The Foreign Account Tax Compliance Act (FATCA) requires U.S. citizens and businesses with holdings outside the United States to report them to the Internal Revenue Service (IRS). Foreign banks and other financial institutions also must report to the IRS about the accounts held by U.S. nationals.

If you live outside the United States but maintain your ties to the country, or if you reside in the U.S. but maintain financial accounts or other investments offshore, you might be subject to this reporting requirement. An Alexandria FATCA lawyer could explain the rules and determine whether you have a reporting obligation under the law. If you have not made the required reports timely, a methodical tax lawyer could prepare the filings to bring you into compliance and resolve any outstanding issues concerning tax liability.

Who Does FATCA Apply To?

Not every person and entity with foreign holdings has an obligation to file under FATCA. Someone might have to file a FATCA report, Form 8938,  if they have assets or business interests abroad and they are a:

  • S. citizen
  • Lawful Permanent Resident of the U.S.
  • Alien who is a resident of the Puerto Rico or American Samoa

U.S. citizens living abroad must also comply with FATCA disclosure requirements.

Not all foreign interests and holdings are subject to FATCA – they must exceed a threshold amount. If the taxpayer is single and resides in the U.S., they must have at least $50,000 in eligible foreign assets on the last day of the year or at least $75,000 at any date during the year. If the taxpayer resides abroad, a single person must make a FATCA disclosure if their foreign assets exceed $200,000 on the last day of the tax year or $300,000 on any day during the tax year. The thresholds are doubled for married taxpayers filing joint returns.

There will be consequences for failing to make a required FATCA disclosure and an Alexandria attorney could review the situation to determine whether disclosure is necessary in a specific case.

Holdings Subject to FATCA

FATCA requires disclosure of certain foreign holdings if the total value of those holdings meets the threshold amounts. However, not all foreign-held assets are subject to FATCA.

Taxpayers must disclose all money held in foreign banks. In addition, they may be required to disclose the following non-cash foreign assets:

  • Stocks issued by foreign corporations
  • Foreign insurance policies
  • Interests in foreign businesses
  • Registered Canadian retirement plans
  • Foreign inheritances
  • Interests in a foreign trust or foundation

Determining whether holdings are subject to FATCA and meet the threshold value can be a complicated matter. An Alexandria attorney could evaluate whether FATCA disclosure is necessary, and if so, help them complete and submit the necessary forms.

FATCA and Other Foreign Reporting Requirements

Taxpayers with foreign holdings may be required to file disclosures under both the FBAR and FATCA laws. Depending on the type of holding and its value, a taxpayer might need to file under both laws or only one.

In general, FBAR applies to cash holdings in foreign financial institutions. The value thresholds for reporting in this situation are much lower than for FATCA.

Some people holding foreign financial assets are unaware of the requirements to report under FBAR and FATCA and might neglect to file. Depending on certain factors, a lawyer could utilize several options to bring a delinquent taxpayer into compliance and maintain that compliance going forward.

Consult an Alexandria FATCA Attorney if You Have Concerns About Reporting Requirements

When you are a U.S. taxpayer and you live abroad or have financial holdings in another country, staying in tax compliance is critical. The IRS devotes significant effort to ensuring taxpayers do not hide assets.

Contact an Alexandria FACTA lawyer for help with foreign asset reporting issues. They could review your situation, assess whether you need to report your holdings, and bring you into compliance if you have neglected to file disclosures in the past. Call to speak with a member of our team today.

Attorney John Pontius

Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC,  Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.

Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.

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