What is the role of the USA's Foreign Account Tax Compliance Act (FATCA)?

The Foreign Account Tax Compliance Act (FATCA) is a law passed by the United States in 2010 to help combat offshore tax evasion by U.S. taxpayers. In short, the law requires foreign financial institutions to report information about U.S. taxpayers to the U.S. Internal Revenue Service (IRS). This law affects U.S. taxpayers in Florida who own or control foreign accounts. FATCA requires foreign financial institutions to report to the IRS on U.S. taxpayers who have certain types of foreign accounts, investments, or insurance policies with a total value greater than $50,000. The financial institutions may also be required to withhold tax from payments to U.S. taxpayers. FATCA gives the IRS more tools to help combat offshore tax evasion. It makes it more difficult for U.S. taxpayers to hide assets in foreign accounts or investments and it increases compliance from foreign financial institutions. This law also allows the IRS to expand its enforcement efforts to include foreign financial institutions, and it helps the IRS recover taxes that may have gone unpaid due to offshore tax evasion. In conclusion, FATCA helps the IRS combat offshore tax evasion by U.S. taxpayers. It requires foreign financial institutions to report information to the IRS and it increases compliance from these institutions. This law also helps the IRS expand its enforcement efforts and recover taxes that may have gone unpaid due to offshore tax evasion.

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