The Foreign Asset Tax Compliance Act (“FATCA”) became law in March 2010 and was intended to target non-compliance and tax evasion by US taxpayers with foreign accounts and offshore assets. There were two sides to FATCA.  The first side focused on the taxpayer and increasing the reporting requirements for certain assets.  These provisions included the creation of Form 8938, which must be filed annually by US taxpayers with offshore assets above a certain threshold.

The second side of FATCA focuses on the financial institutions.  This includes foreign financial institutions that have accounts held by US taxpayers or entities in which US taxpayers have significant interest.  It also includes US financial institutions that make certain payments to foreign entities that have not documented their FATCA status.

While FATCA was targeted at financial institutions, it also impacts US businesses with foreign investors that receive payments of investment income, such as dividends and interest.   For instance, there are many venture capital or real estate investment entities that these reporting requirements impact.

The requirements of this law are complex and time-consuming.  Non-compliance subjects taxpayers to potential criminal liability and astronomical civil penalties.  If you are aware that you are not in compliance with FATCA, you need to contact to an experienced Offshore Disclosure Attorney immediately.  We can help you understand your exposure and your options as you navigate this scary and complicated area of tax law.

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