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  • Tabitha Paddock of Greenback Expat Tax Services – Best Places In The World To Retire User Account Answered by Tabitha Paddock - Greenback Expat Tax Services
    Posted April 11, 2013

    0 9

    FATCA (Foreign Account Tax Compliance Act) is an anti-money laundering measure that the government put in place to stop terrorists and tax cheats. Although its original aim was not at expats, many have gotten caught in its web. The international banks, and fund managers with US clients, are also being negatively affected.

    FATCA basically requires foreign financial institutions to report any of their clients who are US citizens to the IRS. If they fail or refuse to do so, they will be counted as “non-participating” and liable for a 30% withholding tax on all American assets. Unfortunately, as the American equity and bond market is the largest in the world, they feel obligated to register.

    The IRS has this in place to ensure all financial and bank accounts are reported to both the IRS (Form 8938) and the US Department of the Treasury (Form TD F 90-22.1, or the FBAR). Do not be surprised if you find financial institutions or meet fund managers who are not interested in American clients; penalties for delinquency are put on the fund manager, meaning it could be quite expensive for them to accept you as a client if the necessary reports are not filed, and the reporting can be extensive and expensive.

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