Tomorrow, there will be a 30% withholding penalty on any overseas payments to financial institutions that don’t share information with the IRS.
So far, 77,000 financial institutions have agreed to share information and the IRS has entered into information sharing agreements with 80 countries.
The result is you will have to use a financial institution that gives your account information to the IRS or pay a 30% withholding tax. Neat way to get enforcement.
In the past, offshore enforcement has been poor. No more. In addition, if the IRS finds unreported offshore accounts, you are facing large fines and criminal issues. So far, the US has charged more than 70 U.S. taxpayers and three dozen bankers, lawyers and advisers with tax evasion.
The IRS has had a voluntary disclosure program since 2009 that allowed you to bring your money onshore legally at a reduced tax and no criminal violation.
This is the dreaded FATCA Act finally becoming effective.
Some people are renouncing their citizenship (2013 was the highest number on record) and running rather than pay the US tax.
Bloomberg has a good article on this if you would like more information.
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