FATCA automatic data exchange begins

The Internal Revenue Service has kicked off a new program under which it shares large amounts of individuals’ financial-account information with certain foreign countries, the agency said Friday.

The IRS said it received digital information about U.S. taxpayers’ foreign accounts from governments and firms around the world, and it sent information on foreigners’ U.S. accounts to government authorities in as many as 34 countries. While governments have exchanged such information in the past, the sharing wasn’t automatic and the scope was often far narrower. The deadline for the exchange to begin was Sept. 30.

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The information exchanged typically includes the name, address, tax identification number, account number, account balance, and dividend and interest payments, among other things. This disclosure applies to accounts above a certain threshold.

The automatic digital information exchange was developed under the Foreign Account Tax Compliance Act, or Fatca, an enforcement program Congress enacted in 2010 after learning that foreign financial firms, especially in Switzerland, were encouraging U.S. taxpayers to hide money abroad. Since then, more than 50,000 U.S. taxpayers have entered an IRS limited-amnesty program and paid more than $7 billion in connection with undeclared offshore accounts.

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After Fatca was enacted, some countries expressed interest in receiving financial account information about their residents from the U.S., and U.S. authorities authorized such exchanges through bilateral agreements.

In addition, the OECD countries opted to follow Fatca by developing a similar protocol for the automatic exchange of account data. Although not yet fully implemented, the OECD’s “common reporting standard” is expected to be similar to Fatca’s, in a bid to ease information exchange among countries.

http://www.wsj.com/articles/irs-begins-sending-individual-account-information-to-foreign-countries-1443810584