This document outlines responsibilities of US persons for taxation purposes, including citizenship vs residency based taxation. It discusses recent media coverage of former FIFA and Guardian executives being investigated by the IRS. It also summarizes the Foreign Account Tax Compliance Act (FATCA) which requires foreign financial institutions to identify and report US persons holding assets abroad to avoid tax obligations, and the impact on governments, financial institutions, and individuals.
Fatca high cost initiative to curb tax evasionAranca
Enacted by the United States Congress in March of 2010, the Foreign Account Tax Compliance Act (FATCA) is a federal law meant to deter tax evasion. Read details from Aranca's Business Research Experts here.
North American countries have implemented anti-corruption laws. Should other areas adopt such practices? What impact would such laws have on business in a region?
In this powerpoint presentation, tax attorney Mike DeBlis discusses the mechanics of FATCA, the ripple effect that this law has had on those with unreported foreign assets, and why it is one of the most controversial laws that no one has ever even heard about.
De-Risking Web Seminar held on 9/26/16 by Stanley Foodman of Foodman CPAs & Advisors and Global Radar to discuss the impact of de-risking on financial institutions
Moving "value" through commodities is often more important than moving money. Law enforcement focuses on combating money laundering, generating data in such volumes that is not usable. Fighting terrorist financing depends on good intelligence, not mere report generation.
Fatca high cost initiative to curb tax evasionAranca
Enacted by the United States Congress in March of 2010, the Foreign Account Tax Compliance Act (FATCA) is a federal law meant to deter tax evasion. Read details from Aranca's Business Research Experts here.
North American countries have implemented anti-corruption laws. Should other areas adopt such practices? What impact would such laws have on business in a region?
In this powerpoint presentation, tax attorney Mike DeBlis discusses the mechanics of FATCA, the ripple effect that this law has had on those with unreported foreign assets, and why it is one of the most controversial laws that no one has ever even heard about.
De-Risking Web Seminar held on 9/26/16 by Stanley Foodman of Foodman CPAs & Advisors and Global Radar to discuss the impact of de-risking on financial institutions
Moving "value" through commodities is often more important than moving money. Law enforcement focuses on combating money laundering, generating data in such volumes that is not usable. Fighting terrorist financing depends on good intelligence, not mere report generation.
The Cost of Doing Business? Laws Against Bribery of Foreign Public OfficialsNow Dentons
In this presentation, Alan Monk looks at the laws against bribery of foreign Public Officials. Giving an overview of the Corruption of Foreign Public Officials Act (Canada), the Foreign Corrupt Practices Act (United States), and the Bribery Act (United Kingdom) as well as what companies can do in response to the legislation.
Kegler Brown, in conjunction with NACM Great Lakes Region, presented its annual Legal Conference for Credit Professionals on October 16, 2014. The half-day seminar is central Ohio's premier legal conference providing compelling and timely topics that are imperative for credit managers.
This year's topics included handling corruption in international sales, recovering assets transferred by debtors, electronic commerce and a bankruptcy law update.
Tackling Financial Crime through Business Process ManagementCognizant
Failure to meet stringent anti-money laundering regulations or allowing suspicious transactions to go undetected can have a severe impact on financial institutions. BPM (Business Process Management) tools allow you to take a holistic approach for preventing financial crime.
Financial Crime In The Real Estate Sector - Countering Illicit Money Flows.Aperio Intelligence
We are a corporate intelligence and financial crime advisory firm based in the City of London. We specialise in: conducting enhanced due diligence on high risk customers and third parties; integrity due diligence on critical acquisitions and investments; market entry and political risk analysis; and investigations. We provide tailored training and advisory services relating to financial crime, in particular anti-money laundering and sanctions compliance. Our clients include some of the world’s leading regulated financial institutions and corporations. Our team has decades of collective experience in advising clients on financial crime and intelligence gathering, helping them to manage risk and maximise potential.
Contact us today for further information on how we can help you.
Kegler Brown global business attorneys Luis Alcalde and David Wilson presented " Exporting from the United States: Key Legal Considerations" at the 2014 Ohio Export Internship Program.
They discussed international trade in a legal context, international trading or transfers, due diligence, FCPA and why compliance is important.
Luis Alcalde presented "Business Risk: Latin America + Cuba" on November 18-19 at the 2015 Great Lakes Region Credit Conference.
The presentation international trade in a legal context, foreign exchange risk and business opportunities regarding Latin America and Cuba.
This section of Solutions for America highlights the key issues surrounding current immigration legislation and offers reasons to upgrade the current policies.
This presentation serves as study notes for the e-learning material titled: "South African Hedge funds and international developments"
These notes focus on FATCA and its Impact on the Hedge Fund Industry.
http://www.hedgefund-sa.co.za/fatca
The partnership of Kegler Brown, the Ohio Small Business Development Centers at Columbus State Community College (Ohio SBDC) and the Ohio Development Services Agency, presented "Export Compliance: Keeping you Safe, Solvent + Out of Trouble!" as a panel discussion on October 29, 2015. This free, morning briefing hosted a panel of local industry professionals that shared their insights and best practices for exporting.
