In February, we reported that the South African Revenue Service was in negotiations with the IRS to implement FATCA, the Foreign Account Tax Compliance Act. That law requires foreign banks and financial institutions to review their accounts and report those with connections to the United States.
Opening a foreign account account in South Africa, or elsewhere, is completely legal if the account is properly disclosed. Accounts that exceed in the aggregate $10,000 (U.S. Dollars) must be reported on Schedule B of the 1040 tax return and on a Report of Foreign Bank and Financial Accounts (FBAR). Willful failure to file an FBAR is a felony and can result in huge civil penalties.
South Africa to Join FATCA
Many countries have already joined FATCA with dozens more in negotiation. Earlier this week, KPMG reported that South Africa has now committed to the program. FATCA impacts more than just South African banks; it also includes brokerage firms, commodities brokers, certain precious metal dealers and even some insurance companies. KPMG claims that South Africa is poised to make compliance with FATCA a statutory obligation under South African law.
Many ex pat groups and others claim that FATCA is U.S. monetary policy out of control. Whether you believe that premise or not, the entire world is moving towards greater financial transparency. The South African Revenue Service also reports it is negotiation with Andorra, Belize, the BVI, the Cook Islands, Isle of Mann, Jamaica, Liechtenstein, Macau, the Marshall Islands, St. Kitts and Uruguay for similar tax exchange treaties.
We have said it many times before. If you are placing money offshore to hide it from Uncle Sam, your days are numbered.
Most of our clients with unreported offshore accounts are not tax evaders or tax cheats. They are ex pats living overseas, dual nationals, foreign born Americans and Americans with business interests or family overseas.
If you have an unreported South African bank account, contact an experienced FATCA attorney immediately. The risks and penalties are simply to high to try and comply without a lawyer. A good lawyer can often qualify you for one of several amnesty type programs or even take you through a voluntary disclosure and eliminate all or most penalties. Every case is different, obviously.
For more information, give us a call. We offer a free initial consultation with an experienced FBAR attorney. Because we are a law firm, every inquiry is protected by the attorney – client privilege and kept in strict confidence.
For more information, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. You may also contact the author of this post, Brian Mahany, at or by telephone at (414) 704-6731 (direct).
Mahany & Ertl – IRS Lawyers. Services available nationwide.