It is no secret that many individuals living in Latin America have personal bank accounts in the U.S.
For various reasons many of these accounts are kept in a private and confidential manner.
Soon, however, this confidentiality will be more difficult to achieve as the U.S. Internal Revenue Service (IRS) will be collecting all information of these accoun ts and will share it with all the countries with which the U.S. has an information exchange treaty in place.
There are two new pieces of legislation in the U.S. providing for this:
- The Foreign Account Tax Compliance Act (FATCA): FATCA is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore account. It has been introduced to enhance the transparency regarding U.S. taxpayer’s accounts in foreign financial institutions, for tax compliance reasons. This legislation requires that all foreign financial institutions report information on these accounts directly to the IRS.
- The Treasury 2012 Final Regulation: The introduction of FATCA led to an avalanche of criticism internationally, which has forced the U.S. Government to introduce, the Treasury 2012 Final Regulation. With the introduction of this new piece of legislation, U.S. banks must now also report information on all foreign bank account holders. This implies that information of non-U.S. accounts holders will be sent to the Revenue Department of their respective country.
The reality is that nowadays one must take care and avoid that one's private information would land in wrong hands and be used to his disadvantage.
We are living in a time where privacy and confidentiality have evolved from“good to have” to “must have.”
There are of course solutions for the above situation, such as trusts arrangements and/or the establishment of a private foundation.