What is the role of the USA's Foreign Account Tax Compliance Act (FATCA)?
The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that was passed in 2010. Its purpose is to force foreign financial institutions to report information to the Internal Revenue Service (IRS) about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers have a substantial interest. The law is intended to reduce tax evasion and money laundering by US citizens. In North Carolina, FATCA is used to ensure that US citizens living abroad comply with IRS tax laws. Under FATCA, US taxpayers with foreign accounts must report them and pay any taxes due on the income earned from these accounts. Failure to do so can lead to additional taxes, interest, and civil and criminal penalties. FATCA also serves as a global information-sharing agreement among participating governments and provides the IRS with access to foreign financial information for tax enforcement purposes. As a result, North Carolina taxpayers must provide accurate documentation of accounts held outside of the United States. In short, the Foreign Account Tax Compliance Act (FATCA) is a federal law that requires US taxpayers with foreign financial accounts to report them to the IRS and to pay taxes on income earned from these accounts. This law helps to reduce tax evasion and money laundering by US citizens and provides the IRS with access to foreign financial information for tax enforcement purposes.
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