It is becoming increasingly difficult for tax evaders to hide their assets overseas. The Foreign Account Tax Compliance Act (FATCA) has brought greater transparency in financial dealings of U.S. taxpayers with offshore bank accounts. The IRS is making deals with more countries in order to cut down on tax evasion by wealthy taxpayers who hide their income in overseas bank accounts to evade taxes.
Under FATCA, U.S. taxpayers who have assets in foreign financial institutions that exceed certain thresholds must report them to the IRS. On the other hand, FATCA also requires foreign financial institutions to provide information about the financial transactions of U.S. taxpayers or U.S. taxpayers who have substantial ownership in accounts held by foreign individuals directly to the IRS. With this strategy, the IRS looks to drastically bring down tax evasion.
Along with FATCA, the U.S. authorities are also in talks with Swiss authorities to share financial information of U.S. taxpayers who have hidden unaccounted money in Swiss banks. The deal should be finalized soon.
To stop further U.S. investigation into the banks accused of hiding billions of unaccounted money of U.S. taxpayers, Swiss authorities is likely to accept payment of heavy fines, and transfer of client names and financial transactions of U.S. tax evaders to the U.S. authorities.
The U.S. authorities are taking aggressive steps to bring down tax evasion, bring back the tax money to the Treasury, and punish the evaders.