Offshore Accounts Disclosure Act Gets Back $5.5 billion in Taxes

Last updated on March 12, 2022

Under a new act from the U.S. government, the IRS can access information from hidden offshore accounts of American taxpayers. Agreements with countries, such as Switzerland, Israel, India, Hong Kong, and Singapore will make it possible for the IRS to go after taxpayers who evade taxes by keeping their unaccounted money in offshore accounts. The new law has been successful in getting back $5.5 billion in unpaid taxes so far.

RT shares how the new enforcement action came into being and will help curb tax evasion:

“US tax officials are greatly relying on Foreign Account Tax and Compliance Act, or FATCA, a federal law that was approved in 2010 and takes effect in 2014. Fatca will force foreign institutions to disclose the names of customers who are US taxpayers without fail.

Countries or individual companies can sign agreements to abide by Fatca rules. In case they decline to sign on for joint battle, then U.S. companies, investment firms and banks must withhold 30% of payments such as dividends to account holders.

Nine countries so far have signed or provisionally approved Fatca agreements with the US, while another 40 are in negotiations, according to publisher Tax Analysts, the Wall Street Journal reported.

However, experts say it’s unlikely China, which includes the Special Administrative Region (SAR) of Hong Kong, will comply with the act. It is also unlikely the US will impose the 30% tax.”

Politics will play a part in which countries the U.S. is able to get negotiate with under the new act. FATCA agreements will soon be made with more than 40 countries.

The government is looking to increase revenues from every source. “The government has no intention of letting up in its relentless pursuit of wealthy Americans with secret accounts offshore, and soon it will have even more tools to work with” said Mark Matthews, former chief of the IRS’ Criminal Investigation unit.

Offshore accounts have been widely used by wealthy citizens to keep unaccounted income from not only in the U.S. but around the world. The U.S. government’s initiative to crack down on offshore accounts has been welcomed by average taxpayers whose tax burden increases because of tax evasion.

The IRS will focus on taxpayers with dual citizenship, corporations, and the ultra rich. Financial firms are also preparing to protect themselves against FATCA. Any firm that has clients with offshore accounts with unaccounted income will be penalized by the state.

FATCA will increase tax compliance, but only if the IRS is successful in pursuing these cases on a regular basis.