Offshore Assets Now Under Scrutiny

Last updated on December 24, 2012

Demand for money in tax shelters in various foreign countries to be brought back into the country is rising. The Treasury Department is soon going to publish new rules regarding offshore assets of U.S. taxpayers. After missing the September deadline, the new rules are expected to be published in January, 2013.

Foreign Account Tax Compliance Act (FATCA) is going after assets of American taxpayers that are held in tax shelters. FATCA was enacted in 2010 after a Swiss banking scandal was discovered and it was found that American taxpayers had hidden millions of dollars in various tax shelters in the country.

Many are in opposition of FATCA because they believe it discriminatory to report on pension plans, foreign bank accounts, annuities and property only because the assets are held overseas.

Under FATCA as it stands now, U.S. taxpayers are required to report all assets held in foreign financial institutions to the IRS. Also, foreign financial institutions are required to share information about financial accounts owned by U.S. citizens.

The United States currently has FATCA deals with U.K., Mexico and Denmark. Deals with Spain and Switzerland have been initiated. Apart from these countries, deals are underway with around 50 other countries. The new rules by the Treasury Department will make hiding assets offshore difficult to U.S. taxpayers.