The Foreign Account Tax Compliance Act
A key component of the federal government’s push for heightened tax compliance among United States taxpayers with foreign accounts and assets is the Foreign Account Tax Compliance Act (FATCA). As a result of FATCA, the costs of reporting foreign activities to the IRS have increased, as there are more disclosures. In addition, once the various provisions become effective, the penalties associated with foreign noncompliance will increase, and the statute of limitations within which the IRS can audit a taxpayer will double. FATCA is generally effective for tax years beginning after March 18, 2010, the day the HIRE Act was enacted.