Costa Rica News – For all those expats that are worried about the tax transparency laws that were to be enforced this year due to FATCA, you can put aside those worries at least for a little while longer. But Big Brother will be be able to ask for information your foreign bank accounts soon.
The IRS has always been in charge of keeping taxpayers in line and the Foreign Account Tax Compliance Act or FATCA law will tighten the rules to combat offshore tax evasion. The policy was created in 2010 by President Obama to target US citizens who skirt federal tax obligations by opening foreign bank accounts and hiding their money there.
FATCA requires foreign banks, insurance companies and investment funds to send the US IRS information about offshore accounts from its citizens that hold more than $50,000. In order to comply, banks are required to register with the IRS to ensure that they will report the relevant accounts.
Although the law was supposed to take effect July 1st of that same year, on May 2nd, 2014 the IRS announced yet another delay with the policy’s enforcement. Previous postponements were said to give banks more time to figure out how to comply and this current change will give institutions 2 more years to make sure they are reporting correctly.
This period is being called a “transition period” as it will ease the anxiety that the law has caused to the foreign institutions and take the pressure off. Penalties will not be handed out until 2016, as long as a “good faith effort” is being made towards complying with the law.
