The United States and Ireland have reached an anti-tax evasion pact to share information about wealthy citizens’ financial accounts. This agreement is another step in a series of bilateral deals announced in recent weeks by the U.S. Treasury Department.
These bilateral agreements are part of the implementation of the U.S. Foreign Account Tax Compliance Act, or FATCA, which takes effect in 2014.
A similar agreement with Switzerland has been “initialed,” according to the U.S. Treasury, with final terms expected in coming shortly. The United States has already completed FATCA deals with the UK, Denmark and Mexico. An agreement with Spain has also been “initialed”.
Enacted in 2010, FATCA requires foreign financial institutions to tell the U.S. Internal Revenue Service about Americans’ offshore financial accounts. Banks, funds and other institutions failing to comply could effectively be forced out of U.S. financial markets.
In a separate announcement, IRS Acting Commissioner Steven Miller pointed out FATCA as a tool that has compelled delinquent taxpayers with hidden assets abroad to enter a voluntary disclosure program at IRS. The IRS’ offshore disclosure programs, which have been in place over the last three and a half years, have collected $5.5 billion for the U.S. Treasury. According to the IRS, the third Offshore Voluntary Disclosure Program continues to receive 75 to 150 applications a week from people seeking to enter the program. The program will remain open, but will be less sympathetic to new applicants going forward.
Former IRS Attorneys of Holtz, Slavett & Drabkin, APLC, are available to answer your questions about FATCA and foreign bank account compliance options. To schedule a consultation, please call (310) 550-6200.