The Foreign Account Tax Compliance Act (FATCA) is a U.S. law that requires foreign financial institutions (FFIs) to report information about their U.S. account holders to the Internal Revenue Service (IRS).
Under FATCA disclosure , FFIs are required to provide the IRS with information about their U.S. account holders, including the account holder's name, address, and taxpayer identification number (TIN). If you are a U.S. person with financial interests in or signature authority over foreign financial accounts, you may have to file an FBAR (Foreign Bank and Financial Accounts Report) with the Department of the Treasury. You will also have to report your income from these accounts on your annual tax return.
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The Foreign Account Tax Compliance Act (FATCA), enacted in 2010, requires U.S. taxpayers with foreign financial assets to report those assets to the IRS. FATCA also requires foreign financial institutions to report information about their U.S. clients’ accounts to the IRS.
The purpose of FATCA is to help the IRS identify U.S. taxpayers who are using foreign accounts to avoid paying taxes on their income. By requiring taxpayers to report their overseas income and foreign financial assets, FATCA makes it difficult for taxpayers to hide their income from the IRS.
If you don't comply with FATCA reporting requirements, you may be subject to civil and criminal penalties. So it's important to make sure that you understand your obligations under FATCA and file any required reports on a timely basis.
