US funds face huge costs after tax clampdown

Fund managers, IFAs and investors could be hit with huge costs after the US Senate passed laws forcing millions of people in funds holding US assets to make a declaration to the American tax authorities.

From 1 January 2013, they will be forced to report to the IRS or face punitive penalties, after the Senate approved the laws in a bid to combat tax evasion, the Times reports. Individuals who have never been to the US, and who have no family there, could still have to sign a statement swearing they do not owe tax if their money is invested in a fund holding US assets. Financial institutions fear the Foreign Account Tax Compliance Act (Fatca), signed into law by President Obama in March, could cost them billions of pounds as they struggle to get individuals to comply. To meet with F...