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By Dex Tennyson, for ExpatBriefing.com
12 October, 2015
The US Internal Revenue Service has begun receiving data from foreign banks about US expats' overseas bank accounts and is now sharing data with certain foreign tax authorities to also support their tax enforcement efforts.
The first tax information exchanges on September 30, 2015, were facilitated by a platform put in place by the IRS to ensure the confidentiality of exchanged data. The information, which covers any overseas deposit by a US citizen, is being shared under the US Foreign Account Tax Compliance Act and bilateral intergovernmental agreements signed by the US and third countries.
FATCA is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients can result in a 30 percent withholding tax on payments of US-sourced income. In return, the US is sharing information with certain foreign tax authorities on a reciprocal basis, covering those taxpayers with accounts in the United States .
IRS Commissioner John Koskinen said: "This groundbreaking effort has fundamentally altered our relationship with tax authorities around the world, giving us all a much stronger hand in fighting illegal tax avoidance and leveling the playing field."
"Meeting the Sept. 30 deadline is a major milestone in IRS efforts to combat offshore tax evasion through FATCA and the intergovernmental agreements," said Koskinen. "FATCA is an important tool against offshore tax evasion, and this is a significant step in the process. The IRS appreciates the assistance of our counterparts in other jurisdictions who have helped to make this possible."
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