If you've got an IRS letter on your desk right now, you have a decision to make, and the clock matters. I'm Darrin Mish. I've spent 32 years helping people with exactly this kind of situation. Here's what you should do.<\/p>\n
The Foreign Account Tax Compliance Act (FATCA) is a law that makes it compulsory for all financial institutions to report data on American clients to the IRS.\u00a0 This legislation takes effect January 1, 2013.\u00a0 FATCA is aimed at curbing tax evasion by American taxpayers who hide their taxable assets in overseas bank accounts and other financial instruments.<\/a>\u00a0 This means that no matter which country a financial institution operates in, FATCA is applicable and compliance requires these financial institutions to report and share additional data on their American clients with the IRS.\u00a0 This would involve a huge amount of data management and governance. \u00a0Click here to read or watch more IRS Help resources.<\/a><\/p>\n Although final regulations under FATCA will only be published towards the end of this year, financial institutions cannot wait until then to put into effect the administrative procedures to comply with FATCA.\u00a0 One tremendous task facing all financial institutions is collecting the data accurately.\u00a0 Each financial institution has to conduct a search of their existing client database to track all American clients and then report certain details of these accounts to the IRS.\u00a0 In addition, if a financial institution does not have enough data to determine the origins of an account holder, they will need to contact such a client to obtain additional information. \u00a0That in itself is a herculean task.\u00a0 On top of that, financial institutions will also have to ensure that operating procedures about data quality are put into place to ensure that, in future, they are collecting the needed data from new clients right from the beginning.<\/p>\n Failure to provide such information or providing erroneous information to the IRS will result in penalties.\u00a0 The US tax authorities will apply a 30% withholding tax against the sales of any US assets.\u00a0 But that is not the only thing that financial institutions have to worry about.<\/p>\n Certain countries have their own data privacy laws that protect personal financial information.\u00a0 Complying with FATCA could make financial institutions contravene such data protection laws in the countries they operate in.\u00a0 Thus financial institutions would have to craft a waiver from each US client identified for FATCA purposes that states that relevant information can be passed onto the IRS.\u00a0 The financial institutions also have to be careful they do not disclose information of non-US citizens to the IRS and so break privacy laws in certain countries.<\/p>\n FATCA will be implemented, like it or not.\u00a0 And all financial institutions will have to comply.\u00a0 Hence they have to begin now to put in place systems that can manage data of clients as FATCA is essentially a data-oriented legislation driven by tax considerations.<\/p>\n","protected":false},"excerpt":{"rendered":" If you've got an IRS letter on your desk right now, you have a decision to make, and the clock matters. I'm Darrin Mish. I've spent 32 years helping people with exactly this kind of situation. Here's what you should do. The Foreign Account Tax Compliance Act (FATCA) is a law that makes it compulsory […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[4],"tags":[135],"class_list":["post-17581","post","type-post","status-publish","format-standard","hentry","category-irs-help","tag-tax-evasion"],"_links":{"self":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17581","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/comments?post=17581"}],"version-history":[{"count":1,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17581\/revisions"}],"predecessor-version":[{"id":22195,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17581\/revisions\/22195"}],"wp:attachment":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/media?parent=17581"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/categories?post=17581"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/tags?post=17581"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}