The Truth About Foreign Account Compliance Act

Government to government agreements simplify compliance with the rule that seeks transparency in the finances of U.S. citizens abroad.

Tuesday, January 8, 2013

Elfinancierocr.com reports that "the Foreign Account Compliance Act (FATCA) is a reality and the truth is that to date, there are very few financial institutions in our region who are prepared to meet the requirements of this U.S. legislation. The reason: the majority are waiting for clarification on some gray areas, especially given the possibility that the U.S. government will sign intergovernmental agreements which will simplify the reporting process. "

"... this U.S. legislation seeks bank account information, transactions and investments that U.S. taxpayers have made outside its borders, information which will be collected and sent directly to the U.S. Government from every financial institution in the world. Prior to this, each of the entities had to sign a contract with the Treasury Department of the country. "

But the U.S. government has opened up the possibility of signing intergovernmental agreements with countries that need them. Through these agreements, "the world's financial institutions don’t have to sign a contract with the Department of the Treasury and, instead of sending the information to the U.S. government, they can provide it to their own government, which, as an intermediary, will send the data periodically. To date, Costa Rica has not negotiated or signed this agreement, which they has been signed by Spain, Japan, Switzerland, Germany and the UK, among others. "



More on this topic

Honduras Signs Agreement on FATCA Law with U.S.

April 2014

Movements in the bank accounts of U.S. citizens residing in Honduras will be reported to the Treasury Department of the United States.

The Law on Foreign Account Tax Compliance (FATCA) is a U.S. law that requires citizens of that country, including those living abroad to provide information regarding money held in bank accounts outside the United States by requiring foreign financial institutions to report to the Internal Revenue Service (IRS) about their U.S. customers. The U.S. Congress enacted this law to make it harder for U.S. taxpayers to hide assets and shell companies held abroad, in order to prevent tax evasion.

Panama Gets Ready for FATCA Compliance

August 2013

The Intergovernmental Agreement Model 1 is being prepared with the U.S. Treasury for the application of the Act on tax compliance for accounts held abroad.

"The Ministry of Economy and Finance (MEF) is working in conjunction with an external consultant for the purpose of preparing the negotiation strategy," noted an article in Panamaamerica.com.pa.

U.S. Defers Enforceability of FATCA

July 2013

The fulfillment of the obligation to report on foreign bank accounts belonging to U.S. citizens has been postponed to July 1, 2014.

This was announced by the U.S. Treasury through a statement, explaining that "due to the huge interest from countries around the world" the deadline to comply with the Law on Foreign Account Tax Compliance (FATCA), will be extend by six months, that is until July 1, 2014.

FATCA Law Comes Into Effect In Two Weeks

July 2013

Banks in Panama are urging the signing of the intergovernmental agreement which recognizes them as complying with the Foreign Account Tax Compliance Act.

"July 15 sees the start of the registration period for companies to begin the certification process individually, but Panamanian bankers expressed their wish for entry into the FATCA system to be made jointly via an agreement made prior to 15 July between governments.

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