Foreign Account Tax Compliance Act

 

The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.

  • FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
  • FATCA focuses on reporting:
    • By U.S. taxpayers about certain foreign financial accounts and offshore assets
    • By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest

 

The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.

To avoid being withheld upon, a foreign financial institution may register with the IRS, obtain a Global Intermediary Identification Number (GIIN) and report certain information on U.S. accounts to the IRS.

https://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA