Emily Clarke

What is FATCA?

The world has gotten much smaller due to the Internet, and this means that trading and investing in things like cryptocurrencies is no longer a localized activity. People from all over the planet want to get in on the crypto boom, and this often means trading and investing across international boundaries.

Unfortunately, this can be a problem for the Internal Revenue Service (IRS) since foreign investments may pose a threat to national security. In addition, if gains and losses are had overseas, the IRS may not be able to track this activity and collect taxes on what is owed.

The Foreign Account Tax Compliance Act

To help the IRS keep track of foreign accounts, the Foreign Account Tax Compliance Act (FATCA) was passed in 2010. Although cryptocurrencies were not around at the time of FATCA's passage, the Act can help to mitigate losses for the government due to unrealized tax revenue.

FATCA is part of the HIRE Act. This is a law that was put in place to provide an incentive for United States employers to hire more workers, and it provided tax holidays for employers to bring on and retain new workers. FATCA was connected to the HIRE Act as a way to receive reports from foreign financial institutions that hold assets owned by U.S. entities.

Crypto Taxes and FATCA

When it comes to FATCA and crypto taxes, the Act helps to keep U.S. investors accountable for crypto investments overseas. The focus on FATCA and crypto taxes has become a bigger deal in recent years as more and more investments have taken place in crypto markets. Get FATCA and Crypto Taxes information with Our Experts. Explore Now for Hassle-Free Compliance by visiting this website!

Additionally, the U.S. Tax Code is still evolving when it comes to the government's view on crypto, so having FATCA in place is vital to stop investors from hiding assets in foreign countries while paying no taxes on gains. FATCA can also potentially stop threats to the U.S. that may come from extortion and other crimes involving finance.

If money is demanded to be sent in exchange for protection, a criminal may require an overseas transaction in crypto. Being able to track where crypto and other financial vehicles are stored around the world can protect individuals and companies in the United States from becoming targets and victims.

Author Resource:-

Emily Clarke writes about portfolio management, finance tracking and Consumer SaaS services. You can find her thoughts at cryptocurrency tools blog.