Foreign Account Tax Compliance Act (FATCA)

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The Foreign Account Tax Compliance Act (FATCA) is a U.S. federal law enacted in 2010 aimed at combating tax evasion by U.S. persons holding accounts and other financial assets outside the United States. FATCA requires foreign financial institutions (FFIs) to report information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest, to the Internal Revenue Service (IRS).

If FFIs do not comply with FATCA, they may face a 30% withholding tax on certain payments made from U.S. sources. This law is part of a broader effort to increase tax transparency and ensure that U.S. citizens fulfill their tax obligations regardless of where their assets are located.

Glossary: International Tax Compliance
International Tax Compliance is like a friendly game of hide and seek—nations work together to ensure everyone plays fair and pays their share, keeping the global economy healthy and bright!
Glossary: Compliance with Global Tax Reporting Standards
Compliance with Global Tax Reporting Standards means playing by the rules of the international tax game! It ensures transparency, fairness, and a happier planet for all.

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Foreign Account Tax Compliance Act (FATCA)

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About the Author: Eric Smith