Increasing implementation of the Foreign Account Tax Compliance Act (FATCA) will soon cause problems for U.S. holders of unreported bank accounts in India, according to many tax analysts. FATCA is a recently-implemented U.S. law that requires foreign banks (under the threat of a 30% withholding tax on U.S.-source payments) to disclose the information of U.S. account holders to the IRS for use in investigations of offshore tax evasion. It has been reported that many U.S. citizens have been moving their money to banks in India, as investigation of Swiss banks by the U.S. government has increased dramatically in recent years. India is, at this time, considered a somewhat safer location for an offshore account, because unlike Switzerland, India has not yet officially signed on to an agreement with the U.S. to implement FATCA. But this will soon change, as India is expected to finalize an inter-governmental agreement with the U.S. in the very near future, which would put in motion the mechanisms of FATCA enforcement on Indian banks. Once a taxpayer’s name and account information is disclosed to the IRS by their foreign bank, that taxpayer will be put under investigation, likely assessed substantial penalties, and will no longer be eligible for IRS voluntary disclosure programs like the Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Filing Procedures. These disclosure programs allow taxpayers to pay lesser penalties and, in the case of the OVDP, potentially gain amnesty from criminal prosecution, all in exchange for coming forward to the IRS voluntarily about unreported offshore accounts. As IRS enforcement intensifies and more countries finalize agreements to cooperate with the U.S. government, it will be increasingly difficult for U.S. taxpayers to hold offshore accounts without severe consequences. If you have an unreported foreign bank account, in India or otherwise, contact the experienced international tax attorney at Daniel Rosefelt & Associates, LLC, Attorney & CPA now to discuss your legal options.
FATCA Causes Problems For U.S. Holders of Accounts in India
Facebook
Twitter
LinkedIn
Daniel Rosefelt
Daniel Rosefelt is one of the founding partners of Fried & Rosefelt, LLC. Mr. Rosefelt focuses his legal practice on representing individuals with complex tax and financial problems.
All Posts »