FATCA is a law that requires participating foreign countries to provide the IRS with information regarding U.S. persons who have an interest in a financial account in those countries. Beginning in 2014 and for the first time in its history the IRS will receive information from foreign countries on a regular basis that will assist the agency in identifying ono-compliant taxpayers who failed to properly report their interest in foreign financial accounts.
Most participating foreign countries began providing the information regarding U.S. persons holding financial accounts in 2014. The IRS is currently establishing groups of Revenue Agents to review the information provided by the foreign financial institutions and the IRS will initiate audits of taxpayers who failed to file the required foreign information returns and report their income from the accounts.
FATCA also requires U.S. persons to file Form 8938 and attach it to their income tax returns to disclose their interest in foreign financial assets. Form 8938 is required to be filed if the foreign financial account balance at the end of the year exceeds $50,000 for an individual or more than $75,000 at any time during the year. The threshold for reporting is different for married individuals.