Americans abroad taxes and global financial accountability - awc-ff-april 2012
Americans abroad: Taxes & Rising Global Financial Accountability A presentation for the Fireside Forum, American Women’s Club of Oslo,Norway April 23, 2012JUNE EDVENSON, AMERICAN ATTORNEY EDVENSON CONSULTING
Rising Global Financial Accountability Problem Individuals and companies try to reduce their tax burden at a time when governments need the funds for necessary services, infrastructure and investment. Needs A ’level playing field’ for global financial accountability Greater transparency of transactions across borders Regulations that reduce the risk of advantage-seeking behaviors
Rising Global Financial AccountabilityGoalsTo share the burden of taxationFor the benefit of the publicFor use for public and social causes.DirectionsTo reduce bribery and corruptionBrought about by lack of transparencyIn financial transactionsOf all types and stripes.
Financial Accountability in the News a few recent examples . . .1. Swiss banks and UBS case2. SWIFT system and Iranian trade sanctions3. Greece, internal fraud and corruption4. Italy, internal fraud and corruption5. Multi-lateral pressures for internal control, transparency and accountability
Accountability & Americans abroad Impact Americans must report their foreign income and taxes (and U.S. Income) to the U.S. Internal Revenue Service (IRS) More recent requirements include sharing information on the balance in foreign bank accounts & foreign securities Effects vary in different countries In Norway, our high tax rate means we usually would not owe tax to the U.S. after reporting. Ex: In France, their lower tax rate affects Americans who may owe tax to the U.S.
American Reactions Anger: Why me? Confusion: What must I do? Am I in trouble? Resentment: I shouldn’t owe the U.S; I don’t live there. Other Responses: Ex: Renunciation of U.S. citizenship Ex: Advice by the Taxpayer Advocate Service Lobbying Options (2): Comply or revoke your citizenship
American Filing Requirements IRS Personal Income Tax Forms American citizenship Dual citizenship would not affect the duty to file American citizenship requires one to file with the IRS If a person is behind, file the 3 prior years plus the current year Minimum income that requires filing personal income forms: Single: (2011): Under 65, $9,500; over 65: $10,950 Married filing separately (2011): $3,700 (Convert 2011 NOK to dollars by dividing by 5.6022) Resources: http://www.irs.gov/pub/irs-pdf/i1040gi.pdf
Bank Information Filing Requirements FBAR – Report of Foreign Bank and Financial Accounts Form TDF 90-22.1: http://www.irs.gov/pub/irs- pdf/f90221.pdf Form 8938 – Statement of Specified Foreign Financial Assets http://www.irs.gov/pub/irs-pdf/f8938.pdf http://www.irs.gov/pub/irs-pdf/i8938.pdf
FBAR Process and Goals Who must file? You send this to Dept. of Treasury if you have the equivalent of at least a total of $10,000 in a foreign bank account that year. This includes control or rights to access that account. It also includes options, funds, annuities, securities and insurances. What information must one file? For each account: The name and address of your bank/security/other financial institution The account number and name(s) on the account The highest balance in the account in the given year
Form 8938 Process and Goals Who must file? You only file it if (1) you have to file an income tax return for that year, even if your foreign assets meet the minimum amount to be reported on the form, and (2) your assets total are over the amount at end of year: For 2011: $200,000 single or married filing separate, and $400,000 married filing jointly. What information must one file? This goes with your income tax return to the IRS. It includes: For each account: The name and address of your bank/security/other financial institution The account number and name(s) on the account The balance ’range’ in the account in the given year
Two Americans with foreign assets The slacker, an example: The honest hard-worker: Lives in Miami Lives & works in Norway Makes money in the U.S. Pays large income taxes he can send abroad to Norway Sends it to a Cayman Reports to the IRS Islands bank. Does not owe tax to the Does not declare it in the U.S. U.S. for tax
Looking to the future Positive Consequences Unavoidable Results Larger tax collections Americans overseas from persons who should experience a seemingly pay tax unfair reporting burden: Less avoidance of tax Difficult forms liability among ex-pats Scary deadlines Creates a model for other Lack of ease to understand nations to follow Forces those with no Begins to level the playing resulting payment field and close gaps in obligation to produce accountability caused by time-consuming reports to national borders the U.S. government
Making the right decision Ethics in a shrinking world Cosmopolitanism – making the world better for all. Justice and re-distribution of wealth Works to reduce financial market burdens on the poor Globalization means a more equitable distribution of wealth. The role of personal responsibility Consequentialism: What is the result? ’Doing the right thing’: Following the law. Virtue ethics: Being a ’good’ person.