On behalf of Silver Tax Group posted in Offshore Accounts on Thursday, September 7, 2017.
Congress passed the Foreign Account Tax Compliance Act (FATCA) with the idea of collecting more tax revenues from U.S. citizens living outside of the country. By implementing a series of complex reporting requirements on foreign financial institutions, authorities were hoping to identify accounts and assets belonging to such individuals.
FATCA has faced a great deal of opposition, however. Not all taxpayers or financial institutions understand the reporting requirements. Also, penalties for not reportingoffshore assets are severe.
While a federal appellate court recently dismissed a challenge to FATCA, this dismissal may lead certain political leaders to take this matter to the U.S. Supreme Court. The concern among such leaders is that the appellate court was not appropriately sympathetic to the hardship FATCA places upon American citizens living overseas.
There have denials of bank accounts and mortgages due to FATCA reporting requirements. And FATCA requirements have led to significant prosecution of American citizens. This includes significant penalties for not filing a Foreign Bank and Financial Account Report (FBAR) and other forms related to FATCA.
Filing forms based on requirements
The requirements in filing such forms can be difficult. For example, requirements led to one London official facing demands to pay taxes on the sale of his residence located in London. Though such a sale was not taxable in the UK, U.S. officials demanded payment.
It is important for Michigan residents to understand the penalties they may face for noncompliance. This is why having legal counsel on your side to help you understand such requirements can be essential. It is always best to avoid legal entanglements with tax officials before they even start.