Ireland On Board With IRS FATCA Enforcement Efforts
When businesses find themselves in tight financial spots, they often look for new streams of revenue. Washington does the same thing, though its main revenue stream — taxing — remains key.
Right now, the nation is slowly emerging from what some have called the Great Recession. That’s put added pressures on the treasury and the Internal Revenue Service to find the funds that are needed to keep the wheels of government grinding and to quiet some of the loudest squeaky wheels. Think “fiscal cliff” and the looming battle over the latest debt ceiling increase.
One of the routes open to the IRS in this regard is going after moneys held by businesses and individuals in foreign accounts. To better tap into these sources of revenue, the U.S. government has been seeking the help of foreign governments through so-called intergovernmental agreements.
One of the latest to be signed was with Ireland. Officials announced the formal arrangement last month. With the addition of Ireland, IGAs now exist with four foreign governments, including the United Kingdom, Denmark and Mexico.
Under terms of the deal, Ireland’s government agrees to do the job of tracking accounts of U.S. citizens held in Irish financial institutions. That information will then be turned over to the IRS. Audits and collection efforts will likely follow in many instances.
The U.S. is undertaking this effort under the aegis of the Foreign Account Tax Compliance Act. This law, passed in 2010, looks to block the practice of storing assets overseas with the aim of evading taxes. U.S. officials estimate that there may be as much as $10 billion in hidden wealth around the world.
The point to take away from this is that U.S. power to go after income and interests beyond U.S. borders is expanding fast and FATCA represents a tool that is likely to be wielded to the fullest extent possible. Anyone with assets and interests overseas, or thinking about expanding their holdings outside the U.S., needs to be sure they are staying abreast of the changes in law to best safeguard their rights.
Source:International Adviser, “Ireland signs FATCA agreement,” Helen Burggraf, Dec. 21, 2012
- Readers of this blog are invited to learn more about the services our firm provides in regard to the issues discussed here. This can be done by visiting our Washington, D.C., foreign tax law page.