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Basics of the Foreign Accounts Tax Compliance Act

The Foreign Account Tax Compliance Act or FATCA, was put in place to ensure that tax is imposed on the incomes generated from offshore businesses. The Act was part of a drive by the IRS and the government to reduce the tax gap. Under the Act, taxpayers having financial accounts and assets crossing the threshold are required, by law, to disclose them by filing FATCA forms.

Also under the Act, foreign banks must disclose information regarding US citizens who have accounts with these banks. This will assist the Treasury and IRS in gathering the appropriate information on citizens and businesses. When compared with taxes dispatched against foreign income, the IRS are able to clamp down on offenders that avoid paying taxes on their foreign incomes.

As a result of this data analysis and the FATCA, taxpayers should be on their toes and aware that the authorities will be watching. Because of this tight surveillance, taxpayers will have no choice but to report and pay their taxes. To ensure compliance, in 2009 the IRS has implemented the Offshore Voluntary Disclosure Initiative. The IRS has made their warnings very clear about the severe consequences to foreign income tax evaders. Along with citizens and their companies, Foreign Financial Institutions are also to comply with the Foreign Accounts Tax Compliance Act. As of September 30 all foreign banks are required to reveal accounts held by US citizens.

While this appears to come at a cost for the foreign banks, Core Analytx has developed a system to help analyze the FATCA data, allowing banks to compile a FATCA Report within minutes! To learn more about this convenient and effective software, please watch this short video and contact Core Analytx with any remaining questions you may have.

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