The tax information swapping network being created by FATCA, the Foreign Account Tax Compliance Act, took a big leap forward this week. The U.S. Treasury Department announced today that nearly 50 countries are now officially listed as "in compliance" with the law. More are expected to be added as the months of 2014 progress.
FATCA is seen by many as a significant weapon in Treasury's arsenal in fighting alleged tax evasion. Full enactment is due to be effective as of July 1. Things have been building up to that deadline for the past four years. Among the efforts being undertaken has been the nailing down of intergovernmental agreements (IGA) between Washington and other foreign countries.
Up until today, the count of countries with IGAs had stood at 26. But today, the Treasury Department announced that an additional batch of countries is being counted as having IGAs "in substance." They haven't actually signed the papers, but officials say they're far enough along in the process that they can be considered on board.
Depending on whose count you use, the number of compliant nations is now either 48 or 49. And that's only expected to grow because Treasury has also extended the deadline for foreign financial institutions to get registered.
The implications of these developments could be significant for U.S. citizens with deposits in foreign bank accounts. Under provisions of FATCA, foreign banks are obligated to provide detailed information about Americans who have accounts holding $50,000 or more. If they don't, they could see themselves effectively aced out of the U.S. market.
In addition to reporting information, the banks are required to withhold 30 percent of payments or transfers paid to operations or individuals that aren't compliant with FATCA. That money is to be sent to the IRS.
Anyone worried about potential repercussions resulting from FATCA enforcement should taking action to be aware of their options by speaking with an attorney.
Source: Forbes, "Incredibly, 48 Nations Embrace FATCA To Reveal U.S. Depositors," Robert W. Wood, April 10, 2014