Roberta Winch, international program director at the Ohio SBDC introduced the speakers and opened the program and Martijn Steger, leader of the global business team at Kegler Brown, moderated the panel. Speakers included: Vinita Bahri-Mehra, global business attorney at Kegler Brown; Sara Chianese, ocean export coordinator at Team Worldwide; Vickie Lanich, president at Export Compliance Connections, LLC; Heather Schmidt, associate, global trade sales officer at J.P. Morgan Commercial Bank.
In 2010, Congress passed the Foreign Account Tax Compliance Act (FATCA) to address underreporting of income held by US taxpayers in foreign accounts. FATCA will basically require foreign financial institutions to either agree to provide the IRS with information about its US account holders or be subject to withholding taxes on their US source income. Join us for a one hour panel presentation on FATCA, including the policy and processes behind its implementation, an overview of the new law and practical compliance tips. Our panel of speakers includes: Roger Royse, Royse Law Firm Mary Kopczynski, J.D./Ph.D., CEO, Eight of Nine Consulting, LLC Richard Hinton, Seconded Partner, KPMG LLP
The Cost of Doing Business? Laws Against Bribery of Foreign Public OfficialsNow Dentons
In this presentation, Alan Monk looks at the laws against bribery of foreign Public Officials. Giving an overview of the Corruption of Foreign Public Officials Act (Canada), the Foreign Corrupt Practices Act (United States), and the Bribery Act (United Kingdom) as well as what companies can do in response to the legislation.
Kegler Brown, in conjunction with NACM Great Lakes Region, presented its annual Legal Conference for Credit Professionals on October 16, 2014. The half-day seminar is central Ohio's premier legal conference providing compelling and timely topics that are imperative for credit managers.
This year's topics included handling corruption in international sales, recovering assets transferred by debtors, electronic commerce and a bankruptcy law update.
Tackling Financial Crime through Business Process ManagementCognizant
Failure to meet stringent anti-money laundering regulations or allowing suspicious transactions to go undetected can have a severe impact on financial institutions. BPM (Business Process Management) tools allow you to take a holistic approach for preventing financial crime.
Financial Crime In The Real Estate Sector - Countering Illicit Money Flows.Aperio Intelligence
We are a corporate intelligence and financial crime advisory firm based in the City of London. We specialise in: conducting enhanced due diligence on high risk customers and third parties; integrity due diligence on critical acquisitions and investments; market entry and political risk analysis; and investigations. We provide tailored training and advisory services relating to financial crime, in particular anti-money laundering and sanctions compliance. Our clients include some of the world’s leading regulated financial institutions and corporations. Our team has decades of collective experience in advising clients on financial crime and intelligence gathering, helping them to manage risk and maximise potential.
Contact us today for further information on how we can help you.
Kegler Brown global business attorneys Luis Alcalde and David Wilson presented " Exporting from the United States: Key Legal Considerations" at the 2014 Ohio Export Internship Program.
They discussed international trade in a legal context, international trading or transfers, due diligence, FCPA and why compliance is important.
Luis Alcalde presented "Business Risk: Latin America + Cuba" on November 18-19 at the 2015 Great Lakes Region Credit Conference.
The presentation international trade in a legal context, foreign exchange risk and business opportunities regarding Latin America and Cuba.
This section of Solutions for America highlights the key issues surrounding current immigration legislation and offers reasons to upgrade the current policies.
This presentation serves as study notes for the e-learning material titled: "South African Hedge funds and international developments"
These notes focus on FATCA and its Impact on the Hedge Fund Industry.
http://www.hedgefund-sa.co.za/fatca
The partnership of Kegler Brown, the Ohio Small Business Development Centers at Columbus State Community College (Ohio SBDC) and the Ohio Development Services Agency, presented "Export Compliance: Keeping you Safe, Solvent + Out of Trouble!" as a panel discussion on October 29, 2015. This free, morning briefing hosted a panel of local industry professionals that shared their insights and best practices for exporting.
Roberta Winch, international program director at the Ohio SBDC introduced the speakers and opened the program and Martijn Steger, leader of the global business team at Kegler Brown, moderated the panel. Speakers included: Vinita Bahri-Mehra, global business attorney at Kegler Brown; Sara Chianese, ocean export coordinator at Team Worldwide; Vickie Lanich, president at Export Compliance Connections, LLC; Heather Schmidt, associate, global trade sales officer at J.P. Morgan Commercial Bank.
