Report income or lose US passport
Effective Jan. 1, 2016, the IRS will compile a list of Americans in violation of new rule
It is possible that the United States expats could have their passports revoked next month if they fail to comply with their tax and financial obligations under the Foreign Account Tax Compliance Act (FATCA), according to Jim O’Niell, Vice-President of US Financial Advisory and Audit Firm (USFAAF).
The Act stipulates that Americans – whether they are resident in the US or not – must report their worldwide income as well as their foreign bank accounts to pay taxes in the United States if they opt to retain their passports.
O’ Niell said: “The UAE has signed a deal to implement the FATCA. The law requires foreign financial institutions to provide annual reports on account information of customers who are US citizens. The act was enacted by the US Congress in 2010 to target non-compliance by US taxpayers using foreign accounts.”
“The US law says that American citizens living around the world with a balance of $10,000 at any giving day per year in their bank accounts are required to submit FBAR. The FATCA also mandates financial institutions around the world to submit annual reports on their customers who are required to comply,” he added.
Under the new Act set to take effect on January 1, 2016, the Internal Revenue Service (IRS) will compile a list of Americans in violation of the new rule. More information available on www.usfaaf.com/fatca
A taxpayer would not be at risk of losing their passport if they are already in the process of resolving a tax debt issue with the IRS.
It is expected that nearly eight million US citizens who live overseas will be affected if they fail to comply with the Act. It is estimated that around 250,000 US nationals are based in the GCC.
The IRS has collected $8 billion in taxes and penalties under its offshore account programmers during the past few months.
And with the web of data the IRS has under FATCA, the IRS warns those who haven’t yet participated they had better. The agency issued a public reminder to citizens and green card holders that they should strongly consider joining one of two IRS programs to get into compliance with the IRS before it is too late, as non-compliant filers could face financial penalties and criminal charges which could lead to prison under the USA tax law.
The US-based firm’s Middle East headquarters is in Dubai with offices in Saudi Arabia and Egypt. USFAAF’s global expansion brings tax advices and services to American citizens in the Middle East.
