IRS  agreed with this recommendation. For example, neither database had consistent and  complete information on foreign financial account and other asset  information submitted by Form 8938 filers. IRS Stopped Pursuing a Comprehensive Plan to Leverage FATCA Data to Improve Taxpayer Compliance

We previously recommended that IRS develop a broad strategy, including  a timeline and performance measures, for how IRS intends to use FATCA  information to improve tax compliance. Without such a plan, IRS’s ability to collect and leverage data  collected under FATCA for compliance enforcement and other purposes  is constrained. Overlapping requirements to file both Form 8938 and FBAR increases the  compliance burden on U.S. persons and adds complexity that can create  confusion, potentially resulting in inaccurate or unnecessary reporting. Without congressional action to address overlap in foreign financial  asset reporting requirements, IRS and FinCEN will neither be able to  coordinate efforts to collect and use foreign financial asset information,  nor reduce unnecessary burdens faced by U.S. persons in reporting  duplicative foreign financial asset information. According to Treasury officials, to align FATCA and CRS, Congress  would need to revise statutes to: provide for the collection of information for accounts that residents of  partner jurisdictions maintain at U.S. financial institutions;  require certain U.S. financial institutions to report the account balance  (including, in the case of a cash value insurance contract or annuity  contract, the cash value or surrender value) for all financial accounts  maintained at a U.S. office and held by foreign residents; expand the current reporting required with respect to U.S. source  income paid to accounts held by foreign residents to include similar  non-U.S. source payments;  require financial institutions to report the gross proceeds from the sale  or redemption of property held in, or with respect to, a financial  account; and  require financial institutions to report information with respect to  financial accounts held by certain passive entities with substantial  foreign owners. Persons Living Abroad Encountered from FATCA Implementation, but Opportunities Exist to Enhance Collaboration

		Some U.S. U.S. persons and tax  practitioners located in four of the five countries where we conducted  focus groups and interviews reported that some U.S. persons and U.S.- owned businesses encountered difficulties opening bank accounts with  FFIs after FATCA was enacted, with some FFIs closing U.S. persons’  existing accounts or denying them opportunities to open new accounts. FATCA Implementation Contributed to Increased Renunciations of U.S. Citizenship, but the Extent of the Effect is Unclear

According to Department of State (State) data, the annual number of  approvals of requests for renunciations of U.S. citizenships increased  nearly 178 percent during a 6-year period, from 1,601 in 2011—the year  after FATCA was enacted—to 4,449 in 2016, the most recent year to  which full data on renunciations were available. Agencies have ongoing efforts to address FATCA-related issues, as listed  below, but some are ad hoc, fragmented, or otherwise not part of a  broader effort between Treasury and other agencies such as State or  SSA to use ongoing collaborative mechanisms to monitor and share  information on such issues, and jointly develop and implement steps to  address them:
Treasury officials said they are participating in discussions with FFIs  to address residual issues with access to foreign financial services. Conclusions

In enacting FATCA, Congress sought to reduce tax evasion by creating  greater transparency and accountability over offshore assets held by U.S.  taxpayers. At the same time, IRS  has stopped following its FATCA Compliance Roadmap it developed in  2016 because, according to IRS officials, IRS moved away from updating  broad strategy documents to focus on individual compliance campaigns. Modifying the statutes governing the requirements can fully  address the issues outlined above, and can allow for the use of FATCA  information for prevention and detection of financial crimes. This is similar  to other statutory allowances for IRS to disclose return information for  other purposes, such as for determining Social Security income tax  withholding. Some  U.S. persons living abroad are still facing issues accessing financial  services and employment and obtaining SSNs. Establishing a formal means to collaboratively address burdens  faced by Americans abroad from FATCA can help agencies develop  effective solutions to mitigate such burdens. Enabling access to consistent and complete Form 8938 and tax return  data would help IRS better target compliance initiatives and leverage  limited available enforcement resources. Appendix I: Objectives, Scope, and Methodology

