Taxpayers who evade taxes in the U.S. through secret offshore bank accounts may find the details of their financial transactions being handed over to U.S. authorities. That is because under the Foreign Account Tax Compliance Act (FATCA), U.S. authorities are making agreements with governments of various countries to bring more transparency into the financial transaction of U.S. taxpayers overseas.
A major method of evading taxes is to hide the income in offshore bank accounts in foreign tax havens. The U.S. Treasury loses billions in revenue each year because of the large amount of unaccounted money being hidden in overseas accounts by wealthy U.S. taxpayers and large corporations.
Considering the Obama administration’s twin policy of increasing revenue and decreasing government spending, targeting secret offshore bank accounts is expected to recover billions in revenue each year.
The U.S. has signed agreements with various countries to counter tax evasion. Recently, Switzerland and Germany agreed to share the financial activities of U.S. taxpayers in their country. Taxpayers with unaccounted income hidden in overseas banks that are above a certain level will be charged penalty and may face imprisonment.
The persistent efforts of the U.S. in tackling tax evasion will also show results in the number of taxpayers using the Offshore Voluntary Disclosure Program (OVDP) to get back into compliance.