FOR IMMEDIATE RELEASE:
IRAQ’S IRS FATCA COMPLIANCE DEMANDS SWIFT ACTION FROM AMERICANS WITH UNDISCLOSED FOREIGN ACCOUNTS
Detroit, MI – Iraq has implemented the Foreign Account Tax Compliance Act (FATCA) requiring financial institutions in Iraq to reveal Americans with accounts over $50,000 to the IRS (Internal Revenue Service), or face a 30 percent withholding tax on U.S. account holders and exclusion from U.S. financial markets.
Iraq is the latest to join the more than 100 countries who have struck agreements with the U.S. Treasury Department to report back to the IRS on any accounts held by U.S. citizens, people with green cards and U.S. expatriates.
U.S. persons who have a financial interest in or signature authority over one or more foreign financial accounts with a value exceeding $10,000 have been required to disclose this information to the IRS annually since 1970 in a Foreign Bank Account Reporting (FBAR) form. Under the new FATCA enforcement, those who have overseas accounts that have been held at a non-U.S. financial institution for years and knowingly never disclosed it to the IRS will now face some of the biggest tax penalties ever imposed.
“This is a race against time for foreign account holders,” said Venar Ayar, the principal and founding tax attorney for Ayar Law Group. “People with foreign accounts in Iraq need to act now, before it’s too late. There are a number of amnesty programs to get you caught up and avoid the monster penalties, but if the IRS finds out about your account before you disclose it, your chances to negotiate lower penalties are slim.”
If the IRS finds that you willfully failed to disclose overseas accounts, you could owe a penalty of 50% of your total balance or $100,000, whichever is greater, for every year you failed to file an FBAR form (capped at six years). For example: if you failed to disclose foreign accounts totaling $20,000 for six or more years, you could potentially be fined up to $600,000, and possibly be subject to criminal penalties.
FATCA is making worldwide banking completely transparent and foreign financial institutions are supplying information to the IRS instantaneously to avoid being frozen out of the U.S. financial market.
According to Ayar, The IRS does have “mitigation guidelines” for undisclosed foreign accounts under $250,000, which could reduce the massive penalties, especially if the failure to disclose is deemed non-willful. The only way for undisclosed foreign account holders, especially now in Iraq, to avoid these enormous penalties is to beat foreign banks to the punch with the IRS.