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Latino Daily News

Wednesday October 19, 2011

Costa Rican Banks Now Required to Report Balances to IRS

Costa Rican Banks Now Required to Report Balances to IRS

Photo: New IRS Requirement, Costa Rican Banks

Click Here to Enlarge Photo

Banks, investment funds and stock exchanges in Costa Rica and around the world must report, starting July 2013, the balances and movements on investments of U.S. citizens to the Internal Revenue Service (IRS).

The obligation is based on the Fair and Accurate Credit Transactions Act, a United States federal law, passed by the United States Congress that asks agencies to document all those customers and transfer this information to U.S. tax collector.

Financial institutions violating the provision are exposed to the IRS withholding 30% of all interest, dividends or profits sent from the United States.

“Factat applies to all entities around the world as the U.S. wants to better regulate their capital and above all raise more the taxpayer escapees”, Enrique Rojas, tax manager with Deloitte told La Nación.

Too meet the requirements, financial institutions must sign an agreement with the IRS, and to inform customers about the extent to which they, in turn, authorize a disclaimer.

“If the customer does not want to sign the release, the entity must close the account, because otherwise, violates the Fatca”, said Rojas, who commented that many of these people have such investments outside the US hidden away from the IRS.