Morocco Signs on to the Foreign Account Tax Compliance Act
The United States has taken a hard-line approach on tax compliance for assets held in foreign countries. Those who hold these assets and fail to comply with tax laws face serious penalties. These penalties can include jail time.
Part of this effort involves the Foreign Account Tax Compliance Act (FATCA).
What is FATCA? The law was passed under President Obama in 2014. It requires qualifying Foreign Financial Institutions (FFI) to report bank accounts held by United States citizens to the Internal Revenue Service (IRS).
Critics of the law state that it has “left the impression that the U.S. is getting too extreme and greedy with its taxation laws.” This type of critique is supported by the fact that even those who do not live within the United States or identify as Americans can be impacted by this law. Simply being born within the United States is often enough to result in required compliance.
Why would countries agree to comply with the FATCA? In short, money talks. A failure to comply can result in stiff monetary penalties. This penalty can result in a fine of up to 30 percent of all United States sourced income to the non-compliant FFI.
Are countries participating? Yes. At this time over 100 countries comply with the reporting requirements of the FATCA.
The most recent country to join is Morocco.
What should you do if you have foreign assets? Those who own foreign assets or have signature authority over such assets are wise to comply with tax laws. Legal counsel can provide guidance if you are unsure if your accounts are in compliance.
