Some readers may already be familiar with a law known as FACTA, short for the Foreign Account Tax Compliance Act. FACTA is an anti-tax evasion law in the United States that impacts foreign transactions and is one that requires cooperation from other countries on issues of reporting and financial regulation.
Several European countries have already begun cooperating with the requirements of the law, which has caused disclosure of offshore accounts held by Americans. In some of those cases the account holders have been accused of intentional tax evasion as a result of the reporting.
Recently leaders in France announced that they would be cooperating with FACTA. The Prime Minister signed an agreement with the United States Ambassador to France to that effect. The agreement will put into action an automatic information exchange between the two countries to fight international tax fraud.
For U.S. citizens who hold accounts in France or elsewhere, this development raises a lot of questions. Mainly, people will want to know whether or not they have been compliant with tax laws and if not, what they can do to rectify the situation. The United States has been offering amnesty for individuals who want to voluntarily disclose overseas assets and pay their owed taxes. However, it is important to be careful in taking advantage of these types of programs and to consult with a professional to get a better understanding of the situation and the various choices before making any major decisions about whether to disclose and how to go about disclosing.
Source: New York Times, “U.S. and France Agree to Cooperate More Intensively Against Tax Evasion,” Brian Knowlton, Nov. 14, 2013.