Federal Crimes: FATCA stands for Foreign Account Tax Compliance Act. Back in March, 2010, United States legislators decided that the Internal Revenue Code was not bulky enough, and therefore added yet more chapters, 26 U.S.C. §1471-1474. The U.S. has been hard at work on pushing for increased tax compliance amongst U.S. taxpayers with foreign accounts and assets. FATCA forces foreign financial institutions (FFI) to disclose information on foreign accounts held by US citizens to the Internal Revenue Service.
Although the effective date for FATCA was January 1, 2013, another new deadline is looming. Foreign banks must register with the IRS by June 30, 2014. A foreign financial institution could face significant consequences if it fails to enter into an agreement with the IRS. Institutions must now report to the IRS US taxpayers with overseas bank accounts. Failure to report certain transactions to the Internal Revenue Service will result in a 30% withholding penalty. FATCA’s intent is to lessen the ability to avoid paying US taxes. But, it is also a major step in global Orwellian information sharing.
Is this attempt at combatting tax evasion and other financial crimes by US citizens or entities abroad going to succeed? What is success? More penalties? Or more federal crimes prosecutions? Or has the Internal Revenue Code gotten so thick that it can no longer act as a door stopper, but as a full door, and become too onerous for any of us to figure out, much less comply with effectively – all at the cost of our privacy.