In the recent past, we have brought several stories to you detailing how numerous countries have decided to participate in the Foreign Account Tax Compliance Act, also known as FATCA. Cooperation from other countries has come in various forms. Some countries have opted to enter into Intergovernmental Agreements with the U.S. and share information between nations while other countries have simply allowed, encouraged or even required their financial institutions to comply with the reporting provisions of FATCA. But not all countries are completely on board with the demands of the United States.
On July 1st, FATCA’s reporting requirements went into effect. This effective date had been postponed several times before in an effort to give the United States as well as foreign nations and their banks ample time to prepare for compliance. Just before the July 1st effective date, the IRS rolled out new voluntary disclosure terms in a last ditch effort to get taxpayers to report any overseas accounts that contain more than $10,000.
This week, Serbia’s Information Commissioner has stated that there are several problems with banks in his country complying with FATCA. First, he stated that in order for banks to be compliant with Serbian law, account-holders would first need to give their consent to have their information released to the IRS. And further, Serbian law prevents banks from denying service to customers who refuse to give such consent.
Banks in Serbia are in a bind on this because if they do not comply with the reporting mandated by FATCA, they would be subject to strict withholding penalties on transactions that come through the United States. It is unclear how the United States will handle situations like this where a bank is more than willing to comply but is prevented from doing so by their home country’s laws.
Lastly, the Commissioner stated that any agreement between the United States and Serbia would need to be in the form of a treaty because the laws of Serbia would need to be modified to allow for this type of reporting requirement.
If you have a foreign account overseas in any country and have not reported it to the United States government, you are at risk. Serbia is a one of very few countries that have shown any hostility to the reporting requirements of FATCA. The Offshore Voluntary Disclosure Program could help you avoid huge penalties and avoid spending time in jail. Contact the experienced tax attorneys at the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.