Latest FATCA Developments for US Citizens with Foreign Bank Accounts
Foreign financial institutions (FFIs) are continuing to send FATCA letters to their US citizen account holders. Along with the letter, you may also receive a Form W-8 BEN or W-9. If you’ve received a letter, you need to contact a tax attorney immediately. There are several methods of becoming compliant with your foreign accounts but you must do so before the IRS contacts you. After you’ve been contacted by the IRS, it is too late to participate under the voluntary disclosures. You are subject to the maximum penalties at that point.
Recent FATCA Developments
1. Saudi Arabia has signed a Model 1 Intragovernmental Agreement (IGA) on November 15, 2016. Saudi Arabia had previously agreed to a FATCA IGA in substance but this finally makes it official. You can expect to see continued and perhaps escalated participation from Saudi Arabian banks to comply with FATCA requirements.
2. Model 1 intergovernmental agreements (IGAs) with Panama and Georgia have entered into force on November 7, 2016.
3. A decision by the Israeli Supreme Court has cleared the way for FATCA implementation by lifting a temporary injunction on the disclosure of information to U.S. authorities under Israel’s intergovernmental agreement (IGA). In connection with the decision, the Israeli government has agreed to give individual taxpayers at least thirty days to object to the inclusion of their information in data transferred to U.S. authorities under the IGA. Implementation of the IGA began on September 30, 2016.
4. Indian financial institutions are now past the August 31, 2016 deadline to provide FATCA information regarding US account holders to taxing authorities.
5. The FBAR filing deadline has changed to April 15 from June 30 to coincide with the tax return filing deadline. And taxpayers will be able to request a 6 month extension similar to their tax returns. This change will affect FBAR filings in 2017 and beyond.
The Future of FATCA and the Offshore Voluntary Disclosure Program
Although there have been many calls to repeal FATCA, it’s likely here to stay. Too much time and money has been invested in negotiating IGAs and complying with FATCA requirements for it to be repealed. What does remain uncertain is the fate of the Offshore Voluntary Disclosure Program. While the OVDP and streamlined filing programs do not have an expiration date, these programs can be terminated by the IRS at any time as to specific classes of taxpayers or all taxpayers. Moreover, as information sharing continues to increase, it’s a matter of time before the IRS discovers any remaining undisclosed foreign accounts held by US citizens.