FATCA: Foreign Bank Accounts Offshore (Completed)

The Foreign Account Tax Compliance Act (“FATCA”) is found in Sections 1471–1474 of the Internal Revenue Code. The Act requires U.S. persons to report specified foreign financial assets to the IRS on Form 8938 with their U.S. tax return. The purpose of FACTA is to combat the perceived tax evasion of certain U.S. persons through offshore (i.e., non-U.S.) accounts and investments. The rules require U.S. persons to disclose foreign financial accounts and foreign assets.

The IRS enforcement of the Act is particularly aggressive and the scope is enormous casting a wide global net: the IRS has engaged with more than 110 countries who have entered into FATCA Agreements. Further, with 300,000 Foreign Financial Institutions (FFIs) on board, FATCA reporting will remain a permanent feature of the tax compliance landscape and a harsh reality for millions of U.S. taxpayers.

Topics Covered

• FATCA requires withholding agents to collect U.S. tax withholding certificates (i.e., Forms W-8 and W-9) to document the identity of US persons for FATCA compliance of accountholders and investors
• FATCA is fundamentally an information-reporting regime. To achieve its information reporting goals, FATCA requires that U.S. withholding agents ("USWAs") and foreign financial institutions ("FFIs") document their payees or account holders in order to identify U.S. persons and certain non-U.S. entities with U.S. owners
• The determination of whether FATCA withholding is required is documentation driven. This means that a withholding agent must determine, based on the specific documentation rules in the U.S. FATCA regulations, whether it is making a payment to a compliant person
• The collection and review of appropriate documentation are the most important aspects of compliance with the FATCA information reporting and withholding regime

Learning Objectives

• Recognize which U.S. tax withholding certificates to document the identity of US persons for FATCA compliance of accountholders and investors
• Identify what FATCA requires for documentation of payees or account holders in order to identify U.S. persons and certain non-U.S. entities with U.S. owners
• Recognize the most important aspects of compliance with the FATCA information reporting and withholding regime

Level
Basic

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (1 hour)

Program Prerequisites
None

Advance Preparation
None