In its ongoing initiative to uncover offshore tax evasion by US taxpayers, the IRS has announced the exchange of financial account information with foreign tax administrations. This exchange is part of an overall effort to implement the Foreign Account Tax Compliance Act (FATCA).
Generally, FATCA requires withholding on certain payments made to foreign financial institutions (FFIs) unless the FFIs agree to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities where the US taxpayers hold a substantial ownership interest.
Now, with the information exchange, the IRS will have the assistance of its counterparts in other countries. To achieve this, the IRS developed an information system infrastructure, procedures, and data use and confidentiality safeguards to protect taxpayer data. The system facilitates the reciprocal and automatic exchange of tax information with selected foreign jurisdiction tax administrators under the intergovernmental agreements (IGAs) implementing FATCA.
The Service will only perform reciprocal exchanges with foreign jurisdictions that meet stringent safeguard, privacy, and technical standards.
Questions? Contact your Berdon advisor or Marc Ausfresser, J.D., LL.M. at 212.331.7639 | firstname.lastname@example.org