The Foreign Account Tax Compliance Act (FATCA) is a 2010 U.S. federal law requiring all non-U.S. foreign financial institutions (FFIs) to search their records for customers with indicia of a connection to the U.S., including indications in records of birth or prior residency in the U.S., or the like, and to report such assets and identities of such persons to the United States Department of the Treasury.

Nonetheless, customers in Puerto Rico must complete forms W-8BEN and W-8BEN-E as part of the account opening process and reportings are almost the same as other U.S. banks.

"[5] The U.S. has yet to comply with FATCA itself, because as of 2017, it has not yet provided the promised reciprocity to its partner countries and it has failed to sign up to the Common Reporting Standard (CRS).

[15][16][17] FATCA was reportedly enacted for the purpose of detecting the non-U.S. financial accounts of U.S. resident taxpayers rather than to identify non-resident U.S. citizens and enforce collections.

FATCA is used to locate U.S. citizens (residing in the U.S. or not) and "U.S. persons for tax purposes" and to collect and store information including total asset value and Social Security number.

As implemented by the intergovernmental agreements (IGAs) (discussed below) with many countries, each financial institution will send the U.S.-person's data to the local government first.

[30]: 10–11  One report included a statement of a finding that participation in the QI program was too low to have a substantive effect as an enforcement measure and was prone to abuse.

According to Zucman's analysis, this sheltering of assets results in US$36 billion in lost tax revenue annually in the United States.

[36] Supplementing the reporting regimes already in place was stated by Senator Max Baucus (D-MT) to be a means of acquiring more financial data and raising government revenue.

[37] After committee deliberation, Sen. Max Baucus and Rep. Charles Rangel (D-NY) introduced the Foreign Account Tax Compliance Act of 2009 to Congress on October 27, 2009.

FATCA has the following important provisions: Foreign financial institutions which are themselves the beneficial owners of such payments are not permitted a credit or refund for taxes withheld, absent a treaty override.

In practice, since the introduction of the Common Reporting Standard, FFIs are required to confirm the residence of all account holders as well as their US status.

[35] (Jane Gravelle, a specialist in economic policy at the Congressional Research Service, has asserted that this figure is small relative to her estimate of $40 billion per year as the cost of international tax evasion.

"[35] "The IRS has claimed that over ten billion dollars in additional tax revenues will be recovered from offshore accounts over the next decade.

[81] The Deputy Assistant Secretary for International Tax Affairs at the US Department of the Treasury stated in September 2013 that the controversies were incorrect (myths).

[82] In April 2017 the Committee on Oversight and Government Reform, led by Congressman Mark Meadows, held a hearing on unintended consequences of FATCA.

Originally, ACA called for the US to institute residence-based taxation (RBT) to bring the United States in line with all other OECD countries.

[178] In March, 2015, the United States Senate Committee on Finance sought public submissions to a number of Tax Reform Working Groups.

In 2014, attorney James Bopp, Republicans Overseas, and Senator Rand Paul of Kentucky, Mark Crawford, among others, brought suit challenging the constitutionality of FATCA.

[193] On September 11, 2018, the U.S. Government successfully prosecuted its first case against an individual for conspiracy to defraud the United States by failing to comply with FATCA.

Former CEO of (liquidated) Loyal Bank Limited,[a] Adrian Paul Baron (a British citizen) was arrested in Hungary, then transported to the U.S. for trial.

for reporting foreign financial assets, requiring the filing of Form 8938 Archived April 21, 2016, at the Wayback Machine with income tax returns.

[210][211] France, Germany, Italy, Spain, and the United Kingdom announced in 2012 they consented to cooperate with the U.S. on FATCA implementation,[212][213] as did Switzerland, Japan[214] and South Africa.

[223] As enacted by Congress, FATCA was intended to form the basis for a relationship between the U.S. Department of the Treasury and individual foreign banks.

Some FFIs responded[224] however, that it was not possible for them to follow their own countries' laws on privacy, confidentiality, discrimination, and so on and simultaneously comply with FATCA as enacted.

The agreements generally require parliamentary approval in the countries they are concluded with, but the United States is not pursuing ratification of this as a treaty.

[206][229] The Securities and Exchange Board of India (SEBI) said "FATCA in its current form lacks complete reciprocity from the US counterparts, and there is an asymmetry in due-diligence requirements."

As of 2024[update], the following jurisdictions have concluded intergovernmental agreements with the United States regarding the implementation of FATCA, most of which have entered into force.

[260] The Common Reporting Standard requires each signatory country to gather the full identifying information of each bank customer, including additional nationalities and place of birth.

Prior to the implementation of CRS, there had been no other method of fully and globally identifying immigrants and emigrants and citizens by way of their identification numbers, birthplaces, and nationalities.