Govt. to Target Tax Money Hidden Overseas

Last updated on December 25, 2012

The Treasury Department will soon come up with new rules regarding offshore assets of U.S. taxpayers. Foreign Account Tax Compliance Act (FATCA) is set to publish its new regulations for increasing compliance regarding foreign financial assets in January, 2013.

After the busting of a Swiss banking scandal, it was found that millions of dollars were hidden in various overseas banks by American taxpayers to evade taxes. It was after this discovery that FATCA was enacted in 2010. The act has received mixed reactions. Some are of the opinion that it is discriminatory because taxpayers are required to disclose pension plans, foreign bank accounts, annuities and property only because the assets are held overseas.

Under FATCA, U.S. taxpayers are required to report all overseas assets to the IRS when filing taxes if they are above the decided threshold. Also, foreign financial institutions must share information with the IRS about financial accounts owned by U.S. citizens in their country. Those U.S. taxpayers who have a substantial ownership interest even if a foreign entity or entities own the account(s) must report it to the IRS.

International businesses are waiting to see the new rules so that they can plan their taxes accordingly. FATCA was to publish the new rules in September, 2012. More delay will mean that businesses will have lesser time to prepare their taxes. Companies will need to wait till January to see whether they need to wait more or not.