Massachusetts residents might have heard that six more countries have signed a pact that is intended to stop Americans from dodging the Internal Revenue Service by keeping their money overseas. The agreements are hoped to help cut down tax evasion by individuals who have bank accounts in Bermuda, the Netherlands, Malta and three UK Crown Dependencies, which include Guernsey, Jersey and the Isle of Man, according to U.S. Treasury officials. With these latest agreements, the U.S. has 18 foreign countries or dependencies on board with 11 more looking ready to sign.
The effort to get agreements signed with offshore governments is part of an attempted enforcement by the U.S. of its Foreign Account Tax Compliance Act, which was enacted in 2010 after an international banking scandal revealed Americans hiding large fortunes in Swiss bank accounts. FATCA’s intention is to have overseas banks inform the IRS if a U.S. citizen’s account holds more than $50,000.
The tool that the Treasury Department is using to spread participation in FATCA is called an intergovernmental agreement, which lets other countries know what is expected of them under the initiative. Of the six governments that signed the agreement most recently, five were identified by a Congressional Research Service report to have formerly acted as tax havens for wealthy Americans who were attempting to shield their money.
Tax evasion is not something that only the very rich try to do. Similarly, prosecution on tax evasion charges is not limited to wealthy folks, either. Retaining a legal professional after being accused of tax fraud or other white collar crime might be instrumental in mounting a criminal defense against these charges.
Source: Reuters, “Treasury signs anti-tax evasion pacts with six jurisdictions”, Elaine S. Povich, December 19, 2013