Just four days ago, we reported that there would be no more delays to the controversial FATCA program. Short for the Foreign Tax Compliance Act, the law requires foreign financial institutions to become the eyes and ears of the IRS. Beginning July 1st, these banks, brokerage firms and insurance companies must examine their accounts and determine those with connections to the United States. Twice the implementation date has been extended and recently, many stakeholders from the banking industry to foreign governments and even the IRS’ own watchdog, the Treasury Inspector General for Tax Administration (TIGTA), have asked for extensions. (TIGTA didn’t ask for an extension but clearly stated the IRS was not fully prepared for the looming July 1st deadline.)
Amid all these signals that another extension was likely forthcoming, last week reported that on Tuesday the IRS Deputy Commissioner told a group of tax lawyers in New York that there would be no further extension. Those off-the-cuff remarks started a small frenzy in the practitioner community. Was the IRS really going forward with FATCA on July 1st?
If Deputy Commissioner Michael Danilack’s comments last week were not clear enough(“There is absolutely no chance that it’s going to slip. We think we can make it”), his boss Commissioner John Koskinen made it crystal clear later in the week.
On a media conference call last Friday, Koskinen said, “We’re not going to have any delays.” Wire reports say that a Treasury Department spokesperson followed up that call with these words: “We expect to issue the final package of rules shortly. We are working diligently to finalize all related guidance to ensure that financial institutions have time to effectively prepare and comply, and there is no consideration for a delay of FATCA implementation.”
That means in less than 5 months, FATCA will go live even though the IRS has not completed the final rules.
With such strong words from the number one and two people in the IRS, it is clear the IRS is fully committed to the July 1st start date. Many foreign banks are still waiting for answers and Americans with offshore accounts remain unsure what to do.
With or without FATCA, Americans, dual nationals, expats and green card holders remain obligated to report their offshore accounts. The penalties for failure to report required FBARs (Report of Foreign Bank and Financial Accounts) are tied to the Bank Secrecy Act which has been on the books since 1970. FATCA has no bearing on those penalties or the duty to file FBAR forms.
With our FATCA, bank secrecy is a thing of the past and the IRS has become extremely adept at finding new and old unreported offshore accounts. If you fall into that category, time is certainly running out. Although the IRS has an amnesty and expat reporting options available, those deals are off the table if the IRS finds your account first.
We have found that most taxpayers with unreported FBARs are not criminals looking to evade taxes. They are dual nationals, Americans living abroad, part time residents and those looking for the security of Swiss banks. The IRS, however, has a hard time distinguishing between the good and the bad.
We welcome questions about FATCA, FBAR and foreign reporting issues and will gladly explain your responsibilities and explore your options. Our FBAR attorneys have helped many taxpayers with a wide variety of offshore reporting problems.
For more information, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. The author may also be contacted at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence. Our IRS tax services are available worldwide.
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Post by Brian Mahany, Esq.
FBAR lawyers – FATCA attorneys – Offshore Voluntary Disclosure Program – IRS tax attorneys