On June 1, 2017, U.S. Ambassador Margaret Ann Uyehara and Montenegrin Finance Minister Darko Radunovic signed an Intergovernmental Agreement (IGA) to combat offshore tax evasion by implementing the provisions of the Foreign Account Tax Compliance Act (FATCA). Banks from Montenegro will be able to share information about financial accounts of U.S. citizens with the IRS.
A record number of US taxpayers are coming into compliance with their foreign filing requirements, with 1,163,229 Forms 114 (Report of Foreign Bank and Financial Accounts, or FBAR) filed for 2015---an 8 percent increase from 2014. FBAR filings have increased at an average rate of 17 percent per year for the last five years.
The IRS met its deadline to begin the reciprocal automatic exchange of tax information with some foreign jurisdiction tax administrators as agreed under the intergovernmental agreements (IGAs) as part of the Foreign Account Tax Compliance Act (FATCA). As of September 30, 2015, the IRS can now reciprocate and provide information to the other jurisdictions who have shared information regarding financial accounts held by U.S. taxpayers with the IRS. 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.
On Friday, October 2, 2015, the Internal Revenue Service ("IRS") announced the exchange of financial account information with certain foreign tax administrations, meeting a key Sept. 30 milestone related to FATCA, the Foreign Account Tax Compliance Act.
In a recent edition of TaxTips, the IRS reminds taxpayers of pending deadlines related to foreign income and assets.
In its pledge to seek financial transparency, the Holy See (the ecclesiastical jurisdiction of the Catholic church) signed on to become the newest member to FATCA, the U.S. Foreign Account Tax Compliance Act, that requires banks and financial information to report certain financial information of U.S. Citizens and permanent residents directly to the United States if the accountholder¹s assets exceed $50,000.
Today the IRS issued a fraud alert to foreign financial institutions warning them that scam artists posing as IRS agents may call to request client and account information allegedly as part of the Foreign Account Tax Compliance Act (FATCA) requirements. The IRS reminds the financial institutions that the IRS never calls requesting information on a specific account or accountholder.
A federal jury found that Carl Zwerner must pay more than $2 million for wilfully failing to file Reports of Foreign Bank and Financial Accounts (FBARs). In this case, the IRS sought a 50 percent penalty for each of the four years at issue, for a total of 200 percent in a civil case. Clearly, the punishment for not coming forward and reporting offshore accounts is pricey. In this case, the highest value of the account over the four years was approximately $1.55 million, but the total penalties for failing to file this report, which carries no tax, were approximately $2.24 million.
As promised, the IRS has released the first list of financial institutions that have obtained their Global Intermediary Identification Numbers (GIINs) and have met the other requirements of FATCA. Taxpayers may now search financial institutions by name, country or GIIN to determine whether the financial institution is in compliance. This list will be updated by the IRS each month.
The IRS provides further clarification and announces its intention to further amend certain Regulations concerning FATCA. In order to facilitate an orderly transition for withholding agents and Foreign Financial Institutions, the years 2014 and 2015 will be treated as a transition period for FATCA compliance. For more information, read IRS Notice 2014-33.