THE TRANSATLANTIC MAGAZINE
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Yesterday, the IRS confirmed that due to the COVID-19 virus, Foreign Financial Institutions (FFIs) subject to FATCA reporting requirements would be given an extension on the current deadline of March 31, 2020 for filing.
In a Q&A, the IRS wrote that "In response to the COVID-19 virus, the Internal Revenue Service will provide an extension of time for a Reporting Model 2 FFI or a Participating FFI to file the FATCA Report (Form 8966) to the IRS. The filing deadline for the FATCA Report (Form 8966) will be extended from March 31, 2020 to July 15, 2020. Form 8809-I, Application for Extension of Time to File FATCA Form 8966 will not be required for this extension."
The IRS' capacity to alter their approach to FATCA filing in light of extraordinary circumstances like the spread of Coronavirus could come under scrutiny in the context of a lack of action for overseas Americans who have been facing their own extraordinary circumstances, including the inability to access basic financial services such as bank accounts and credit cards due to the perceived risk of FFIs from onboarding US Citizens as clients.
Earlier this year, the National Taxpayer Advocate's Purple Book 2020 reported that "Many US taxpayers, particularly those living abroad, face increased compliance burdens and costs as a result of FATCA reporting obligations that significantly overlap with the FBAR filing requirements ... However, the IRS has repeatedly declined to adopt the recommendations of the National Taxpayer Advocate that are also supported by other stakeholders, including the Government Accountability Office, to eliminate duplicative FATCA reporting where assets have already been reported on an FBAR and to provide a same-country exception for reporting financial accounts held in the country in which a US taxpayer is a bona fide resident. These recommendations, if adopted, would reduce the compliance burdens on US taxpayers, who now must file additional complex forms themselves or pay higher tax return preparation fees. They would also reduce the compliance burdens on FFIs, some of which are declining to do business with US expatriatesbecause of the significant costs and regulatory risks associated with ongoing FATCA compliance. In addition, the unwillingness of certain FFIs to do business with US expatriates makes it difficult for US citizens to open bank accounts in certain countries."
It would be quite understandable for overseas Americans and advocacy groups to ask why the IRS has been flexible in the circumstances of COVID-19, but not as flexible on the ongoing reports of overseas Americans being blacklisted from banks and other financial services due to the complex burdens associated with FATCA compliance.
For more details on IRS guidelines for FATCA, go to www.irs.gov/businesses/corporations/frequently-asked-questions-faqs-fatca-compliance-legal
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