The Foreign Account Tax Compliance Act (FATCA), is a U.S. law aimed at foreign financial institutions (FFIs) and other financial intermediaries to prevent tax evasion by US citizens and residents through use of offshore accounts. New reporting requirements for individuals were introduced in December 2011 that were applicable for taxpayer’s 2011 and forward, personal tax filings.
New regulations became effective in 2014 for domestic entities and make substantial changes to information reporting and compliance requirements. Freed Maxick’s experienced International tax team provides valuable guidance to help individuals and organizations get prepared and meet their compliance obligations.
FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts. The objective of FATCA is proper reporting of foreign financial assets and previously unreported income.
FATCA focuses on reporting:
- By individuals with certain foreign financial accounts and offshore assets
- By foreign financial institutions about financial accounts held by their customers or non-financial entities, U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest (withholding may be required in some instances)
What To File
Individual taxpayers are required to file Form 8938 with their personal income tax returns. Entities may be required to obtain form W-8BEN-E to validate taxpayer information. In cases where withholding is required, Form 1042 series is required.
When and Where to File
The form is due on the same date as your income tax return including extensions since it is required to be filed with the income tax return. As a result, it should be filed at the same I.R.S. Service Center as your income tax return. Freed Maxick’s specialized team can help you stay on top of important deadlines and reporting documents to keep you in compliance.
Consider the Stiff Penalties
The base penalty for failure to file is $10,000. Additional penalties for failure to comply once notified may be levied and can increase beyond 90 days by $10,000 for each 30-day period up to a maximum of $50,000.
Please contact a member of our International Tax team. Freed Maxick is poised to assist you in assessing your international tax issues and filing requirements, assimilating the necessary information and preparing the materials required. We also have considerable experience in helping taxpayers that have not been historically compliant to deal within the IRS guidelines and minimize their potential penalties through the various IRS Voluntary Disclosure Programs (VDFs) that have been available.