An astounding 77,000 banks and financial institutions—even some in Russia—have registered under FATCA—the Foreign Account Tax Compliance Act. America’s global tax law requires foreign banks to reveal American accounts holding over $50,000. Non-compliant institutions could be frozen out of U.S. markets, so everyone is complying. The fact that 77,000 banks have registered and some 70 countries are providing government help to the IRS means almost no foreign account is secret.
Foreign Financial Institutions (FFIs) must report account numbers, balances, names, addresses, and U.S. identification numbers. There is 30% withholding on anyone who doesn’t report. With teeth like never before, Americans must report worldwide income and many must file IRS Form 8938 to report foreign accounts and assets.
The ink is hardly dry on Credit Suisse’s guilty plea to U.S. tax charges. But the penalty must still smart. The bank agreed to a record $2.6 billion fine for actively helping Americans hide money to avoid taxes.
With UBS, Credit Suisse and a dozen banks still under criminal investigation by the Justice Department, that is only a drop in the international bucket. And more banks are lining up, causing many account holders to wonder What To Say When (Not If) Your Offshore Bank Asks, ‘Are You Compliant With The IRS?‘. U.S. account holders who aren't compliant have limited time to get to the IRS before names are disclosed.
FATCA is making banking transparent virtually worldwide. In fact, with the help of the U.S. Congress and the U.S. Department of Justice, arguably, the IRS should have a new slogan: Today Switzerland, Tomorrow the World.