Summary of an important new announcement for US persons: US citizens living and working offshore, dual and triple nationality citizens with the United States but residing in another country, LPRs (long-term permanent residents, aka green card holders) along with foreign nationals who have become US residents for income tax purposes (thus subject to US tax law and regulations).On February 8, 2012, the US Department of the Treasury and the Internal Revenue Service (in a 400-page report) issued comprehensive proposed regulations implementing the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA). Enacted by Congress in 2010, as part of the Hiring Incentives to Restore Employment (HIRE) Act, these provisions target non-compliance by US taxpayers using foreign accounts.An overview of the recent regulations lay out a step-by-step process for US account identification, information reporting, and withholding requirements for foreign financial institutions (FFIs), other foreign entities (for example, generally, pension providers, investment firms, trusts, partnerships, insurance corporations, mutual funds, intermediaries, etc), and US withholding agents.“When taxpayers overseas avoid paying what they owe, other Americans have to bear a disproportionate share of the tax burden,” said Acting Assistant Secretary for Tax Policy, Emily McMahon.“FATCA is an important part of the US government’s effort to address that issue, and these regulations implement FATCA in a way that is targeted and efficient. We believe these efforts will serve as a complement and catalyst to the ongoing global efforts to combat offshore tax evasion.”The proposed regulations envision implementing FATCA’s obligations in stages to minimise burdens and cost as well as to adjust for time in resolving conflicts with other jurisdiction’s law constraints.Foreign financial institutions with integrated compliance systems in place for anti-money laundering, “know your customer” rules, and account risk profile due diligence will be permitted to rely upon information already obtained, thereby allowing greater focus on higher risk financial institutions that have a global investment community reach.FATCA requires foreign (non-US) financial institutions (FFIs) to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest. In order to avoid withholding under FATCA, a participating FFI will have to enter into an agreement with the IRS to:l Identify US accounts.l Report certain information to the IRS regarding US accounts.l Withhold a 30 percent tax on certain US-connected payments to non-participating FFIs and account holders who are unwilling to provide the required information.Registration will take place through an online system that will become available by January 1, 2013. The Treasury Department also jointly issued a statement with France, Germany, Italy, Spain and the United Kingdom expressing mutual intent to pursue a government-to-government framework for implementing FATCA - an important step toward addressing legal impediments to financial institutions’ ability to comply with the regulations.Updates and further information on FATCA can be found by visiting the FATCA page on www.IRS.gov.What does this recent announcement mean for US persons: US citizens living and working offshore, dual/triple nationality citizens with the United States but resident in another country, LPRs (long term permanent residents aka green card holders) along with foreign nationals who have become US residents for income tax purposes (thus subject to US tax law and regulations)?It is a matching game. All FFIs, other non-financial foreign entities, and their withholding agents are charged with reporting US persons (taxpayers’) accounts to US Internal Revenue Service. These account reports will be matched against individual (and other) tax reports and tax return filings.The impending onus of enforcement is increasing for all US persons who do not understand that they have a US tax compliance issues for various reasons: extenuating personal circumstances, unaware of obligations, not sure they are US citizens, misunderstanding of, or ignorance of law in a non-resident county. Individuals who could be considered US persons under any of the categories listed above are encouraged to undertake these tax reporting and filing initiatives (passed by US Congress and implemented by US Internal Revenue Service) at the first opportunity.The crux of these serious decisions are:l Voluntarily come into full compliance with US tax laws and regulations, thereby allowing them to move on with their lives while retaining their right of permanent US domicile.l Take the emotionally charged decision to renounce US citizenship - that can only be implemented after coming into full compliance.l Choose to remain oblivious, or stay under the radar hoping the whole issue that may (or may not) affect them goes away. This decision will be significantly harder to defend in the event of an IRS audit.Great confusion still abounds among millions of innocent non-compliant US persons permanently residing and working abroad, holding foreign accounts, foreign assets and investments merely in order to live their lives.Residing abroad may mean lack of access to current understandable tax reporting directives (if you’ve never filed a US tax return because you’ve never lived there, where do you start), and well-intended but unqualified (nor licensed to practice before US Internal Revenue Service thereby quite possibly subjecting themselves and their offshore clients to review and possible penalties a) foreign advisers providing US tax advice that is neither correct, or applicable to an individual’s complete financial profile. The sheer overwhelming complexity of the United States Tax Code and US Treasury Regulations truly hinders these ordinary US persons living their lives in understanding their US tax compliance responsibilities.US persons are encouraged to take this voluntary initiative to get their personal financial life sorted out. A number of firms in Bermuda with US practitioners on hand can assist you: KPMG, PricewaterhouseCoopers, Ernst & Young, and Patterson Partners Ltd.Keep in mind that US Persons residing abroad have a fairness champion in Ms. Nina Olson, US Taxpayer Advocate Service, an independent agency within the IRS.Stay tuned for the Taxpayer Advocate Service defence of the little taxpayer resident outside the United States in her last address to US Congress. We will also review a non-reporting tax compliance case that resulted in revocation of LPR (green card) status, and take a current look at US IRS initiatives for conspiracy charges against a foreign bank.Pursuant to Treasury Circular 230 regulations, you are advised that this article contains general information only, and has not been prepared to be used, and cannot be used, by you for the purpose of avoiding such penalties that may be imposed by the IRS regarding the matters or information provided in such article.Martha Myron, JP CPA CFP (US) TEP, is an international Certified Financial Planner practitioner in private wealth management. She specialises in independent fee-only cross border investment, tax, estate, and strategic retirement planning services for Bermuda residents with US and multi-national connections, and US citizens living and working abroad. She is a Masters in Law candidate in International Tax and Financial Services and member of the American Citizens Abroad Tax Advisory Council for Bermuda. www.americansabroad.org For more information, contact mmyron[AT]patterson-partners.com martha.myron[AT]gmail.com or 296 3528 at Patterson Partners Ltd.