Foreign Account Tax Compliance Act

Boston’s Tax Attorney for FATCA Compliance

The legal team at Thorn Law Group assists individuals and businesses in complex foreign and domestic tax matters.  Each Boston tax attorney at our firm has an extensive understanding of the complex IRS reporting requirements U.S. taxpayers and foreign financial institutions must comply with under the Foreign Account Tax Compliance Act (FATCA).  We use this knowledge to develop approaches aimed at ensuring our client’s offshore bank accounts are compliant with FATCA and all other legal requirements.  

Overview of Key FATCA Requirements

The United States government enacted FATCA in 2010 as part of the Hiring Incentives to Restore Employment Act (HIRE).  FATCA is designed to prevent and reduce tax evasion by U.S. taxpayers who hold financial assets in bank accounts outside of the United States.  Under the Act certain U.S. persons holding investments in offshore accounts are required to report specific information about their accounts to the IRS. Additionally, foreign financial institutions (FFI) and Non-Financial Foreign Entities (NFFEs) are required to disclose to the IRS certain information concerning financial accounts held by U.S. taxpayers or accounts held by foreign entities in which U.S. taxpayers hold a substantial interest.

In particular, FATCA provides that certain U.S. taxpayers who hold offshore financial assets - including foreign bank accounts, stocks and other investments - with assets in excess of $50,000 dollars must report information about their accounts to the IRS.  Pursuant to this reporting requirement, U.S. taxpayers with financial assets exceeding the $50,000 dollar threshold must include Form 8938 with their annual federal tax return.  

This requirement applies to financial assets held in taxable years beginning after March 18, 2010.  U.S. taxpayers who fail to comply with FATCA’s reporting requirements by filing Form 8938 will face a penalty of $10,000 dollars.  In the event a taxpayer repeatedly fails to report the required information after receiving notification from the IRS, the amount of the penalty will increase up to $50,000 dollars.  Moreover, U.S. taxpayers will be subject to a 40 percent penalty for any underpayments attributable to the foreign financial assets that were not disclosed to the IRS.  

FATCA also adds reporting and tax withholding requirements for entities including banks, financial institutions and trusts.  The rules apply to US and foreign entities.  

Foreign financial institutions (FFIs) are required to provide information about “financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest” directly to the IRS.  FATCA rules regarding who qualifies as an FFI and what their reporting responsibilities and withholding obligations entail are complex and they vary by jurisdiction.  

Developing FATCA Compliance Strategies

The international tax attorneys at Thorn Law Group are intimately familiar with the complex laws and procedures governing offshore bank accounts.  Each Boston-based tax attorney at our firm is prepared to advise and assist clients holding financial assets outside of the United States.  Our attorneys also help foreign entities navigate complicated FATCA requirements and work with these entities to develop effective compliance strategies.    

The legal professionals at our firm are former IRS attorneys with extensive experience representing individuals, businesses, trusts and other organizations dealing with sensitive investigations and enforcement actions stemming from FATCA requirements and other IRS rules and regulations.  We partner with our clients to develop legal plans and approaches aimed at keeping offshore accounts in compliance with all legal requirements.  When controversies arise involving these types of assets, our Boston offshore bank account practice acts quickly to settle all legal issues and limit penalties and other adverse consequences imposed upon our clients.

If you have questions about reporting requirements under FATCA or general concerns about an offshore bank account, we encourage you to contact a tax attorney at in our Boston law offices today at (617) 692-2989.