The United States announced last week that it has come to agreements with eight more foreign jurisdictions with regard to FATCA reporting. This is important news as we approach the July 1st implementation date provided by FATCA. Taxpayers that have accounts in these eight jurisdictions that may have thought that their secret account was safe need to act quickly to disclose before it’s too late.
There are two types of agreements under FATCA. First, the “Model 1” agreement allows for the sharing of account information between the countries. In these countries, there are laws that require the disclosure of the necessary information to the foreign government who will then act as a middleman to deliver the information to the United States. Under the “Model 2” agreement, the foreign banks will send American account information directly to the Internal Revenue Service. The new jurisdictions that have agreed to participate are listed below.
Antigua and Barbuda
St. Kitts and Nevis
St. Vincent and the Grenadines
In addition to the Model 1 and 2 agreements that have been made with the above jurisdictions, the Ukrainian Ministry of Finance expressed their willingness to sign an Inter-Governmental Agreement. This would send American account information within the Ukraine to the I.R.S.
These additions create a 10% increase in participating jurisdictions and bring the current list of FATCA participants to 78. This means trouble for Americans who may have money in a bank account of any of the above nations.
As we have previously reported, the mandatory reporting under FATCA takes effect on July 1st. That means that Americans that have foreign account information have very little time to come clean about their accounts without facing severe penalties. If you are deemed to have willfully failed to report, there is a 50% penalty imposed based on the highest balance in the foreign account for each year that the account when unreported. This scheme can create a total penalty that is two or three times the amount of your foreign account.
Last week, we reported that the I.R.S. is trying to make it easier for taxpayers to come clean about foreign accounts by establishing new guidelines for its Offshore Voluntary Disclosure Program. This includes a very low one-time penalty rate. But taxpayers will not qualify for the program if their account information is given to the I.R.S. through FATCA reporting. That means that voluntarily disclosing your foreign accounts as soon as you can, may be your only saving grace.
The experienced tax professionals at the Tax Law Offices of David W. Klasing have extensive experience in assisting taxpayers come clean with the government and keeping them away from draconian government penalties and even jail time. But the window to safely voluntarily disclose is quickly closing. If you have or have had money in an undisclosed foreign account, contact us today for a reduced-rate consultation before it’s too late.