The Foreign Account Tax Compliance Act (FATCA) was enacted in the U.S. in March 2010 to target US Persons that are concealing assets held in foreign accounts.

Impact On Account Holders: The Big Stick

How does it affect those receiving U.S. sourced income? After paying out, the payor provides a breakdown to the IRS including any amounts with-held. The IRS, in turn, will do a comparison against the returns and declarations made by the recipients. If tax or returns are outstanding, then that opens the possibility of audit and a range of criminal or civil penalties. A strong incentive to stay on the right side of compliance.

Impact on Foregn Financial Institutions

Foreign Financial Institutions often have heightened requirements for reporting and compliance. Non-US entities generally treated as FFIs are private investment companies, banks, hedge funds, private equity funds, broker-dealers, portfolio managers, investment advisors, trust companies, private trusts, and certain insurance companies. To meet these requirements they need to put in place sufficently robust processes and teams to provide assurance to the IRS and deliver the level of compliance required.

At DivDoc, with you and your chosen advisors we'll take a realistic approach in addressing your concerns. Our goal is to deliver a customised client experience that meets your needs but is cost-effective and relatively simple to implement.