Monday, March 5, 2012

5 European Countries Agree to Disclose Bank Information with IRS | Bellevue Tax Lawyer

The IRS recently announced that an agreement has been reached between the US, Germany, Britain, France, Italy, and Spain to collect and exchange information about accounts held in those countries with the IRS.  In return, the IRS has agreed to report information about US accounts held by residents of those countries with their respective authorities.  Furthermore, the IRS stated that more agreements similar to this one are currently being negotiated.

The agreement relates to the 2010 passage of the Jobs bill which includs the FATCA provision.  FATCA requires foreign financial institutions to enter into disclosure agreements with the IRS or face harsh penalties if the institution does not report this information.  The goal of FATCA is to insure that there is no gap in the ability of the US government to determine the ownership of US assets in foreign accounts.  As more foreign financial institutions and countries enter into these disclosure agreements with the IRS the likelihood that US owners of foreign financial accounts evading detection diminishes substantially.  

As stated in my previous posts on the OVDI, the IRS is encouraging US persons with foreign financial accounts to come forward and report the foreign accounts and income.  You should consider immediate action if you have accounts in one these countries, or any foreign country (for that matter), and haven't filed FBARs and/or reported income from foreign sources.  This action should start with reporting the income for this year and filing the FBAR and other required forms.  You should also speak with a tax professional to determine your exposure to other penalties and determine the best course of action to bring your status with the IRS into compliance.

If you have any questions please contact me directly or leave a comment.

As with everything related to the IRS, it is difficult to provide comprehensive information related to taxes and tax law on the web.  Please do not rely on this article without consulting a tax professional.

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