Anyone who is a citizen of the United States must provide annual reports of money and assets held in accounts located in offshore financial institutions. This requirement was established by the Foreign Account Tax Compliance Act (FATCA) in an effort to help fight tax evasion. Because some individuals do not voluntarily report their accounts as required, the U.S. government is also seeking to obtain information from foreign financial institutions (FFIs).
FATCA includes provisions stipulating that foreign financial institutions should turn over information annually on U.S. accounts held in their institutions, but FATCA created issues because several local privacy laws in many countries were incompatible with FATCA. That being the case, the United States and foreign countries began entering into intergovernmental agreements in order to facilitate the enforcement of FATCA's reporting requirements.
Countries throughout the world began signing FATCA agreements in 2012. Recently, India also signed an agreement with the United States for the implementation of FATCA. Under the terms of the newly-signed agreement entered into in July of 2015, the exchange of information would go both ways and would begin in October. India will receive information from U.S. institutions about their citizens who invest in the United States, and the United States will receive information about U.S. citizens with foreign accounts in India. Under the multilateral agreement, India will also be receiving information from other countries as well and will be participating in the automated exchange of information beginning in 2017.
Because so many different locations worldwide now share information about accountholders, anyone with funds offshore needs to be aware they will be unable to keep their account information private. The U.S. government is likely to find out about offshore funds, if they haven't already. If you have not been reporting those funds as required annually, you need to speak with a Boston tax evasion attorney today. You may have options for minimizing penalties and avoiding criminal prosecution, but your options narrow after an investigation into your accounts has already begun.
India Enters Into FATCA Implementation Agreement
France, Germany, Italy, the United Kingdom, Spain, South Africa, Germany and Japan all entered into agreements for the implementation of FATCA in 2012. India now becomes one of many countries participating in the exchange of information.
Under FATCA's provisions, foreign financial institutions must go through all of their records to find accounts that could be connected to United States citizens and must provide information about those accounts to authorities. If a financial institution does not comply with FATCA's mandates, the institution faces a penalty of 30-percent of all U.S. revenue, including money from dividends, taxes and fees.
Financial institutions have sometimes dropped U.S. accounts when they don't want to cope with the reporting requirements that have left people who live in other countries in a difficult situation. Most institutions, however, simply turn over information on accountholders, which can provide enough details for the government to go after accountholders suspected of evading taxes.
There are amnesty programs allowing you to voluntarily come forward if you have an account in India or another location offshore and did not report the account. You will still face financial penalties, but the amount you must pay may be significantly lower with participation in the Offshore Voluntary Disclosure Program.
You may wish to consider this option or speak with a knowledgeable tax evasion attorney about your other options if you have an account in India or elsewhere that you have not reported each year. As more locations sign onto FATCA, keeping money secret is going to essentially become impossible for U.S. citizens. Contact Kevin Thorn today to discuss the details of your case.
For a consultation, contact Kevin E. Thorn, Managing Partner, at firstname.lastname@example.org or (617) 692-2989