Costa Rica must share financial info on US citizens beginning July 1st

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June 11th, 2014 (InsideCostaRica.com) Beginning on July 1st, Costa Rican banks must comply with the Foreign Account Tax Compliance Act, known as FATCA.

 

The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that requires United States persons, including individuals who live outside the United States, to report their financial accounts held outside of the United States, and requires foreign financial institutions to report to the Internal Revenue Service (IRS) about their U.S. clients. The US Congress enacted FATCA to make it more difficult for U.S. taxpayers to conceal assets held in offshore accounts and shell corporations, and thus to recoup federal tax revenues.

 

Beginning on July 1st, Costa Rican banks and financial institutions must provide the IRS the names of their U.S. citizen account holders, as well as tax ID numbers, addresses, account balances and their financial transactions.

 

The implementation of FATCA in Costa Rica comes after the signing of a memorandum of understanding signed with the United States in November of last year.

 

Many banks around the world have opted to cease doing business with US citizen customers rather than comply with the legislation, which many banks feel is burdensome.

 

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  • HONEST MAN

    If i was a US citizen i would denounce my Citizenship now because IRS are now the SS of US GOVERMENT

    • Daryl Smitts

      If I could give 1,000,000 thumbs up here I would!

      • Arne Reisvaag.

        Before you renounce, and yes it is “Renounce” your American citizenship you better make sure you are a citizen of another country otherwise you will be known as stateless.

        • Daryl Smitts

          true dat… Got that covered here in CR.

  • Ken Morris

    Can you clarify whether this is ALL bank accounts or only those with a certain minimum balance? In the old days, anything under $10,000 didn’t have to be reported. Am I going to have to include the account in which I have $28 on my income tax return next year?

    • http://insidecostarica.com/ Timothy Williams

      While you should always consult a professional as I’m not completely sure on this, my understanding is that under FATCA, you must report ALL foreign financial institution accounts (there is a new form, but I don’t know the number off the top of my head) regardless of balance. This doesn’t just apply to bank accounts either, it is any “financial institution” – stock brokerages, you name it. Of course, if you don’t, the bank/financial institution itself is obligated to do so and will, regardless if you report it or not, so better be safe than sorry and report it, even if I’m wrong about no minimum balance.

      For IRS Form 2555 (which you’ll have to continue to file, and has existed before FATCA), you only have to report accounts that at ANY TIME DURING THE CALENDAR YEAR had a balance of $10,000 or more, even if it was for an hour, regardless of the current balance in the account (or even if you no longer own the account).

      • Courgette

        The banks or governments may eventually be reporting everything that is not in the IGA, and the U.S. government is, of course, interested in all income. However, as far as FinCen (FBAR) filing goes, a taxpayer only needs to report if the total amount in foreign accounts is over $10,000.

    • Daryl Smitts

      Yes, the US will want 30 percent of your 28$…

      • Arne Reisvaag.

        Wrong, any foreign transaction between a U.S. Bank and foreign bank the 30% is withheld if the foreign bank is not in compliance with FATCA.

    • HONEST MAN

      Your right less than $10.000 no problems with IRS so far i understand.

      • Arne Reisvaag.

        The FBAR form is a treasury form not an IRS form.

    • Arne Reisvaag.

      Don’t worry Ken I think it’s $50,000.00 or more.Everyone is getting excited over something most of us don’t have to worry about.

      http://www.irs.gov/Businesses/Corporations/FATCA-Information-for-Individuals

  • Luis Diego Campos

    Uncle Sam needs money and a good way to get more is to target those out of USA that God knows how much they have and never bother to tell Uncle Sam. CR should get a percentage out of each victim.

  • Chris Thomas

    Great maybe more people will leave Costa Rica as they should they o longer have protection the country cares that much for the tourist, government is always stabbing people in the back. CR is i the top 20 most corrupt countries on this planet.

    • Joseph Wood B.

      Chris,why stay here in CR. take your white trash ass out of here,and go hide somewhere else.Comply with the laws of the U.S. and remain there.We dont need you here.

      • Chris Thomas

        Are you Costa Rican? I don’t think so maybe another outlaw running from the States since you obviously are not the cream of the crop.

        • turbooperator

          Oh wise and plenty traveled one, please enlighten us “outlaws” where the “cream of the crop” live, if not Costa Rica

          • Chris Thomas

            Dude you got some serious personal issues you embrace something you do not know about and a culture which is not your own, who knows what your really are running from maybe some daddy or mommy issues but you are way over your head on this one.

          • turbooperator

            imagínate voz, pura vida mae, tranquilo

  • Papagayo_Fish

    My husband is a tico and I am a US citizen with residency and we have joint accounts in which he is the primary holder of the account. Would I still have to submit the money in this account?

    • Papagayo_Fish

      Oh, and we have a business together.

      • Chris Sparks

        I want to retire in CR and if I choose to make money in CR I certainly don’t think the US has a right to any of that money.

        • Courgette

          I agree, but we don’t make the rules, which are crazier than one could possibly imagine.

      • Courgette

        You could have some difficulties if the bank asks for your place of birth (they can require information they don’t already have). If you only had that problem and were interested in complying, the Streamlined Compliance program might have been a good, cheap option.

        Unfortunately, the business could be a bit of a problem because the U.S. has overly harsh rules regarding what it calls ‘controlled foreign corporations’. This is not a straightforward matter and you may need to talk to a sympathetic lawyer (not a U.S. CPA who would be bound by professional ethics to turn you over). There is a new tax amnesty program that is coming out for overseas residents in a few weeks, but who knows what will be in it.

    • HONEST MAN

      If your Bank accounts are under your Costa Rican Residency you will not have any problems get your US passport out of the Costa Rican Banking system. USE YOUR LOCAL RESIDENCY

  • HONEST MAN

    Most banks that have joint accounts with Costa Rican will not be handed over to the IRS because they have Costa Rican on the account as primary holders. The Costa Rican Goverment is being very Careful on that issue.

    • Courgette

      Your cash idea is fine, but the joint account idea is questionable. The primary account holder doesn’t matter for the IRS. If a U.S. person is on the account (which it should be noted also includes U.S. greencard holders living outside the U.S.) the U.S. sees the account as belonging entirely to the U.S. person.

  • http://adullroar.blogspot.com/ A Dull Roar

    Good grief! Bad law, but not that bad for individuals. Instead of consulting such “in-depth” articles, one should educate themselves on the ins and outs of the actual requirements. For instance, many people are erroneously concluding that the IRS wants to see how much gas you bought for your car on Wednesday. Not so many banks are locking out U.S. account holders either, that’s myth. Most of FACTA does not apply to the average expat at all. And the ones who get the most upset are the ones who are actually hiding assets to avoid taxes.