FATCA requires offshore trust accounts to disclose information to the IRS or face penalties or U.S. sanctions on funds transfers.
The Foreign Accounts Tax Compliance Act (FATCA) has created a slew of new requirements for United States citizens with funds and income in offshore accounts. In addition to requiring citizens and foreign financial institutions to disclose information regarding personal and business accounts with U.S. owners, beneficiaries, or signatories, the law also requires the disclosure of foreign trust accounts. Recently, trustees of private family trusts with U.S. ties are being advised to comply with the new FATCA obligations. This includes individuals who may be beneficiaries or signatories on such accounts.
What does this mean for trusts?
Information regarding the deadline for disclosure reporting from trust accounts has been ambiguous. The Financial Times (FT) recently published an article about this process, and urged citizens who this may involve to research the new requirements under FATCA and take the necessary steps to remain compliant.
According to U.S. tax authorities, investment-based trusts can be considered a “financial institution” if they are managed by a discretionary fund manager. Because of this definition, those parties would be responsible for disclosing information in the same way a foreign bank would and face the same penalty of a 30% sanction on all U.S.-based funds transfers.
What this means for trust accounts is that taking the time to understand the regulations surrounding FATCA should be a priority. Law firms such as Freeman Tax Law are uniquely qualified to represent and support individuals and financial institutions through this process. Freeman Tax Law is able to represent clients before the IRS and also has the unique capability to assign a CPA to each client to assist with submitting all the necessary documentation and disclosure forms required for FATCA compliance.
“FATCA has many far-reaching consequences for those who have income, assets, an accounts abroad,” shares Jeffrey S. Freeman, J.D., LL.M. . “I have a very unique background both with accounting firms and international tax law that enables me to provide comprehensive services for my clients to help them negotiate the requirements of FATCA compliance.”
Professional Law Firms Can Ensure Compliance
Passed in 2010, FATCA has gone into effect as of July 1, 2014. For this reason, it is imperative that individuals and foreign financial institutions consider the steps they need to take to ensure compliance. In some cases, amnesty programs have been put in place for qualified applicants to disclose information from previous years without facing penalties or criminal charges. Fines for non-compliance can be expensive, and the U.S. government has already made it clear that those who willfully fail to disclose information may also face criminal charges if discovered. By partnering with an experienced professional tax firm like Freeman Tax Law, individuals and companies can help ensure they meet all requirements and avoid unfavorable penalties and sanctions.
About Freeman Tax Law
Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws. FTL provides a multidisciplinary approach for filing offshore voluntary disclosures. Working to help clients prevent future tax headaches we offer a complete wealth management and estate planning team. As an experienced firm with wide reach, Freeman Tax Law provides immediate assistance to our clients planning for and resolving all tax related challenges.
Freeman Tax Law