The objectives of this report are to (1) assess the Internal Revenue  Service’s (IRS) efforts to use information collected under the Foreign  Account Tax Compliance Act (FATCA) to improve taxpayer compliance;  (2) examine available foreign financial asset reports submitted by U.S.  persons, including submissions that were below required filing thresholds;  (3) examine the extent to which the Department of the Treasury  (Treasury) administers overlapping reporting requirements on foreign  financial assets; (4) describe similarities and differences between FATCA  and Common Reporting Standard (CRS) reporting requirements; and (5)  examine the effects of FATCA implementation that are unique to U.S.  persons living abroad. We collected  documentation from and interviewed Treasury, IRS, Department of State,  and Social Security Administration officials on steps to monitor and  mitigate such effects.
Why GAO Did This Study

Concerns over efforts by U.S. taxpayers to use offshore accounts to hide income or evade taxes contributed to the passage of FATCA in 2010, which sought to create greater transparency and accountability over offshore assets held by U.S. taxpayers.
House Report 114-624 included a provision for GAO to evaluate FATCA implementation and determine the effects of FATCA on U.S. citizens living abroad. GAO—among other things—(1) assessed IRS's efforts to use FATCA-related information to improve taxpayer compliance; (2) examined the extent to which Treasury administers overlapping reporting requirements on financial assets held overseas; and (3) examined the effects of FATCA implementation unique to U.S. persons living abroad.
GAO reviewed applicable documentation; analyzed tax data; and interviewed officials from IRS, other federal agencies and organizations, selected tax practitioners, and more than 20 U.S. persons living overseas.

What GAO Found

Data quality and management issues have limited the effectiveness of the Internal Revenue Service's (IRS) efforts to improve taxpayer compliance using foreign financial asset data collected under the Foreign Account Tax Compliance Act (FATCA). Specifically, IRS has had difficulties matching the information reported by foreign financial institutions (FFI) with U.S. taxpayers' tax filings due to missing or inaccurate Taxpayer Identification Numbers provided by FFIs. Further, IRS lacks access to consistent and complete data on foreign financial assets and other data reported in tax filings by U.S. persons, in part, because some IRS databases do not store foreign asset data reported from paper filings. IRS has also stopped pursuing a comprehensive plan to leverage FATCA data to improve taxpayer compliance because, according to IRS officials, IRS moved away from updating broad strategy documents to focus on individual compliance campaigns. Ensuring access to consistent and complete data collected from U.S. persons—and employing a plan to leverage such data—would help IRS better leverage such campaigns and increase taxpayer compliance.
Due to overlapping statutory reporting requirements, IRS and the Financial Crimes Enforcement Network (FinCEN)—both within the Department of the Treasury (Treasury)—collect duplicative foreign financial account and other asset information from U.S. persons. Consequently, in tax years 2015 and 2016, close to 75 percent of U.S. persons who reported information on foreign accounts and other assets on their tax returns also filed a separate form with FinCEN. The overlapping requirements increase the compliance burden on U.S. persons and add complexity that can create confusion, potentially resulting in inaccurate or unnecessary reporting. Modifying the statutes governing the requirements to allow for the sharing of FATCA information for the prevention and detection of financial crimes would eliminate the need for duplicative reporting. This is similar to other statutory allowances for IRS to disclose return information for other purposes, such as for determining Social Security income tax withholding.
According to documents GAO reviewed, and focus groups and interviews GAO conducted, FFIs closed some U.S. persons' existing accounts or denied them opportunities to open new accounts after FATCA was enacted due to increased costs, and risks they pose under FATCA reporting requirements. According to Department of State (State) data, annual approvals of renunciations of U.S. citizenship increased from 1,601 to 4,449—or nearly 178 percent—from 2011 through 2016, attributable in part to the difficulties cited above.
Treasury previously established joint strategies with State to address challenges U.S. persons faced in accessing foreign financial services. However, it lacks a collaborative mechanism to coordinate efforts with other agencies to address ongoing challenges in accessing such services or obtaining Social Security Numbers. Implementation of a formal means to collaboratively address burdens faced by Americans abroad from FATCA can help federal agencies develop more effective solutions to mitigate such burdens by monitoring and sharing information on such issues, and jointly developing and implementing steps to address them.

What GAO Recommends

GAO is making one matter for congressional consideration to address overlap in foreign asset reporting requirements. GAO is making seven recommendations to IRS and other agencies to enhance IRS's ability to leverage FATCA data to enforce compliance, address unnecessary reporting, and better collaborate to mitigate burdens on U.S. persons living abroad. State and Social Security Administration agreed with GAO's recommendations. Treasury and IRS neither agreed nor disagreed with GAO's recommendations.