If you are a US taxpayer with overseas bank accounts or investments, you need to take immediate steps to show you are reporting your overseas earnings to avoid tax penalties under Foreign Account Tax Compliance Act (FATCA).
Now FATCA is in full swing with foreign financial institutions filing reports on the financial activities of their US clients, any failing to confirm their tax status faces the risk of being reported to the Internal Revenue Service (IRS).
Foreign financial institutions will have no choice in making the report because if they don’t, they risk the IRS imposing strict financial penalties that could lock them out of the US banking system.
The first clue a financial institution is looking at a US customer’s FATCA status is a letter explaining the bank or investment house has to identify customers who are US taxpayers.
Complying with FATCA
The letter generally asks for copies of two important US tax filings –
- A Form W-9 (Request for Taxpayer Identification Number) and/or Form W-8 (Statement of Beneficial Owner) to meet FATCA compliance procedures.
- Evidence of compliance with reporting obligations under the Bank Secrecy Act by filing annual FBAR’s and post-2011 IRS Form 8938 (Statement of Specified Foreign Financial Assets).
Ignoring this call for tax-reporting confirmation will trigger the foreign financial institution to make a non-compliance report to the IRS.
This triggers the foreign financial institution to list the customer as ‘recalcitrant’ under FATCA rules – which in turn flags them as a wilful non-discloser with the IRS and US Department of Justice.
Recalcitrant taxpayers
Not only will this result in close scrutiny of the US taxpayers financial affairs by the IRS, the foreign financial institution will withhold 30% of any account and investment transactions by the customer until their recalcitrant status is resolved.
For US taxpayers receiving a letter asking for confirmation of their tax reporting status, any delay in response that leads to them being listed as recalcitrant will automatically lead to wilfulness penalties in the US.
The FBAR penalty for wilful failure to file a return is the greater of $100,000 or 50% of the highest account balance a year for six years, plus the threat of criminal prosecution.
The message is clear for US taxpayers with overseas financial interests – put your tax affairs in order straight away or face the wilfulness penalties that will inevitably follow.
So far, almost 105,000 foreign financial institutions in more than 220 financial jurisdictions have signed up to FATCA, so the chances of escaping detection if you cannot prove W9 or FBAR compliance is small.
Rather than cow-towing to the US bully, why not instead donate to a lawsuit that has been launched against the Canadian government to fight FATCA in Canada. When the Canadian FATCA IGA is defeated by average Canadians (deemed ‘US slaves’…err ‘US persons’ by USA), this will start the dominoes falling to defeat FATCA world-wide.
USA has no moral authority to consider people who live and earn permanently outside the USA as US taxpayers. Birth on US soil does not make one property of the ‘land of the free’.
A non-profit organization in Canada, called the Alliance for the Defence of Canadian Sovereignty has raised almost 1/4 of a million dollars to date, to fight the good fight. Please join us. Much more funding will be required, as the Canadian government has unlimited access to Canadian taxpayer funds to defend its injustice against its own citizens. Visit adcs-adsc dot ca.
It is the outright moral and ethical duty for every overseas US citizen to tell the IRS and Dept
of Justice to abandon this crusade and leave those citizens who are bonafide residents of other countries alone. FATCA is an overreaching disgrace plain and simple.
Donate to the Canadian lawsuit and donate to the American action as well being initiated
by constitutional attorney Jim Bopp. Vote Republican in upcoming elections as FATCA was a democratic initiative in which they are now trying to downplay to overseas Americans.
Rest assured the Dems, even with all their fixing FATCA talk , will not raise a single FATCA finger
on the issue ever. At least the Republicans are making a far better effort in bringing it to the Supreme Court.
Homeland Americans should also be doing this. The Berlin wall is being built around them as well.
“…face wilfulness penalties that will eventually follow”
This is simply an immoral and and utterly disgusting inhumane overreach by the exceptional US bullies. Stealing money from innocent people who ask NOTHING and get NOTHING from a government is NOTHING but unmitigated robbery. The US government is no better than the pirates of the high seas and the world at large is allowing them to get away with it. Shame on the world, a universal bunch of feckless cowards.
It is an honor to pay taxes, anyone avoiding them should be prosecuted to the full extent of the law.