Yes….your bank in Switzerland, Argentina, Brazil, India or (insert most any other foreign country) is reporting to the U.S. government that you have a foreign bank account.
Here’s the typical scenario, a client calls us and says that their foreign bank sent them a letter in the mail with the word FATCA in the subject line and they want to know what FATCA means and what they need to do. Short answer? Your foreign bank is confirming with you that you are a “U.S. Person” and giving you a heads up that they’ll be telling the IRS about your account soon.
I've tried to outline generally what you should do if you receive a FATCA letter from your bank.
WHO IS FATCA?
The first answer is that FATCA isn't a "who". FATCA is a law or act that stands for FOREIGN ACCOUNT COMPLIANCE ACT. FATCA was passed here in the United States and, among other things, requires banks located in foreign countries to disclose the account and financial information for U.S. taxpayers that have accounts in their foreign banks.
The great majority of foreign banks world-wide are willing to provide this information to the United States Treasury to avoid financial penalties and pressure from the United States. So if you have a bank account or other type of financial account located in a foreign country, it's likely you will receive a FATCA letter.
WHAT DO I DO IF I GET A FATCA LETTER IN THE MAIL?
The first thing I tell all of my clients whenever they are dealing with the U.S. Treasury Department or the IRS is that they should never ignore their letters. Ignoring international tax issues is not a winning strategy. The second thing I tell them is that they should seek qualified legal counsel right away. U.S. taxpayers have legal reporting obligations on certain bank and financial accounts that should be filed every year depending on the type of accounts, who owns the accounts and how much money is in the account. For example, if you are a U.S. Person with accounts overseas that total more than $10,000 any time during the year then you likely need to file an FBAR or other similar tax forms.
There are severe penalties for failing to report these accounts but there are also options to avoid criminal or severe civil penalties and get back in the good graces of the U.S. government. To learn more about some of these options call us for a FREE & CONFIDENTIAL CONSULTATION at 480 330-5003 or fill out our contact sheet HERE and we'll contact you right away. Usually within 15 minutes!