We’ve written on this blog in the past about the renewed efforts by the Internal Revenue Service (IRS) to enforce anti-tax evasion laws. One of these efforts include cooperation with foreign governments and new agreements on disclosure of Americans who have bank accounts abroad.
The new initiatives have been somewhat controversial, but ultimately are set to go into effect next year. However, one watchdog group says that despite copious spending and 19 months of preparation, the IRS might not be fully prepared to start the program and enforce the new laws.
The Treasury Inspector General for Tax Administration released a report indicating that additional investments in computers and staff training will be necessary in order to administer the law, known as FACTA (Foreign Account Tax Compliance Act). Somewhere between 200,000 and 400,000 banks are expected to register with the Internal Revenue Service in order to come into compliance. Critics say the report supports other lobbying efforts by banks to delay the law, as many financial institutions are still scrambling to create the necessary system for full compliance.
For taxpayers who may be impacted by FACTA, this information means a few things. First, it means there may be a small delay that enables taxpayers to continue their own work to voluntarily disclose overseas accounts to the IRS. Second, it means that the first months or even year of the law’s enforcement could be a bit rocky, so it is important to prepare with a tax law professional to make sure all of one’s personal issues are in order and properly documented in the event that the IRS makes erroneous allegations or if there are other issues.
Source: Reuters, “U.S. IRS not fully ready for law against offshore tax evasion – watchdog,” Dec. 5, 2013.