by Brian Mahany
Although some still believe FATCA is in trouble, new countries join each month. Last week on tax day (April 15th), Norway became the newest nation to sign an Intergovernmental Agreement with the IRS.
FATCA is short for the Foreign Account Tax Compliance Act. Part of President Obama’s 2010 jobs legislation, the law forces foreign banks and other financial institutions to examine their accounts and report those with ties to the United States. The IRS hopes to identify the hundreds of thousands of unreported foreign accounts.
Opening or having signature authority over an offshore account is completely legal but only if the account is reported annually to the government. Although reporting foreign accounts has been required for decades, compliance has been spotty. The Feds hope that FATCA will make foreign banks the government’s eyes and ears.
FATCA is only successful if countries join. Several European countries have already joined with popular offshore banking haven Switzerland, having recently agreed to participate. Some big countries like China and Russia have yet to commit, however.
Last Monday, Norway became the newest country to participate.
The Norway agreement is a bit different than that signed by other countries. The Norwegian government has been given until November 2015 to pass required enabling legislation. That doesn’t mean that people with unreported Norwegian accounts are safe until then.
The IRS has developed a number of methods to discover offshore banks. This includes “John Doe” subpoenas that require a bank to identify account holders with American passports or addresses. The United States already has a tax exchange agreement with Norway. Under FATCA and the recently negotiated intergovernmental agreement, Norwegian banks will soon automatically report accounts with U.S. ties to the Ministry of Finance who will then turn over the information to the IRS.
Holders of unreported offshore accounts are subject to massive penalties. If the IRS can prove willfulness, taxpayers can face 5 years in prison. If you have an unreported account in DnB NOR ASA, Bank 1 Oslo, Fokus Bank or any other foreign brokerage firm or hedge fund, contact us immediately.
There is still time to come into compliance and avoid significant penalties.
For more information, contact attorney Bethany Kroes at or by telephone at (414) 223-0464. All inquiries are protected by the attorney – client privilege and kept in strict confidence. Whether you hire or us or not, we will gladly discuss your options at no cost and without obligation.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. IRS tax services available worldwide.
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