Snap Fact #193
President Obama Successfully Endorsed and Supported an Act To Close Offshore Tax Avoidance Loopholes!
More often than not, significant change takes a long time from inception by virtue of an Act passing Congress, and implementation of that law. In many of these cases the opposition does all it can to delay or kill the passed Bill.
Today’s SNAP-CAP was introduced and passed in 2009, the effective date is New
Years Day of 2013. This Act will be one of many far-seeing bricks in the wall that will help support the enhanced recovery during President Obama’s second term.
On October 27, 2009, the “Foreign Account Tax Compliance Act of 2009” (“FATCA”) was introduced by Democratic members in the House and in the Senate based on proposals included in President Obama’s 2010 Budget.
Motivated by incidents of U.S. citizens failing to report foreign account information, FATCA would broaden required disclosure and reporting by foreign financial institutions and other foreign entities (including, in general, foreign hedge funds, private equity funds and other investment vehicles) regarding U.S. account holders.
U.S. taxpayers and their financial advisors would be required to furnish information regarding foreign assets and transactions involving certain foreign entities. These information reporting requirements are backed up by expanded withholding and penalty provisions.
FATCA is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts. Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. In addition, it will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
Short Summary: The Foreign Account Tax Compliance Act of 2009 - Amends the Internal Revenue Code to revise and add reporting and other requirements relating to income from assets held abroad, including by:
1. requiring foreign financial and nonfinancial institutions to withhold 30% of payments made to such institutions by U.S. individuals unless such institutions agree to disclose the identity of such individuals and report on their bank transactions;