Feds Give International Tax Dodgers Extra Six Months

The federal government announced in July 2013 that another delay is needed before Uncle Sam starts enforcing a law targeting international tax scofflaws. So, good news, tax dodgers.

More Time Needed to Finalize International Agreements

Congress passed the Foreign Account Tax Compliance Act in 2010 as a measure intended to recoup some of the $100 billion the U.S. government loses out on every year due to Americans hiding money overseas.  A Swiss banking scandal triggered public debate and the need for the legislation.

But it turns out foreign banks needed more time to navigate the law and learn it well enough to comply with its requirements. They have delayed this before. Initially, they planned to begin enforcement in 2013. But the Treasury Department gave international financial institutions until April 25, 2014 to register. Additionally, these institutions have July 1, 2014 to face penalties.

Under the law, foreign banks, investment funds, and insurance companies must give certain information to the IRS about Americans’ offshore accounts with at least $50,000 in value. The law required agreements with foreign governments, but some foreign capitals needed an extra six months to smooth out the details.

The government completed agreements with Denmark, the British, Mexico, Ireland, and Switzerland, among others. But they continue to negotiate scores of these financial agreements.

What This Means for Tax Dodgers

It does not matter whether it’s an international corporation or the average Joe working for that corporation. The Internal Revenue Service takes a stern attitude toward tax scofflaws. Finances – and taxes – can become a messy situation without appropriate oversight and management. But negligence or mistakes don’t buy any leniency.

But working with a tax professional can help clear up a taxing situation that’s become unmanageable. Whether the delinquency is domestic or foreign in nature, tax dodgers have a way out.

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