FATCA Reporting

About FATCA Reporting

The Foreign Account Tax Compliance Act, enacted in 2010, requires foreign financial institutions to report information about financial accounts held by US taxpayers to the IRS. FATCA was designed to combat offshore tax evasion by US citizens. Foreign banks that do not comply face a 30 percent withholding on US source payments. Over 110 countries have signed FATCA intergovernmental agreements. FATCA has been controversial because the US taxes citizens on worldwide income regardless of where they live, one of only two countries to do so alongside Eritrea. FATCA has made it difficult for Americans living abroad to open bank accounts, as some foreign banks refuse to serve US customers rather than comply with FATCA reporting requirements.