FATCA : Foreign Accounts Tax Compliance Act

This is an Act enacted by US Government in March 2010 and it targets Tax non-compliance by US tax payers with foreign accounts.

It focuses on reporting by U.S. tax payers about certain foreign financial accounts, off-shore assets and about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.

As countries become signatories to FATCA, the financial institutions in the country is obligated to exchange information about US taxpayers’ accounts held by them to their central agency( Tax authorities) who in turn will provide them to IRS, who is the Tax collecting Agency for US Government.