August has been a busy month for weaving tighter the growing web of international snares laid for catching offshore tax evaders.
On August 13, the U.S. and Cayman Islands announced agreement on a Model 1 Intergovernmental FATCA implementation agreement. Under the Model 1 agreement Cayman banks will relay information about U.S. account holders to the Cayman Government, which, in turn, will forward the information to U.S. tax authorities. The text of the agreement will be released when the document is formally signed.
Also, on August 13, the U.S. and Cayman announced the signing of a new tax information sharing agreement.
These announcements came on the same day IRS released an initial draft of Form 8966, FATCA Report. Although I have not seen instructions for the Form, presumably it will be used by banks that must report directly to the IRS. Amount other information the form requests the following about U.S. account owners:
- Account numbers
- TIN (e.g., Social Security Number for individuals)
- Gross proceeds
On August 14 the Bahamas announced its intention to join the FATCA club. It will implement FATCA by, among other actions, entering into a Model 1 FATCA agreement, likely similar to that to be signed by the Cayman Islands.
Those still out in the cold should take heed of these developments. The latest version of the IRS Offshore Voluntary Disclosure Program is still open. But, the door closes swiftly once IRS has a taxpayer’s name; and, names will soon be forthcoming from the Cayman Islands and Bahamas among other countries and/ or foreign financial institutions that have agreed to comply with FATCA.
© 2013 by Robert S. Steinberg, Esquire
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