FATCA. Since July 2014, the five-letter acronym has instilled dread in the hearts of American expats all around the world.
Published: 26 Jan 2016 09:12 GMT+01:00
“The Foreign Account Tax Compliance Act (FATCA) requires banks to report information to the IRS regarding all financial accounts held by American clients,” Ines Zemelman, expat tax specialist and founder ofTaxes for Expats, tells The Local. "The age of financial privacy is over.”
American citizens must report their worldwide earnings and assets to the IRS no matter where in the world they live. WIth the implementation of FATCA, expats who have spent years avoiding this uncomfortable truth are being reminded of it -- as well as being punished if they don’t comply.
This development has led to many foreign banks trying to track down their American clients – and in some cases, lessen their own burden by simply refusing Americans service.
Many expats have begun to receive a ‘FATCA Letter’ from their bank requesting certain information about their US tax status (and asking them to complete either Form W-9 or W-8). The letter usually offers a brief explanation of the FATCA legislation that requires the bank to share your name, address, and other personal details with the American tax authorities - the Internal Revenue Service.
But what if you're not compliant? Some expats choose to ignore the request - but this high-risk approach is likely to quickly bring about a negative outcome.
American citizens must report their worldwide earnings and assets to the IRS no matter where in the world they live. WIth the implementation of FATCA, expats who have spent years avoiding this uncomfortable truth are being reminded of it -- as well as being punished if they don’t comply.
This development has led to many foreign banks trying to track down their American clients – and in some cases, lessen their own burden by simply refusing Americans service.
Many expats have begun to receive a ‘FATCA Letter’ from their bank requesting certain information about their US tax status (and asking them to complete either Form W-9 or W-8). The letter usually offers a brief explanation of the FATCA legislation that requires the bank to share your name, address, and other personal details with the American tax authorities - the Internal Revenue Service.
But what if you're not compliant? Some expats choose to ignore the request - but this high-risk approach is likely to quickly bring about a negative outcome.