Goldburd | Goldburd McCone LLP

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Goldburd | Goldburd McCone LLP

For nationwide tax guidance, call: 212-302-9400 or toll-free at 844-653-2873.

Serving Individual And Corporate Tax Clients Nationwide From Our New York, New Jersey, Florida And California Offices

Steven Goldburd and Benjamin A Goldburd

Since 1983, our tax firm has skillfully represented individuals and corporations across the United States and around the globe from our offices in New York, New Jersey, California and Florida.

What tools does the IRS use to exchange tax information with other countries?

On Behalf of | Oct 16, 2024 | Foreign Account Tax Compliance Act (FATA)

The Internal Revenue Service (IRS) uses many tools to gather tax information about financial holdings United States citizens have in other countries. One of the most notable is the Foreign Account Tax Compliance Act (FATCA). This federal law essentially requires foreign financial institutions report any accounts held by United States citizens to the IRS. A failure to do so can result in financial penalties and other ramifications for the offending institution.

The IRS may also make a request through the Exchange of Information (EOI). The EOI allows sharing of tax related information between countries for tax enforcement purposes by making requests through legal paths which can include:

  • Treaties. Tax treaties include provisions that guide tax-related information, often with the goal of reducing the risk of double taxation.
  • TIEAs. Tax Information Exchange Agreements (TIEAs) are agreements between two countries that guide how the partner countries will share tax information.

These are just a few of the tools authorities will use when looking to see if a taxpayer is attempting to avoid their tax obligations to the United States.

The United States is not the only country interested in taking steps to better ensure global cooperation for tax compliance matters. United Nations Secretary-General Antonio Guterres recently released a report calling for an update to the international financial architecture to better address this issue. The report includes a focus on increasing reporting efforts involving developing nations as well as required publication to provide beneficial ownership information for all legal vehicles on a global scale.

Even so, the United States has a reputation for aggressively pursuing taxpayers who fail to report foreign accounts. It is important that those who hold these accounts review their practices to make sure they are in compliance with applicable tax laws.

It is also important to act to protect your interests if you find yourself the subject of an official tax audit. Those who have foreign accounts are wise to seek legal counsel with experience in this niche area of tax law. The attorneys at Goldburd McCone have experience in these complex cases and can advocate for your interests, better ensuring a more favorable outcome.