CHICAGO: Upset at the drag on US economy caused by money laundering and tax evasion, the US government had initiated a few measures including the one requiring the US citizens to declare their overseas holdings, income and transfers in their annual tax return.
To plug the loophole and ensure better compliance, it pitched for adherence to Foreign Account Tax Compliance(FATCA) and sought an agreement with a number of overseas governments, inducing India UK, Spain, Switzerland, Germany, and a few others that would require the foreign banks or financial institutions, insurance companies, mutual funds , depositories and brokerage firms to report details of accounts of US citizens and US addressees to Internal Revenue Service (IRS) in USA, if the balance exceeded US$ 50,000 as on 31st December, 2013 or if the said account was closed during the year 2013
This requirement is relaxed a bit in that the IRS and the US Treasury have postponed the reporting requirements by 6 months and made it effective from 1st July, 2014. The financial institutions will be now report accounts of US citizens and US addressees to the IRS if balance in the accounts exceeds US$ 50,000 as on 30th June, 2014 or if such accounts were closed in the year prior to 30th June, 2014.
These amended provisions are reflected in agreements recently concluded by USA with France; Cayman Islands & Costa Rica, and a few others. Similar agreement with the Indian government is not finalized yet but is in advance stage of processing, it is learnt. If the deal with USA and India gets formalized the US citizens investing with banks and financial institutions will have their stakes get reported to IRS.
The practical significance will be that all the details about financial transactions exceeding certain limit will be under IRS radar. IRS notice regarding revised time frame and other relevant factors can be viewed athttp://www.irs.gov/pub/irs-drop/n-13-43.pdf.
Surendra Ullal & Rajesh Dhruve
Thank You For Your Vote!
Sorry You have Already Voted!
