While the Foreign Account Tax Compliance Act (FATCA) has been around for close to a decade, new developments continue to arise. For example, a federal court brought a conviction against a naturalized citizen of St. Vincent for failing to comply with the act.
It's already understood that the failure to disclose foreign accounts can result in significant penalties. Yet while offshore enforcement concerning foreign accounts was significantly stepped up in 2009, many individuals failed to participate in the IRS Offshore Voluntary Disclosure Program (OVDP).
The timeline is closer to where American citizens can no longer apply for relief under the Offshore Disclosure Program (OVDP). The OVDP, which has been running for 10 years, is due to shut down on Sep. 28.
As we’ve indicated many times on this blog, there are significant disclosure requirements concerning offshore accounts and income. The Foreign Account Tax Compliance Act (FATCA) requires offshore financial institutions to either report accountholder information, or face significant penalties.
A commentator recently noted how little American citizens living or earning money abroad know about the Foreign Account Tax Compliance Act (FATCA). A survey revealed that close to two-thirds of Americans living offshore have issues with paying taxes to the U.S. Also, only around 20 percent of such individuals felt they needed more assistance in filing their taxes.
Under 26 U.S. Code § 965, shareholders throughout the U.S. must pay a transition tax on foreign earnings from specific foreign corporations. The IRS deems this tax as a repatriation of the income.
Tax attorneys understand how serious the penalties are concerning nondisclosure of offshore assets. For purported violations, the IRS may seize 50 percent of the account’s value, file possible criminal charges, and assess other penalties.
You may face criminal charges for violations of the Foreign Account Tax Compliance Act (FATCA). Such charges can include obstruction of the functions of the IRS.
There have been voluntary disclosure programs in place to entice taxpayers to come clean about unreported foreign assets since 2009. These programs allow for promises of decreased penalties. They may also allow for avoidance of prosecution in return for participation.
The U.S. Supreme Court will not be haring the latest challenge concerning the Foreign Account Tax Compliance Act (FATCA). A number of U.S. citizens living abroad brought the lawsuit. It also had support from Senator Rand Paul who felt that FATCA was unconstitutional.