Last month US Senator Roger Wicker (R-Miss.) introduced a budget amendment SA 621 to repeal…
FATCA Noncompliant Accounts may be Frozen or Blocked
Many of our clients with foreign accounts have received FATCA letters. The letters seek personal information regarding the account holder in order to comply with the US FATCA law.
In recent weeks, government authorities in a few foreign countries have announced that account holders that have received FATCA letters and have not responded with the requisite information would be deemed noncompliant accounts and would be frozen or blocked. It is presumed that a frozen or blocked account would be inaccessible by the account holder, with no ability to transact on the account, including withdrawals. Numerous newspapers have reported the possibility of block accounts starting May 1, 2017.
For example, the Indian mutual fund industry has announced that noncompliant accounts would be permanently blocked until compliant.
Compliance has its own costs and obligations. Under the FATCA law, financial and account information regarding an account owned by a US customer would be shared with the IRS. If the US account holder has not properly reported the existence of the account and income earned on the account on US tax returns then significant penalties would apply. As a result, we recommend to our clients that US tax reporting be cleaned up through a variety of possible IRS approved solutions prior to responding to any FATCA letter received from the foreign bank.
If you have received a FATCA letter, you must seek the advice of a tax legal professional. Failure to do so can result in significant civil penalties or a referral for criminal tax prosecution. Patel Law Offices can explain your legal situation and present potential solutions.