How does the U.S. Government Encourage Foreign Asset Reporting?
The United States government recognizes that unreported foreign assets translate to lost revenue. Various efforts are made in an attempt to recoup some of these losses. Three examples include:
- Foreign Account Tax Compliance Act (FATCA). As noted in a recent piece in HuffPost, one of the main tools used by the government to gather information about foreign assets is the FATCA. The FATCA became law in 2010. It requires foreign financial institutions to report foreign assets held by United States citizens. A failure to do so can lead to serious monetary penalties to the financial institution.
- Swiss Bank Program. This program focuses specifically on financial institutions in Switzerland. Essentially, it provided an opportunity for banks that were not in compliance with United States tax laws to avoid criminal liabilities. Financier Worldwide notes that this was achieved by disclosing information about criminal activities and applying compliance measures.
- Prosecution. The United States government has also stood behind its threats against those who fail to come into compliance with tax laws. In addition to holding individual taxpayers accountable for these reporting requirements, the Department of Justice has successfully prosecuted financial institutions throughout the world that fail to meet these obligations. Two examples include institutions found in both Switzerland and the Cayman Islands.
A combination of laws, programs, and criminal prosecution are just a few of the tools used by the government to encourage compliance with tax laws. Those who are concerned they are not in compliance with FATCA obligations or other foreign account reporting obligations are wise to seek legal counsel. An attorney experienced in these matters can help to ensure you are meeting your obligations.
