The IRS flexed more of its global dominance today, announcing the opening of the International Data Exchange Service, or IDES. Financial institutions worldwide will now utilize this system to send information reports on their US clients as per the FATCA agreements.
For those of you who do not know, the Foreign Account Tax Compliance Act, or FATCA, has been the one of the sexier points in the tax profession in the last few years. It requires foreign banks to disclose the identity and personal details of US citizens or residents who maintain accounts over $50,000. This law has extraordinary power and has forced more than 145,000 financial institutionsto comply through more than 110 intergovernmental agreements.
FATCA, coupled with taxpayer programs like the OVDP (Offshore Voluntary Disclosure Program) and the Streamline Offshore Filing Compliance procedures has allowed the IRS to collection more than $6 Billion in back taxes, interest and penalties from previously non-reporting taxpayers.
With this new Data Exchange the IRS is sure to make good on its promise to identify more non-reporting taxpayers for huge penalties and even possible criminal charges. These institutions will disclose, and soon. So wavering taxpayers should take heed and rush into a protective program before it is far too late.
Benjamin Goldburd is an Associate at Goldburd McCone LLP a boutique tax law firm in New York City.
For more information on these and other tax issues feel free to contact our offices at 212-302-9400, or on the web at www.goldburdmccone.com