On July 12, the U.S. Treasury Department and the Internal Revenue Service (IRS) announced that the implementation of the Foreign Account Tax Compliance Act (FATCA) would be postponed for six months to allow foreign entities to finalize their intergovernmental agreements with the IRS.
As such, FATCA withholding by foreign institutions will begin on July 1, 2014, rather than January 1, 2014.
FATCA, which was signed into law in 2010, seeks to combat offshore tax evasion by targeting U.S. taxpayers who hold assets in foreign accounts. FATCA will require U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFI) that do not agree to identify and report information on U.S. account holders. The United States Department of Treasury’s press release states that “Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe, before withholding begins,” said Treasury Deputy Assistant Secretary for International Tax Affairs, Robert Stack. “The high volume of international participation in this effort represents a quintessential race to the top. Every additional country we bring on board means we are one step closer to winning the fight against offshore tax evasion.”
All U.S. citizens who hold funds in foreign accounts are required to report their assets to the IRS. If you are unsure of how FATCA will affect you, or want to learn how to come into compliance with the IRS, you should seek advice from an experienced tax attorney. Here at the tax law firm of Moskowitz LLP, we are in the business of helping taxpayers legally save tax dollars and comply with US and State Tax Laws. We have over three decades of experience representing clients (individuals, small businesses, corporations, municipalities, trusts, estates, and other organizations) with their tax matters. We are committed to obtaining the best results for our clients with skilled, calculated legal representation and providing, personal, accessible service to meet the professional and personal tax needs of our clients.