Foreign Account Tax Compliance Act (FATCA)

Having money and investments anywhere in the world – whether for business, legal, favorable interest or other reasons – is within your rights as a U.S. citizen or business, but be careful to report any foreign income. As logical as withholding information about an offshore bank account may be, the U.S. government has implemented efforts to safeguard their share of your earnings.

The Foreign Account Tax Compliance Act (FATCA) is legislation designed to prevent offshore tax evasion by U.S. taxpayers. Essentially, foreign income must be reported to the IRS on Form 8939 in addition to FBAR (Report of Foreign Bank and Financial Accounts) reporting with varying reporting thresholds depending on whether you file a joint or separate income tax return and live in the U.S. or abroad.

FATCA also imposes rules on foreign financial institutions to report accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest, increasing the risk of being caught if you neglect to report an account yourself. The civil and criminal penalties for non-compliance can be steep – both in terms of possible jail time and hefty fines, which is why it’s vital to consult with an international tax expert even if you don’t believe taxes are owed because of a lack of earnings or other reasons.

If you have foreign financial accounts or assets, we can ensure that you fully understand the law and remain in compliance. The services we offer related to FATCA include:

  • Preparation of Form 8939 and FinCEN Form 114 (FBAR)
  • Foreign and U.S. tax planning
  • Assistance with inquiries from U.S. tax authorities and foreign financial institutions
  • Applicable legal structure analysis
  • Prior tax year evaluation and tax amendments if necessary

Take the Next Step

The rules governing international tax reporting and compliance can be complex and difficult to keep current on. As a result, it’s essential work with an accounting provider that has experience managing international tax matters for companies and individuals. If you have questions on FATCA or other international tax issues, JLK Rosenberger can help. For additional information click here to contact us or select from the highlighted professionals at right.