Ex-IRS commissioner, taxpayer advocate question FATCA

The federal Foreign Account Tax Compliance Act, commonly known as FATCA, is a 2013 law that empowers the IRS to pursue taxpayers suspected of failing to disclose assets in foreign bank and investment accounts. The idea is that these individuals and businesses are defrauding the IRS by hiding these funds so that they can claim less income than they actually earned.

Among other things, FATCA requires financial firms based overseas to provide information to the IRS about their U.S. customers’ account balances and investment income. Failure to disclose could trigger a fine ranging from $10,000 up to $50,000 per offense.

The way those tax penalties are assessed, and how the law’s provisions are getting phased in, are a problem, according to one IRS official and the agency’s former leader. National Taxpayer Advocate Nina Olson and former acting IRS Commissioner Steven Miller both criticized FATCA in a recent interview, according to the Wall Street Journal.

As FATCA has come into effect, many U.S. expatriates have given up their citizenship, rather than risk having to pay penalties for hidden assets. From a business perspective, many foreign financial firms have become cautious of taking on expatriates as clients.

Olson said that many taxpayers do not fully understand the new law, because of its wide scope and the gradual way it has been phased in. She also criticized FATCA’s penalties for being objectively proportioned. She said the fines are “tormenting” taxpayers.

Miller said that FATCA will succeed in its goal of increasing federal income tax revenue. He predicted that taxpayers will simply become more creative in how they avoid paying taxes.

For more information about FATCA, please read our article on the subject.

Source: The Wall Street Journal, “Tax Officials Express Doubts About Fatca,” Laura Saunders, Oct. 8, 2014

No Comments

Leave a comment
Comment Information
  • ABA | American Bar Association
  • AV Preeminent | Peer Rated for Highest level of Professional Excellence | 2018
  • Virginia State Bar | 1938
  • Super lawyer | 2018
  • DC Bar
  • American Bar Academy of Attorney - CPAs | The power of the dual view
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1629 K Street NW, Suite 300
Washington, D.C. 20006

Phone: 202-618-1873
Fax: 888-235-8405
Map & Directions

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Annapolis Office
888 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 410-497-5947
Fax: 888-235-8405
Map & Directions

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 703-621-7169
Fax: 888-235-8405
Map & Directions

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 240-599-5009
Fax: 888-235-8405
Map & Directions

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 443-743-3381
Fax: 888-235-8405
Map & Directions