As many readers are already aware, there has been a recent push by the government and the Internal Revenue Service in particular to crack down on overseas tax evasion. This has been a big issue in the past few years as the United States has sought to introduce increased reporting requirements for foreign banks serving United States citizens. The push to create these reforms was renewed after a scandal involving accounts as prominent Swiss banks. The law that resulted is known as the Foreign Account Tax Compliance Act (or FACTA).

This has been a controversial measure both domestically and abroad, as many see the increased reporting as an overreach of American power into the actions of foreign governments and corporations. Most recently, a vote by the Republican National Committee affirmed the party’s wishes to abolish the law entirely.

Whether or not this happens, the impact of FACTA is immediate for many Americans who live or otherwise hold accounts in other countries. The law requires banks to report accounts with $50,000 or more that are held by U.S. citizens abroad.

Taxpayers who are impacted by this new regulation must be careful to come into proper compliance while at the same time protecting their privacy rights. Approaching the payment of accidentally underpaid taxes or dealing with allegations of tax evasion can be stressful. In this situation, proceeding carefully with the advice of an experienced professional who knows how to negotiate with the IRS can make a big difference and can make the process easier in some cases.

Source: Reuters, “Republicans bash U.S. law targeting offshore tax dodgers,” Patrick Temple-West, Jan. 24, 2014.