Don't Mess With Taxes

The Vatican takes scripture seriously, especially Mark 12:17.

"Jesus said to them, 'Render to Caesar the things that are Caesar's, and to God the things that are God's.' And they marveled at him."

It's not quite amazement, but it is definitely interesting to see the Holy See signing on to the Foreign Account Tax Compliance Act.

Panoramic photo of St. Peter's Square, the basilica and obelisk, from Piazza Pio XII in Vatican City courtesy I, Dfmalan via Wikimedia CC.

FATCA, FBAR facts: Known in tax-speak at FATCA, this federal law generally requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts.

Both affected taxpayers and the professionals who advise them say the law is, at best, a pain. Those who are vociferously fighting it point to a section of the National Taxpayer Advocate's 2013 annual report to Congress that noted the law "has the potential to be burdensome, overly broad, and detrimental to taxpayer rights."

The Internal Revenue Service, however, argues that FATCA and its companion Report of Foreign Bank and Financial Accounts, aka FBAR, requirements only "make it tougher for that relatively small number of taxpayers trying to hide assets and income offshore."

Quick time out for a tax deadline note. The IRS also reminds folks facing an FBAR filing requirement that they have until June 30 to report their foreign assets. And U.S. taxpayers living abroad must file their annual tax returns, and report any FACTA-related assets on Form 8938, by June 15. Now back to FACTA in Rome.

Part of continuing global crackdown: IRS has been aggressively seeking global support in its efforts to track down, and collect from, previously hidden foreign accounts.

The Vatican's participation in this global taxing effort puts it in the company of more the more than 60 countries that have agreed to the Foreign Account Tax Compliance Act. Also signing on this week was South Korea.

The tax compliance agreement is the first intergovernmental pact between the United States and the home of the Catholic Church. Under the terms, the Vatican Bank will adopt an automatic reporting system on accounts held by U.S. taxpayers.

In jointly announcing the signing of the historic agreement, Archbishop Paul Gallagher, the Holy See's Secretary for Relations with States, and U.S. Ambassador to the Vatican Kenneth F. Hackett note that the forthcoming exchange of tax information underscores the commitment of both parties to promote and ensure ethical behavior in the financial and economic fields.

"In particular, this agreement will prevent tax evasion and facilitate the compliance of fiscal duties by those U.S. Citizens who conduct financial activities in Vatican City State," according to the two governments' representatives.

Papal focus on the needy: And in language that no doubt was inspired and approved by Pope Francis, who has from the get-go called for more help to be provided to the world's poor, the statement notes the economic and corresponding social (and implied spiritual) importance of taxes.

"Ensuring the payment of taxes and preventing tax evasion are of crucial economic importance for every community since adequate tax revenues and public spending are indispensable for governments to become instruments of development and solidarity, to encourage employment growth, to sustain business and charitable activities, and to provide systems of social insurance and assistance designed to protect the weakest members of society.

"In a context of economic globalization, it is therefore essential to strengthen the exchange of information with the view to prevent tax evasion. The present agreement is thus based on the most up-to-date global standards to curtail offshore tax evasion through the automatic exchange of tax information."

The agreement makes it clear that at least for now, the U.S. Treasury is seeing ever-increasing support for its efforts to collect what should be rendered unto it.

So all you folks who thought you had special leave to ignore U.S. tax laws because your money was being held in a particularly sacred place, think again. And re-read your Bible.

You also might find these items of interest:

• Offshore account owners more likely to confess Swiss holdings
• Beanie Babies billionaire caught in offshore tax evasion net
• Obama says corporate tax inversions are 'gaming the system'