It’s Here; The Automatic Exchange of Information Under FATCA Began September 30th
The IRS has announced that as of September 30, 2015 it will implement the automatic exchange of tax information as set forth in the Foreign Account Tax Compliance Act, (FATCA).
The IRS Commissioner in announcing the implementation of the automatic exchange of information stated:
“This information exchange is part of the IRS’s overall efforts to implement FATCA, enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts or foreign entities. FATCA generally requires withholding agents to withhold on certain payments made to foreign financial institutions (FFIs) unless such FFIs agree 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.”
“The information now available provides the United States and partner jurisdictions an improved means of verifying the tax compliance of taxpayers using offshore banking and investment facilities, and improves detection of those who may attempt to evade reporting the existence of offshore accounts and the income attributable to those accounts.”
The following list identifies the countries with which the automatic exchange of the information collected has been determined by the Treasury Department and the IRS to be appropriate:
Isle of Man
This is an evolving process as data security measures need to be in place before the U.S. will agree to an exchange of information. For those U.S. taxpayers who have undeclared accounts in countries other than those listed above, the disclosure of information under FATCA will be only be made to the U.S.
FATCA is not the only agreement providing mutuality of disclosure. The OECD (commonly known as the G-20) is implementing “Common Reporting Standards” (“CRS”) among OECD member beginning 2017. The U.S. has not agreed to participate in the CRS choosing to implement FATCA instead. This could be important for U.S. taxpayer s who have undeclared foreign accounts and who are dual nationals in countries with strict currency controls.
The IRS Commissioner offered the following comment about coming forward:
“Since 2009, tens of thousands of individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP), which is open until otherwise announced”
There are multiple methods of coming forward, such as:
Delinquent Filing Program
Streamline Procedures, domestic and non-resident
Offshore Voluntary Disclosure Program (OVDP)
Deciding which is the proper approach need expert advice. Procrastination is not one of the lists approaches. “Procrastination is one of the most common and deadliest of diseases and its toll on success and happiness is heavy”. Wayne Gretzky.