Overview of FATCA
In 2010, the U.S. government enacted the Hiring Incentives to Restore Employment Act (the “Act”). The Act’s principal purpose is to provide U.S. employers with the necessary incentives to hire and retain new employees. With exemptions and tax credits offered by the Act, the U.S. Government has chosen to offset its costs by incorporating the provisions of the Foreign Tax Account Compliance Act of 2009 (“FATCA”). FATCA implements measures which challenge the concept of offshore financial privacy, by measures such as increased reporting requirements and taxation of foreign institutions. By FATCA, the Internal Revenue Service (the “IRS”) may impose additional reporting requirements for U.S. persons who hold offshore financial accounts or enjoy offshore financial services. These reporting requirements are in addition to the current foreign banking reporting requirements and require disclosure of a broader class of foreign assets.