On November 29, 2013, the Cayman Islands and the U.S. Signed a FATCA IGA. The Cayman Islands IGA is a Model 1B agreement, meaning that FFIs in the Cayman Islands will be required to report tax information about U.S. account holders directly to the Cayman Islands Tax Information Authority. The Cayman Islands Tax Information Authority will in turn relay that information to the IRS. Additionally, the United States and the Cayman Islands also signed a new Tax Information Exchange Agreement (TIEA), to take the place of the original TIEA signed in 2001. The IGA is non-reciprocal; the IRS will not report to the Cayman Islands on Caymanian account holders in the U.S.
U.S. taxpayers with foreign bank accounts should begin the process of coming into compliance with their reporting obligations, if they have not already done so. The IRS’s Offshore Voluntary Disclosure Program (OVDP) is still available. For more information on the government’s offshore enforcement efforts, FBAR penalties, and the OVDP, please contact Jim Mastracchio at (202) 861-1650 (Jmastracchio@bakerlaw.com) or Jay Nanavati, (202) 861-1747 (firstname.lastname@example.org), Baker Hostetler LLP, 1050 Connecticut Ave., Washington, DC 20036 (www.bakerlaw.com).