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IRS Alerts Foreign Banks about a New FATCA-Related Scam

Sep 24th 2014
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Scammers posing as the IRS are trying to solicit foreign financial institutions for account-holder identity and financial account information under the Foreign Account Tax Compliance Act (FATCA), the tax agency warned in a fraud alert on Wednesday.

These illegal solicitations are known as “phishing” scams, which are typically carried out through the use of unsolicited emails and/or websites that pose as legitimate contacts in order to deceptively obtain personal or financial information, according to the IRS.

FATCA, which went into effect on July 1, was enacted by the United States in an effort to crack down on overseas tax evasion. The law requires foreign financial institutions to report information about accounts held by US taxpayers to the IRS, even if the accounts hold only foreign assets. If a bank refuses to disclose the information, it would be subject to a 30 percent withholding tax on certain US source income payments.

However, under the law, the IRS does not require foreign banks to provide specific account-holder identity information or financial account information over the phone or by fax or email. The IRS also does not solicit FATCA registration passwords or similar confidential account access information.

“Tax scams using the IRS name can take many forms, and they are not limited by national borders,” IRS Commissioner John Koskinen said in a written statement. “People should always be cautious before sending sensitive information to anyone.”

Thousands of financial institutions worldwide have signed FATCA compliance agreements with the United States. But banks in multiple countries and continents have reported to the IRS that they have been approached by scammers who say they are representing the tax agency.

The IRS emphasized on Wednesday that any financial institution that suspects it is the subject of a phishing scam should report the matter to the Treasury Inspector General for Tax Administration (TIGTA) at (800) 366-4484 or through TIGTA’s secure website. Any suspicious emails that contain attachments or links in the message should not be opened, and the email should be forwarded to [email protected].

Phishing was ranked third in the IRS’s top 12 scams for 2014.

Related articles:

FATCA Pacts with US Grow as Law Takes Effect
Identity Theft Tops IRS ‘Dirty Dozen’ List of Scams for 2014


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