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US and UK Agree to Share Information

In a bilateral agreement signed by the U.S. and the U.K. on September 14, 2012, the two countries agreed to implement the cooperative information reporting and tax withholding provisions of the Foreign Account Tax Compliance Act (FATCA). The agreement imposes common reporting and due diligence standards on financial institutions within the two countries.

The terms of similar agreements between the U.S. and many other countries, including France, Germany, Italy, and Spain, are currently being negotiated. U.S. taxpayers who have not yet disclosed ownership of a bank account in a country that agrees to the FATCA provisions will likely be discovered through the automatic exchange of information required under the agreement.

The IRS's 2012 Offshore Voluntary Disclosure Program offers U.S. taxpayers an opportunity to disclose previously unreported foreign bank accounts without being subjected to the criminal prosecution or maximum penalty structure that may otherwise apply. U.S. taxpayers with bank accounts in the United Kingdom should carefully weigh their options for disclosure with this increased risk of non-compliance.

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