The incorporation of the FATCA Act Essay
The incorporation of the FATCA Act, 479 words essay example
The incorporation of the FATCA Act will have an immense impact on the taxpayers in the US in quite a number of ways. First, the tax-payers will be required to furnish the IRS with the right and correct information in full and at the right time regarding all the payments that will be made to US persons. The information must be provided to IRS regardless of whether these persons own an account in a given company or are amongst the US shareholders of certain entities (Moll 2014). Given these facts, all international entities will have to furnish the IRS with all the financial information required. Thereafter, it will remain the core responsibility of the US taxpayers to ensure that they fully and at the right time comply with the numerous reporting obligations, which refer to the submissions of the TD F 90-22.1 report on Foreign Bank and other financial accounts related to the individual (Verlag 14).
On the other hand, the US taxpayers will also be required by the Act to submit other forms including Form 8938, which refers to the statement of foreign financial assets. They will also be demanded to hand in Form 5471, which explains the information on the return of US individuals with respect to given foreign corporations. As if this is not enough, the taxpayers will similarly be expected to submit Form 8621, which carries information pertaining to the return by a shareholder of a passive foreign investment company or qualified electing fund.
The FACTA has gone to an extent of setting penalties and even imposing sanctions on the parties that will fail to comply with the submission of all the required documents in full and on time. There will be other additional documents to be submitted including Form 8858. The documents will expound on the particular information relating to the return of the US individuals having foreign disregarded entities. On the other hand, there will be the Form 8865 to be submitted, which shall explain the details of the return of the US individuals with respect to certain foreign partnerships (Moll 2014). The IRS has set a penalty of up to $ 10,000 for any party that fails to submit the above documents in full and on time. However, in Form 926, there is a clause of exception from the entire penalty of $ 10,000 and $ 100,000 which has been put at 10% of the total FMV of the entire property transferred or subject to a maximum penalty of $ 100,000 unless there is a reason for the failed party that is not intentional (Nagarajan 2015).
The changes made in Forms 6501 by the IRM have made it important for the tax-payers to ensure that they hand in all the required documents in time and in full so as to avoid the imposed heavy and harsh penalties. The US has furthermore set a regulation to allow for voluntary participation in this program of FACTA by allowing only those who are ready and