FAQ 1: Foreign Account Tax Compliance Act (FATCA), Report of Foreign Bank and Financial Accounts (FBAR)

Q: What should I do if I receive a Foreign Account Tax Compliance Act (FATCA) letter from my foreign financial institution?

A: The foreign financial institutions send FATCA letters to account holders because they are required to share the information of US persons (i.e. US citizens, residents, and domestic businesses) with the IRS. These FATCA letters request the account holders to confirm whether they are a US person. Even if the account holders do not reply to the FATCA letters, the foreign financial institution will share the account information with the IRS. If a taxpayer has not fully reported his or her worldwide income or reported the foreign accounts on an FBAR, the taxpayer should speak with a tax attorney to discuss resolution options upon receipt of a FATCA letter.