If you are a U.S. taxpayer, the Internal Revenue Service makes it their business to know all about you. Until now, however, there was still a lot of information to which they had little access. For instance, if you had monies in offshore accounts, you may have left no apparent trace. As in most arenas, technology has changed everything. The near instant transfer of information online has enabled a true global economy. Now, the U.S. Government need not sniff you out. They have decided to hold the Foreign Financial Institutions, who manage your monies, financially responsible if they don't report you to the IRS. Shifting the financial burden, with the click of a mouse, has changed everything.
The Foreign Account Tax Compliance Act, or FACTA, was enacted in 2010 to require that Foreign Financial Institutions report to the IRS information about United States citizens and Green Card holders that hold foreign accounts and assets. FACTA represents both the pinnacle and commencement of the valiant efforts of the United States government to prevent tax evasion, and recover the tax monies owed them from Foreign Financial Institutions and U.S. Citizens dealing in foreign assets or holding foreign accounts. If you have foreign assets or foreign accounts, it's time to make a date with your neighborhood tax lawyer!
The Israeli government has showed its intent to comply with FACTA by setting up a special committee to check obedience, led by Frieda Israeli, and including many other members of Israeli government from the Israeli Securities Authority, the Israel Tax Authority, the Securities Markets, and the banking sections of regulatory bodies within the Finance Ministry and the Justice Ministry. To create a climate of compliance and enable FACTA, the U.S. is negotiating entry into Intergovernmental Agreements with other countries, including Israel. While the terms of the final deal with Israel have not yet been reached, these Agreements help compliance by setting up the model for information exchange between Foreign Financial Institutions and the IRS.