International Tax Disputes
FATCA Compliance
The tax law team at Thorn Law Group focuses on designing innovative compliance strategies for businesses and individuals facing complicated international tax law matters. Our attorneys help clients across the U.S. and abroad navigate the complex reporting requirements U.S. taxpayers and foreign financial institutions (FFIs) must comply with under the Foreign Account Tax Compliance Act (FATCA).
As former IRS lawyers, our legal team has an extensive understanding of the U.S. tax laws and regulations governing foreign accounts and other financial assets held outside of the country. We know how the IRS and other federal authorities examine and investigate unreported offshore assets and accounts. Our attorneys work directly with our clients to identify potential tax issues and develop plans to ensure that their foreign assets are in full compliance with FATCA and other offshore account reporting requirements.
FATCA: Key Reporting Requirements for Individuals
FATCA was enacted in 2010 in an effort to help combat tax evasion by U.S. taxpayers holding accounts and financial assets outside of the United States. FATCA requires certain individual taxpayers with offshore accounts and assets exceeding a total value of $50,000 to report information about their offshore holdings to the Internal Revenue Service. These taxpayers are required to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) when they file their annual income tax return.
Taxpayers who fail to report their foreign financial assets to the IRS on Form 8938 are subject to a $10,000 penalty along with a 40 percent underpayment penalty applied to any underpayments associated with the undisclosed offshore assets. If a taxpayer repeatedly fails to comply with FATCA’s requirements after being put on notice by the IRS, the federal government can increase the penalty from $10,000 up to $50,000.
Taxpayers need to be aware that FATCA’s requirement to file Form 8938 is separate and distinct from any FBAR (Report of Foreign Bank and Financial Account) reporting requirements. This means if you have offshore accounts and assets you may be required to file both the FBAR and Form 8938 with the IRS. An experienced international tax attorney at Thorn Law Group can review your situation to make certain you are in compliance with both the FATCA and FBAR reporting requirements.
FATCA: Key Reporting Requirements for Foreign Financial Institutions (FFIs)
Foreign Financial Institutions (FFIs) are also subject to strict reporting requirements under FATCA. The IRS explains that in order to avoid being withheld on, FFIs may elect to register with the IRS and agree to disclose specific information “about their U.S. accounts, including accounts of certain foreign entities with substantial U.S. owners” directly to the IRS. When an FFI enters into a “special agreement” with the IRS the FFI may be required to withhold and pay more than 30 percent of “certain payments to foreign payees if such payees do not comply with FATCA.”
Thorn Law Group: Advising Individual Taxpayers and FFIs
The legal team at Thorn Law Group is well positioned to advise clients on complex tax issues associated with their offshore accounts and other foreign financial assets. Our attorneys are very familiar with the reporting requirements individual taxpayers must meet under FATCA and other U.S. tax laws and regulations. We make certain that our clients understand their legal obligations and are taking appropriate steps to bring their offshore accounts and assets into full compliance with the law. Our tax law firm also assists foreign financial institutions (FFIs) with IRS reporting requirements and works with FFIs to design effective FATCA compliance strategies and programs.
If you have questions about what may be required under FATCA or are concerned about your offshore or foreign financial accounts, contact Kevin E. Thorn, Managing Partner of Thorn Law Group today. Our legal team represents clients across the United States and around the globe and can be reached at:
Washington D.C. Office:
(202) 349-4033
New Jersey Office:
(201) 842-7696
Boston Office:
(617) 692-2989