Thinking about hiding money overseas? Think again. The Internal Revenue Services has increased measures to makes sure Americans are not hiding their taxable income abroad. The U.S. government has added to the Foreign Account Tax Compliance Act (FATCA) requiring foreign banks to release US citizen’s account information to the IRS.
Congress enacted FATCA in 2010 after learning that overseas financial firms were suggesting that U.S. taxpayers invest abroad in order to hide their taxable assets. Since FATCA was implemented $7 billion have been paid to the IRS by 50,000 taxpayers with overseas accounts.
With the U.S. government’s newly implemented standards, it is even more difficult to hide money from the IRS. More banks have been added to the list that penalizes accountholders at a higher rate. In return, more foreign banks are handing over account information to the IRS.
In addition to other countries sending account information to the US government, the US government can share account holder information to 34 countries. According to FATCA, if foreign banks do not share information about US taxpayers’ accounts, they can lose 30 percent of interest or dividend payments coming from the US. It is in their best interests to comply.
According to IRS Commissioner John Koskinen, “this groundbreaking effort has fundamentally altered our relationship with tax authorities around the world, giving us all a much stronger hand in fighting illegal tax avoidance and leveling the playing field.”
What this really demonstrates is the length that the U.S. government is taking to collect tax revenue. With an ever increasing deficit and wasteful spending habits, the government is scrambling around for revenue. This time it penalizes taxpayers and foreign financial institutions. What was once a simple act of setting up an offshore account, is no longer simple.
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