United States and Costa Rica Formalize FATCA Accord
The U.S. Department of the Treasury announced that the United States has signed intergovernmental agreements (IGAs) with Costa Rica November 26, 2013, to implement the Foreign Account Tax Compliance Act (FATCA). FATCA is rapidly becoming the global model for combating offshore tax evasion and promoting transparency.
FATCA, enacted in 2010, seeks to obtain information on accounts held by U.S. taxpayers in other countries. It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) that do not agree to identify and report information on U.S. account holders. FFIs have the option of entering into agreements directly with the IRS, or through one of two alternative Model IGAs signed by their home country.
The Costa Rica IGA is a Model 1A agreement, meaning that the United States will also provide tax information to the Costa Rican government regarding Costa Rican individuals with accounts in the United States.
“Today’s signing marks a significant step forward in our efforts to work collaboratively to combat offshore tax evasion – an objective that mutually benefits both our countries,” said Gonzalo R. Gallegos, Chargé d’Affaires of the U.S. Embassy in Costa Rica, who signed on behalf of the United States.
For the signed Costa Rica IGA, click here.
The U.S. Department of the Treasury announced that the United States has signed intergovernmental agreements (IGAs) with Costa Rica November 26, 2013, to implement the Foreign Account Tax Compliance Act (FATCA). FATCA is rapidly becoming the global model for combating offshore tax evasion and promoting transparency.
FATCA, enacted in 2010, seeks to obtain information on accounts held by U.S. taxpayers in other countries. It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) that do not agree to identify and report information on U.S. account holders. FFIs have the option of entering into agreements directly with the IRS, or through one of two alternative Model IGAs signed by their home country.
The Costa Rica IGA is a Model 1A agreement, meaning that the United States will also provide tax information to the Costa Rican government regarding Costa Rican individuals with accounts in the United States.
“Today’s signing marks a significant step forward in our efforts to work collaboratively to combat offshore tax evasion – an objective that mutually benefits both our countries,” said Gonzalo R. Gallegos, Chargé d’Affaires of the U.S. Embassy in Costa Rica, who signed on behalf of the United States.
For the signed Costa Rica IGA (Pdf – 237Kb), click here.
Information for Individuals
Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting is made on Form 8938, which taxpayers attach to their individual federal income tax return. To help individuals understand how FATCA may impact their filing and reporting responsibilities, we have redesigned the IRS website and made it easier to navigate. The main page for individuals is found at Information for U.S. Taxpayers on Form 8938 Requirements
From this main page, the user may click on additional hot links, depending on the topic. For example, there is a chart available (linked from this main page via a hot link) which describes types of foreign assets which may be reportable under the FATCA rules. On the right side of this main page under the heading “Summary of Form 8938 Requirements” is another hot link to a document titled “Summary of FATCA Reporting for U.S. Taxpayers.” This document provides the best summary of the filing and reporting responsibilities for individuals. We recommend you check this website periodically, as we are continually updating our material and adding hot links as additional information becomes available.
Information for Foreign Financial Institutions
FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Foreign Financial Institutions looking for information on this topic may visit the IRS website. From this main page, the user may click on several hot links to find specific information related to FATCA regulations and guidance, the registration process, and schema requirements. We recommend you check our website periodically, as we are continually updating our material and adding hot links as additional information becomes available.
Foreign financial institutions may submit specific questions to the IRS:Submit Your Questions About How To Comply With FATCA
