Zaher Fallahi, Attorney, CPA; The US and Mexico signed a FATCA agreement
On November 19, 2012, The US and Mexico signed an agreement to implement the Foreign Account Tax Compliance Act otherwise known as FATCA. Mexico is the third country after the Great Britain and Denmark to sign such agreement. The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts. Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS. This reporting will be made on Form 8938, which taxpayers attach to their federal income tax return, starting this tax filing season. In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The US is in the process of negotiating such agreements with about 50 countries and territories.