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FATCA Compliance & Self-Incrimination

Recently, several foreign financial institutions are trying to shift the blame of the institution’s non-compliance with FATCA onto their customers– which can cause serious problems for U.S. taxpayers.

FATCA Compliance & Self-Incrimination


FATCA is the Foreign Account Tax Compliance Act. It is an act developed to curtail offshore tax evasion while promoting financial transparency.

More than 110 different countries have entered into FATCA agreements (IGA) with the United States, to enforce FATCA -- and more than 300,000 Foreign Financial
Institutions have agreed to report.

Foreign Financial Institution Reporting

There are two main components to FATCA reporting. The first aspect of FATCA reporting is the reporting required by the actual institution, and the second component is the reporting done by the individual, business, or other U.S. person account holder with foreign accounts and assets.

Ever since the development and enforcement of FATCA, many Foreign Financial Institutions have been working to try to get their “exchange of financial data” procedures in order.

FATCA Agreements Are Bilateral

In accordance with the IGA/FATCA Agreements, both parties to the agreement agree to exchange information to each other's government.

More U.S. Account Holders than Suspected

It turns out there are many more non-compliant U.S. account holders than first suspected. These account holders never informed the foreign financial institutions of their U.S. status. (usually because they were never asked).

These account holders include: Legal Permanent Residents/Green-Card Holders, U.S. Citizens and temporary visa holders who meet the substantial presence test. As a result, the institution is now out of compliance, since it never reported the account holder information to the U.S. Government.

As a result, Foreign Financial Institutions are getting nervous that they may be out of compliance with the IRS -- and concerned about potential fines and penalties.

FATCA Letters Are Legitimate

If you receive a FATCA letter from your Foreign Financial Institution, possibly including a W-9 or W-8 BEN and asking you certify whether or not you are U.S. Person -- that is usually a legitimate FATCA letter that hundreds of thousands the Foreign Financial Institutions are sending out to current or suspected U.S. account holders.

Other “FATCA” Letters May Try to Trick You.

Alternatively, if you receive a letter from the Foreign Financial Institution requesting for you to sign under penalty of perjury a letter stating that you never updated the bank that you were a U.S. person – this is less a FATCA issue and more a "CYA" self-serving letter from you institution to try to place the blame squarely on you. You must be VERY CAREFUL before signing one of these letters, because depending on the facts and circumstances -- you may self-incriminate yourself.

The institution may even freeze or limit access to the accounts until you have complied.

If you are out of compliance, you should speak with an Attorney before making any affirmative representations or statements to the IRS.

Speak with Experienced Counsel

IRS Voluntary Disclosure law is a speciality. It is important that you speak with an experienced IRS Disclosure Attorney, which typically means:

• Around 20 years of experience representing their own clients as an Attorney
• A Masters of Tax Law (aka LL.M.)
• Enrolled Agent (EA) or CPA license
• Preferably a State Bar Board Certified Tax Law Specialist

Different Options for Amnesty

At the current time, there are 4 main options for IRS Foreign Amnesty/Voluntary Disclosure:

• IRM (Internal Revenue Manual) Voluntary Disclosure
• Streamlined Domestic Offshore Procedures
• Streamline Foreign Offshore Procedures
• Reasonable Cause/Delinquency Filings

Our Managing Partner, Sean M. Golding, JD, LLM, EA is the only Attorney nationwide who has earned the Certified Tax Law Specialist credential and specializes exclusively in IRS Voluntary/Offshore/Foreign Disclosure matters. He is a 20-year attorney with a license in both New York & California and has a Master's degree in Tax Law.

In addition, Sean is also an Enrolled Agent (the highest credential awarded by the IRS). As an Enrolled Agent, he is authorized to represent clients before the IRS nationwide.

*Less than 1% of Tax Attorneys Nationwide Are Board Certified Tax Law Specialists.

Copyright Golding & Golding, Attorneys at Law
More information about this article at Golding & Golding, Attorneys at Law

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.
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