Hungary became the latest country to agree to help the United States enforce the Foreign Account Tax Compliance Act. By signing an agreement with the United States in February of 2014, Hungary joined Switzerland, the Cayman Islands, and many other former international tax havens as countries working with the U.S. to enforce FATCA.
The international tax consultants at LSL CPAs believe the Hungarian signing is a strong signal to U.S. taxpayers with international accounts to accept the inevitability of complying with the enforcement of the tax code.
The agreement was signed by Andre Goodfriend of the US Embassy and the Hungarian ministry’s state secretary of taxation and finances, Gábor Orbán. With Russia still resisting signing a FATCA agreement, Hungary became the first former Eastern bloc country to come on board. Gábor Orbán said, “Hungary is the 21st country in the world and the first one from the region to sign this agreement.”
Enacted in 2010, FATCA targets tax evasion by US taxpayers who use foreign financial accounts as tax havens. By providing the necessary legal framework for the effective implementation of FATCA by Hungarian banks and other financial institutions, the agreement removes Hungary from the list of potential tax havens. There is a strong belief in the international tax community that, eventually, there will be worldwide compliance with FATCA.
Goodfriend declared his appreciation of Hungary taking this step to help the United States: “Today’s signing marks a significant step forward in our countries’ efforts to work collaboratively to combat offshore tax evasion – an objective mutually benefiting our two countries. We appreciate Hungary’s commitment to enhancing our bilateral cooperation to improve international tax compliance.”
The International tax consultants at LSL CPAs believe this is the first former Eastern Bloc dominos to fall. Although Russia remains resistant, other countries like Czechoslovakia, Bulgaria and Romania are sure to follow the trend set by Hungary. If you need help with foreign accounts and avoiding IRS tax problems, don’t hesitate to contact the foreign tax team at LSL CPAs in Orange County.
Under U.S. Treasury Department Regulations, any federal tax advice in this article is not intended or written to be used for (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
It is important to note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate. To learn more about how these issues might apply to your particular international accounts or financial holdings, please call LSL CPAs international tax accountant Yana Weaver at 714.569.1000.
