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Banks throughout the world agree to share information with IRS

From digital currency to foreign bank accounts, the Internal Revenue Service continues to develop its methods of collecting taxes. As we've previously discussed, if a foreign bank holds more than $10,000 of your assets, then you are required to use the Report of Foreign Bank and Financial Accounts (FBAR) to report those assets to the Treasury Department.

Taxpayers with money in foreign accounts should also be aware of the Treasury Department's recent announcement that financial institutions and investment funds all over the world have agreed to provide information to the IRS about U.S. account holders. Starting in March 2015, more than 77,000 financial institutions and nearly 70 countries are expected to cooperate in sharing the names, account information and account balances of U.S. taxpayers.

Even after failed negotiations between the U.S. and Russian governments, 515 banks in Russia have agreed to supply information to the IRS. The new law provides that foreign banks that don't cooperate with the IRS will be penalized if they do business in the U.S.

The Bahamas, the Cayman Islands and Switzerland are included in the list of governments that have agreed to information-sharing.

The law is part of the Treasury Department's ongoing crackdown on tax evasion. Under the Foreign Account Tax Compliance Act (FATCA), the IRS has already stepped up measures to stop tax evasion and ensure compliance. The Bank Secrecy Act also requires taxpayers with interests in foreign accounts or mutual funds to report those assets. If you have questions about the FBAR or other tax compliance issues, then a tax law attorney can help.

Source: Economic Policy Journal, "77,000 Foreign Banks to Share Tax Info with IRS," June 4, 2014

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