IRS Faces Challenges in Enforcing FATCA Penalties on Nonfilers with Large Foreign Accounts
The Internal Revenue Service (IRS) is struggling to enforce penalties on taxpayers with significant foreign bank accounts who fail to comply with the Foreign Account Tax Compliance Act (FATCA). A report by the Treasury Inspector General for Tax Administration (TIGTA) highlights that despite identifying 405 noncompliant taxpayers, only a small fraction have been examined or penalized. The IRS's Offshore Private Banking Campaign aimed to address this noncompliance but has seen limited success. Of the 164 taxpayers referred for examination, only 12 were examined, resulting in $39.7 million in additional taxes and $80,000 in penalties. Meanwhile, 241 taxpayers received educational or soft letters, but none faced the initial $10,000 FATCA nonfiling penalty. The report suggests that the IRS needs to establish performance measures to assess the effectiveness of the FATCA program. 
