The Foreign Account Tax Compliance Act (FATCA) is a US law that requires foreign financial institutions to report to the US government information about financial accounts held by US taxpayers.
To comply with FATCA, banks must collect and report certain information about their customers, such as their name, address, and taxpayer identification number, to the IRS (via the national tax office). Banks must implement policies and procedures to comply with the law and provide the required information to the IRS in order to cooperate with FATCA. Noncompliance results in extremely high fines for the financial institution.
It makes sense for the financial institution and its compliance department to pass on this information. It is a huge burden for many people. Due to the complex reporting process, banks no longer hire people with a US tax liability, and so on.
Many citizens in Europe, and especially in other parts of the world, are unaware of their American citizenship or the tax liability that comes with it. These are not, as the US government sometimes claims, fraudsters, money launderers, or wealthy individuals attempting to avoid paying taxes.
Because they have spent the majority of their lives living and growing up outside the United States, 90% of these people are genuinely unaware of US citizenship laws, rights, and obligations. Due to FATCA legislation and a lack of proper information for this group of people, many get into trouble because they discover they have defaulted through their bank or, worse, through a letter from the IRS.
FATCA is a burden for the American expatriate and the so-called “Accidental American”. For years, Expats Overseas, a division of Americans Overseas, has advocated for a good long-term solution. In the meantime, we provide a wealth of free information and a referral to a professionally experienced and a referral to a professionally experienced affordable network of professionals.
Expats Overseas has a large network of CPAs with the necessary qualifications, experience, and cost-effective services. Contact us for a free and no-obligation discussion of your options.
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