How Do You Spell FOREIGN ACCOUNT TAX COMPLIANCE ACT?

Pronunciation: [fˈɒɹən ɐkˈa͡ʊnt tˈaks kəmplˈa͡ɪ͡əns ˈakt] (IPA)

The Foreign Account Tax Compliance Act, also known as FATCA, is a United States law aimed at combating tax evasion by US taxpayers holding foreign financial accounts. The pronunciation of FATCA is /ˈfɒrɪn əˈkaʊnt tæks kəmˈplaɪəns/ with stress on the second syllable of "foreign," the first syllable of "account," and the first syllable of "compliance." The phonetic transcription breaks down the word into its individual sounds, helping to clarify the correct way to pronounce the word.

Meaning and Definition
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FOREIGN ACCOUNT TAX COMPLIANCE ACT Meaning and Definition

  1. The Foreign Account Tax Compliance Act (FATCA) is a United States legislation enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. It is designed to combat tax evasion by requiring United States citizens and residents to report their financial accounts held outside the country to the Internal Revenue Service (IRS).

    FATCA has significant implications for both American citizens abroad and foreign financial institutions. Under this law, foreign banks and financial institutions must disclose information about their American account holders to the IRS. This includes the account balances, income generated, and any withdrawals or transfers made by American taxpayers.

    For individuals, FATCA mandates the reporting of specified foreign financial assets on an annual basis. Failure to disclose the required information may result in penalties and consequences imposed by the IRS.

    The main objective of FATCA is to prevent tax evasion by ensuring that American taxpayers are fully disclosing their foreign financial accounts and assets. By enhancing tax transparency and information sharing between the United States and foreign jurisdictions, FATCA aims to promote compliance with US tax laws and minimize offshore tax evasion.

    Although FATCA has faced some criticism for its extensive reporting requirements and compliance costs for foreign financial institutions, it has been effective in increasing tax compliance and reducing the opportunities for tax evasion on a global scale.