Just when foreign financial firms thought they had enough on their plates, the heat continues to rise. International pressure to catch tax evaders is expected to be ramped up by the end of 2013 as a new inter-governmental agreement that requires information on offshore U.S. accounts with balances of more than $50,000 to be reported to the IRS goes into effect.
According to the Economic Times, the U.S. has yet to approve the agreement that is part of a 3-year-old Foreign Account Tax Compliance Act (FATCA). The purpose of the agreement is to combat tax evasion by "U.S. persons and companies holding accounts and other financial assets abroad," the article says. The United States isn't the only one doing this, with similar agreements in place in the U.K. and Switzerland. However, this agreement would add more than 50 other jurisdictions.
Should those foreign firms fail to comply with the ever-increasing reach of the IRS, they will be hit with a 30 percent tax, according to Avia Collinder in The Jamaica Gleaner. Firms are required to register before April 25, 2014, and will then be expected to report by January 15. Firms will also be required to determine which of its accounts are U.S. accounts, accounts held by recalcitrant account holders, or accounts held by nonparticipating financial institutions.