to dismantle while Democrats and their consumer advocate allies have been known to worship with wave offerings, is a good example. Five years after its passage, the law is still only about 50 percent implemented. That’s good news for some people, and bad news for others. Read More
There’s this question that I always get from my clients: “Do I have to report my real estate holdings in a foreign country?” To which, my answer (in true accountant style) is always: “It depends”. Let me explain further.
You may be a first generation immigrant to the US and still have strong ties to your home country; by way of family elders who live there or a strong sense that you would like to some day retire back there, where you grew up. Or you are an adventurous investor who would like to invest in a little vacation home by the beach in the Caribbean. Or you were stationed abroad through your job and loved it so much that you invested in some property there. Then this blog is for you to read! Read More
As I reported in a previous article, the Department of Justice (DOJ) and the IRS instantly began to drool in anticipation when The Foreign Account Tax Compliance Act was passed in March of 2010. This gives them enforcement tools to make foreign countries and banking institutions play by our rules whether they like it or not. The Department of Justice has gone even further thinking it has been given the power to make foreign treaties without the constitutionally required Senate ratification. The Senate so far doesn’t seem to mind, but some other countries and taxpayers are taking offense.
FATCA gets its teeth from two provisions: Read More
Is Ottawa violating Canadians’ constitutional rights to help the U.S. collect taxes? According to two Ontario women, it is.
Two women are suing the Canadian government over a controversial deal in which Canada has agreed to share the tax information of U.S. persons who are Canadian residents with the IRS.
On its face, the deal may seem to be nothing extraordinary. In practice, however, the costs to privacy, autonomy, and Canadian sovereignty of complying with the United States’ Foreign Account Tax Compliance Act (FATCA) are sweeping. At America’s behest, Canada must share tax information even about Canadians who have never lived a day of Read More
On Wednesday, June 18, 2014, the IRS announced that it had expanded and modified the streamlined filing procedures first offered in 2012 to accommodate a broader group of U.S. taxpayers. Major changes to the streamlined procedures include the following: (1) extension of eligibility to U.S. taxpayers residing in the U.S., (2) elimination of the $ 1,500 tax threshold, and (3) elimination of the risk assessment process associated with the 2012 streamlined filing compliance procedures.
These changes are expected to ease the financial and legal pain for almost six million expatriate Americans who live and work abroad, many of whom had no clue that they had to pay U.S. taxes on their foreign income. Read More
Foreign Financial Institutions are not getting the best of Christmas presents this year. Instead of getting sugar plums in their stockings, they are getting FATCA and GIIN!
By brief background, under the Foreign Account Tax Compliance Act, (FATCA), foreign financial institutions (FFIs) and non-ﬁnancial foreign entities (NFFEs) must agree to verification and due diligence procedures – meaning they must be on the look-out for customers, owners or beneficiaries evidencing any “US indicia”. They must identify and report directly to the United States Internal Revenue Service (IRS) or their own government via an intergovernmental agreement (IGA), information on US account holders/owners. They must look through their customers and counterparties’ ownership to find “substantial United States owners” (generally, more than 10 percent ownership). Read More