FATCA Reporting – Are Trusts And Trustees Caught In The Net?

The US Congress enacted the Foreign Account Tax Compliance Act (FATCA) shortly after the first so-called 'voluntary disclosure program' had begun to reveal the unanticipated extent of US persons' undisclosed non-US financial holdings. Congress sought a way to catch even the most obscure unreported financial account. Enter FATCA. When first enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act of 2010, private practitioners, banks, and other deposit institutions were slow to understand the potential extent of FATCA's reach. The statute, which seeks to coerce beneficial owner disclosure on penalty of a 30 percent withholding tax on certain US-source payments, appeared impossible to implement, and many practitioners (and even some in government) doubted whether FATCA could ever come to fruition. However, the Internal Revenue Service (IRS) and Department of Treasury (Treasury) have worked tirelessly (and some would say ruthlessly) to ensure that FATCA