Perspective of Foreign Accounting Tax Compliance Act as a Future Substitute of Foreign Bank Account Report

Abstract

In this paper, we discuss FATCA (Foreign Account Tax Compliance Act) and whether it could successfully operate in collaboration with the existing FBAR (Foreign Bank Account Report). In order to provide such discussion, we define these two regulations, their initial premise for creation, and means of achieving their objectives. We note that these two regulations were created with the same premise of improving tax compliance but with different outcomes. Further, we argue that IRS created FATCA in order to improve compliance of the ineffective FBAR. In fact we contend that even though these two regulations are separate from each other, the reasoning for the creation of FATCA was the inability of IRS to properly administer and control FBAR. However, with the creation of FATCA, we argue that IRS is now better equipped to ensure compliance.