The Foreign Account Tax Compliance Act (FATCA), was included in the HIRE Act of 2010, and it has caused consternation abroad and at home. The law requires foreign financial institutions to report to the Internal Revenue Service on the assets of U.S. citizens. Last month, the IRS and the Treasury Department proposed new regulations for FATCA designed to address some of the concerns they had been hearing from banks, expatriates, and other countries, such as Canada (see IRS and Treasury Propose New FATCA Rules).
FATCA also requires every U.S. citizen and permanent resident (green card holder) to file a Form 8938 with their income tax return when they have a certain amount of financial assets located overseas. This is on top of the filing of the TD F 90-22.1 with the U.S. Treasury. Failure to file the Form 8938 could result in a penalty ranging from $10,000 to $50,000.