IRS Now Sending Personal Account Information to Foreign Governments

The Internal Revenue Service will begin sending large amounts of data about individual’s personal accounts to foreign firms and governments.

In the past, the U.S. government has sent information about foreigners’ US financial-accounts to government authorities abroad, and has received such information about U.S. taxpayers’ overseas accounts. 

However, the Wall Street Journal reports that the agency’s new initiative makes the sharing automatic and its scope much larger.

“This groundbreaking effort has fundamentally altered our relationship with tax authorities around the world, giving us all a much stronger hand in fighting illegal tax avoidance and leveling the playing field,” said IRS Commissioner John Koskinen.

Still, many worry that some foreign governments may not be adept in protecting this data from falling into the wrong hands.

This shared information often contains names, addresses, tax identification numbers, account numbers, account balances, and interest payments among other data.

“Many countries aren’t as stable as the U.S. and their residents fear their safety is at risk if local authorities know about their assets,” said Kevin Packman, a lawyer with Holland & Knight in Miami, who often advises people from Latin America.

However, the IRS has stated it will not share this information with foreign authorities who do not adhere to its “stringent safeguard, privacy, and technical standards.” The agency also has the authority to cease transmissions if it feels safety standards are not being met.  

This week, the IRS added 16 new countries including Brazil, South Africa, and India, and to its list of nations eligible to receive information from the U.S.

This new initiative is part of the Foreign Account Tax Compliance Act, a tax-evasion-detection program enacted in 2010 after the IRS learned that several foreign firms, especially ones in Switzerland, were encouraging U.S. tax payers to hide money abroad.