FATCA attorney
In 2010, in an attempt to combat tax evasion, the United States government enacted the Foreign Account Tax Compliance Act (FATCA) to require United States persons and foreign financial institutions to report assets held offshore to the IRS.
FATCA requires foreign financial institutions to report to the U.S. Internal Revenue Service about foreign account holdings held by United States taxpayers or foreign entities that hold a substantial ownership interest. Reporting institutions include offshore bank accounts, investment entities, brokers, mutual funds, hedge funds, and certain insurance companies.
Who Needs to Comply With FATCA?
FATCA created self-reporting requirements for United States citizens and certain United States resident aliens who hold foreign financial accounts.
United States citizens and resident aliens must self-report if the aggregate value of the specified foreign financial assets exceeds certain thresholds. For individuals living in the United States, the threshold is $50,000 in a foreign country at the end of the tax year or $75,000 at any point during the year.
For individuals living outside of the United States, the threshold is $200,000 in offshore accounts at the end of the tax year or $300,000 at any point during the year.
If you are an individual account holder, reside in the United States, Puerto Rico, or another country of residence with financial accounts, in receipt of foreign gifts, or foreign account holdings, the United States Department of Treasury and Financial Crimes Enforcement Network may require tax forms be submitted regardless of your marital status.
Ledingham Law has the legal professionals to identify which Internal Revenue Service tax forms to file, keeping you out of district court and avoiding costly tax issues with your foreign bank and financial accounts.
What Foreign Assets Must be Reported?
Financial assets maintained by a foreign financial institution that must be reported include foreign bank accounts, savings, deposits, checking, and brokerage accounts held with a bank or broker-dealer.
Additionally, you must report stock or securities issued by someone who is not a U.S. person, any interest in a foreign entity, and a financial institute held for investment with an issuer that is not a U.S. person. This includes:
- Stock or securities from a foreign corporation;
- A partnership interest in a foreign partnership;
- Interest in a foreign estate;
- A bond, debenture, or note from by a foreign person;
- An interest rate swap or currency swap;
- Interest in an insurance contract offered in a foreign land or annuity with a cash surrender value.
How Do I Report My Foreign Financial Accounts?
To ensure compliance, business owners and investors with foreign financial assets must take the following steps:
- Provide an annual report of your foreign financial accounts and assets on Form 8938 attached to your annual federal tax return.
- Gather and maintain all relevant documents, such as account statements, transaction records, and any other supporting documentation. The United States Internal Revenue Service may request this information during an audit or to verify compliance with FATCA.
- If you have signature authority over offshore accounts owned by entities, such as corporations or partnerships, you must disclose this information on Form 5471 or Form 8865.
- As a business owner or investor, you should conduct due diligence to ensure that any foreign financial institution you are considering engaging with is compliant with FATCA.
The Consequences of Non-Compliance With FATCA
Failure to report foreign financial assets to the Internal Revenue Service could result in a penalty of $10,000 (and a penalty of up to $50,000 for continued noncompliance after IRS notification).
Further, if you have underpayments of tax attributable to non-disclosed foreign financial assets, you could be penalized up to 40 percent. Tax collections and criminal penalties may also apply.
Client Testimonials
Criminal Tax Matters 3
It felt a lot less stressful when I hired Jess to communicate with the IRS on my behalf. Her extensive knowledge of tax law was evident when she would educate not just me but also the RA on the proper law.
She went the extra mile every day – with driving to me, essentially holding my hand through an interview, and making sure all responses to the RA were effective.
If you get audited – I strongly recommend having her by your side.
Criminal Tax Matters 2
A small business requires an enormous attention to detail and Jessica helped me be meticulous in strategizing my tax landscape and know the necessary laws and regulations.
I highly recommend her to anyone with tax questions.
Criminal Tax Matters 1
Jess was always there throughout the audit. She went above and beyond – answering my calls at any time of the day.
What impressed me the most was her attention to detail. She was meticulous in her work and always took the time to explain each step of the process.
Overall, I highly recommend her to anyone going through an audit. I am very grateful to have had her during such a stressful time.
Ledingham Law Can Assist with FATCA Compliance
Are you facing tax-related challenges, particularly related to FATCA compliance, that have led to conflicts with the IRS? As an experienced international tax attorney, Ledingham Law can ensure you report your holdings to the proper tax authorities. We will provide you with the expert guidance and legal representation necessary to navigate these complex matters successfully.
Your report of foreign bank and financial accounts to the United States tax authorities of holdings in any foreign country from foreign income, social security, or any other offshore funds will avoid civil penalties and tax issues in the future.
Ledingham Law will navigate the United States and foreign governments’ tax codes to minimize additional penalties and bring foreign bank account reporting into compliance.
Contact Jessica Ledingham, a tax attorney in Baltimore, Maryland, today at (240) 673-6869 for a consultation.
