FATCA Reporting Woes

The Internal Revenue Service is having trouble dealing with the information it’s getting from foreign banks about U.S. taxpayer assets under the Foreign Account Tax Compliance Act because of problems with the data, various mismatches and missing or inaccurate Taxpayer Identification Numbers provided by the foreign banks. Furthermore, the IRS lacks access to consistent and complete data on foreign financial assets and other data reported in tax filings by U.S. individual taxpayers, partly because some IRS databases don’t store foreign asset data reported from paper filings. Another major problem for FATCA has been the hardships faced by U.S.-born expatriates. Some Americans living abroad can’t get services from foreign banks that find the law too burdensome.

The GAO made seven recommendations to the IRS and other agencies to enhance the IRS’s ability to leverage FATCA data to enforce compliance, address unnecessary reporting, and better collaborate to mitigate burdens on U.S. persons living abroad.

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