Barclays Closes Bank Accounts & Suspends Funds under FATCA
As one of the few firms worldwide that focuses their entire practice on IRS Offshore Voluntary Disclosure, we have seen the evolution of the FATCA Letter firsthand.
FATCA (Foreign Account Tax Compliance Act) is a law designed to reduce offshore tax evasion by requiring individuals (and businesses) to report and disclose their foreign bank accounts when they meet certain threshold requirements.
More than 100 foreign countries and tens of thousands of foreign financial institutions have agreed to report U.S. account information to the US government.
This has made it very difficult for U.S. account holders to open accounts in foreign countries. Essentially, if you are a U.S. Person (US Citizen, Legal Permanent Resident, or Foreign National who meets the Substantial Presence Test) these foreign banks no longer want your business.
*In fact, some banks are going to great lengths to comply with FATCA, including suspending or closing your account.
We have represented numerous individuals who have accounts in the UK at Barclays. At the inception of FATCA, the Barclay’s FATCA Letter was similar to most other FATCA letters a person may receive.
Unfortunately, in recent weeks we have seen the evolution of the letter evolve into a FATCA Email, which not only warns the individual about FATCA, but has taken a unilateral step to close the and freeze the funds in a separate account of which the individual cannot access until the U.S. Account Holder can prove to Barclay’s that he or she is in compliance.
Example: Michelle receives an email from Barclays saying that it looks like she is in the US account holder (in other words, Barclays has information that Michelle is a US Green Card Holder – even though she has lived in the UK for more than 20+ years). Michelle takes a few weeks to process the information, learn about FATCA, and decide how she should respond.
After a few weeks have gone by, Michelle receives a bank statement showing a zero balance for that account they used to have more than 700,000 pounds. Michelle immediately follows up with the bank, only to learn that the bank closed the account and placed the funds into suspended status; Michelle must now prove compliance with FATCA in order to have Barclay’s release the funds.
Getting into IRS Voluntary Disclosure Compliance
If you have unreported foreign accounts or offshore income, it is important to get into compliance. One of the fastest and most effective methods for compliance is through one of the offshore disclosure programs.
Golding & Golding, A PLC
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.