Full form of FATCA: The Foreign Account Tax Compliance Act (FATCA) is a US tax law that requires foreign financial institutions (FFIs) to report information on their US account holders to the IRS. The goal of FATCA is to prevent tax evasion by US taxpayers who have offshore accounts and assets. To satisfy these requirements, FFIs must collect information about all of their US account holders. The IRS then uses this information to verify that each person is eligible to pay US taxes, including the applicable taxes and penalties for not complying with the tax laws.
As of January 1, 2018, the deadline for compliance with FATCA was extended from July 1, 2017 to June 30, 2018. However, if one does not comply by the deadline, they will still be subject to penalties and possible criminal investigations by the IRS.
The Foreign Account Tax Compliance Act, known as FATCA, is a US law that requires foreign banks and other financial institutions to report certain information about their US customers to the Internal Revenue Service.
The goal of FATCA is to better track US citizens who have hidden and undeclared accounts overseas. By ensuring that banks are reporting all transactions, the IRS can better keep track of Americans who may be evading taxes. Other countries have similar laws aimed at tracking tax avoiders.
FATCA has been met with mixed reactions from financial institutions and taxpayers. Some say it will slow down business and make it harder to conduct international payments. Others argue that it goes too far by requiring foreign banks to disclose private information of their customers without cause or proof.
The law was passed in response to the growing problem of offshore tax evasion and has been a major success in curbing the practice. In 2014, FATCA collected over $6 billion from more than 100,000 taxpayers who had hidden assets in foreign bank accounts or invested offshore. This money was then used to fund important public services like the military and health care programs.
FATCA has been a critical part of the government’s efforts to comply with its tax obligations and enforce our tax laws at home and abroad
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