FATCA Helps IRS Net £5 Billion In Lost Tax
The US Foreign Account Tax Compliance Act (FATCA) has helped grab £5.17 billion in lost tax held in secret offshore bank accounts.
The Internal Revenue Service (IRS) has revealed the figures in a FATCA update.
The IRS says the controversial law has made identifying offshore cash and investments that taxpayers have failed to declare easier.
The US tax service has also warned that anyone avoiding tax should take the opportunity to put their financial affairs in order as disclosure schemes offering reduced penalties will shortly come to an end.
IRS commissioner John Koskinen said: “FATCA has changed the landscape for anyone with undisclosed foreign accounts.
Fight against tax avoidance
“FATCA is helping the fight against tax avoidance and taxpayers who have not told the IRS about their true financial standing should consider their options. If I was them, I would make sure I was fully tax compliant and up to date with what I should have paid the IRS.”
The FATCA network demands financial institutions outside the US should volunteer information about any accounts or investments controlled by US taxpayers.
For US residents, the reporting threshold is $50,000 of cash or investments, while the limit is raised to $200,000 for expats.
The FATCA network comprises more than 100 countries and almost 200,000 financial institutions.
The automatic exchange of FATCA financial data started in September, although US taxpayers have had much longer to declare their offshore assets in return for reduced penalties from the IRS.
FATCA uncovers tax cheats worldwide
“FATCA has made the job of cross checking who owns foreign accounts against tax filings,” said Koskinen.
“The IRS is also collecting a lot of new information from Swiss banks co-operating with the US Justice Department in return for giving tax avoidance advice to US clients in past years.”
He also revealed more than 30,000 US taxpayers had come forward to declare their offshore holdings since 2012.
“The IRS is dedicated to detecting offshore tax evasion worldwide and is also helping other tax authorities identify their citizens who hold undeclared accounts in the US,” said Koskinen.
“Even though the IRS has suffered budget cuts, we have significant resources working on uncovering tax avoidance all over the world.”