In 2010, Congress passed the Foreign Account Tax Compliance Act (FATCA) to address underreporting of income held by US taxpayers in foreign accounts. FATCA will basically require foreign financial institutions to either agree to provide the IRS with information about its US account holders or be subject to withholding taxes on their US source income. Join us for a one hour panel presentation on FATCA, including the policy and processes behind its implementation, an overview of the new law and practical compliance tips. Our panel of speakers includes: Roger Royse, Royse Law Firm Mary Kopczynski, J.D./Ph.D., CEO, Eight of Nine Consulting, LLC Richard Hinton, Seconded Partner, KPMG LLP
The Federal Corrupt Practices Act (“FCPA”) prohibits a U.S. company or person from bribing foreign government officials to obtain a business advantage. Along with this seemingly simple restriction comes accounting and record keeping requirements with which companies must comply. The FCPA requires the implementation of a compliance program which addresses FCPA concerns and establishes an FCPA corporate policy. This webinar covers the basics of the FCPA, including an introduction to the regulators, both the SEC and DOJ, and recent communications to the public regarding the FCPA from these regulatory bodies. The standards for a compliance program review is analyzed, including what makes a program current and effective as well as how often the program requires review. The role of a compliance coordinator is discussed, as is record keeping, training, and retaliation. Finally, meals and entertainment, gifts, travel, charitable contributions, and hiring are all discussed with reference to recent government actions and legal decisions.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/foreign-corrupt-practices-act-compliance-2021/
Luis presented to Brazilian law firm Peixoto e Cury Advogados on April 12, 2012, in Sao Paulo, Brazil. Luis discussed the background of the Foreign Corrupt Practices Act, along with the rules, regulations and sanctions.
In house Counsel Alert: Foreign and Domestic Corruption PresentationThis account is closed
In this audio presentation, Glen Jennings and Michael Misener (standing in for Kristine Robidoux) from Gowlings discuss Foreign and Domestic Corruption including, an overview of corruption globally; an outline of the Canadian legislative framework; and a discussion of some key case studies. They provide in-depth analysis of the Griffiths Energy Case and highlight what in-house counsel can learn from it.
The Federal Corrupt Practices Act (“FCPA”) prohibits a U.S. company or person from bribing foreign government officials to obtain a business advantage. Along with this seemingly simple restriction comes accounting and record keeping requirements with which companies must comply. The FCPA requires the implementation of a compliance program which addresses FCPA concerns and establishes an FCPA corporate policy. This webinar covers the basics of the FCPA, including an introduction to the regulators, both the SEC and DOJ, and recent communications to the public regarding the FCPA from these regulatory bodies. The standards for a compliance program review is analyzed, including what makes a program current and effective as well as how often the program requires review. The role of a compliance coordinator is discussed, as is record keeping, training, and retaliation. Finally, meals and entertainment, gifts, travel, charitable contributions, and hiring are all discussed with reference to recent government actions and legal decisions.
Part of the webinar series: Corporate & Regulatory Compliance Boot Camp 2022 - Part 1
See more at https://www.financialpoise.com/webinars/
The Impact of FATCA and CRS on Employee Share Plans and Share OwnershipAndrea Huck-Esposito
2015 heralds the start of US FATCA report submissions, requiring global reporting of financial accounts to the US. Following on from FATCA, the Organisation for Economic Co-operation and Development (OECD) are introducing agreements for a Common Reporting Standard (CRS). The CRS is designed to extend ‘FATCA-style’ reporting across other jurisdictions with an expectation that over 40 countries will adopt this. Join this informative discussion to better understand what FATCA and CRS means, learn about the related time frames and reporting obligations, and more importantly, find out what the impact of these regulations is to both employee share plans and share ownership. Come with questions, leave with answers on this tricky topic.
$60 Billion in US Extraterritorial Enforcement, Lecture Slides, Hong Kong, Fa...Paul Backer
US imposed $60 billion in penalties against companies for actions outside the US violating US administrative and substantive law including AML, antitrust, combating the financing of terrorism, criminal, Dodd-Frank, FATCA, FCPA, regulatory, RICO, sanctions, Sarbanes – Oxley, securities and others. Implementing effective compliance, remediation, mitigation, risk management and whistleblower policies for companies transacting outside the US.
The Department of Treasury issued additional guidance on FATCA compliance including final versions of various disclosure forms, statement of specified foreign financial assets, and new regulations for foreign financial institutions - O'Connor Davies - New York CPA Firm, New York City
A UBO is an individual who ultimately owns or controls 25% or more
of an entity (whether directly as a shareholder or indirectly via control
of companies) or other entities or structures that control the entity. In
short, it is the ultimate beneficiary regardless of the chain of control.
Thoughts on Price Optimization in the age of Compulsion LoopsDerren Joseph
Revenue Management and Pricing International hosted a conference on June 6th 2013. This brief presentation considered the emerging discourse on 'compulsion loops' and whether it can inform our thinking price optimization.
Thoughts on Price Optimization in the age of Compulsion Loops
Understanding fatca icatt 07-01-15
1.
2. This document or presentation is not intended or written to be used,
and may not be used, for the purpose of avoiding penalties that may be
imposed on the taxpayer.
4. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – FATCA
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – Non qualified insurance policies
• Amnesty
• Q&A
5. Responsibilities of US persons in general
- What is a US Person?
• Passport holders
• Permanent residents
• Substantial presence
• Accidental Americans
• NRA spouses who make a Sec 6013g election
7. Responsibilities of US persons in general
- Filing Threshold
http://www.irs.gov/pub/irs-pdf/p54.pdf
8. Responsibilities of US persons in general
- Reporting
• Other triggers –
• Interest in foreign entity
• FBARs
• Give or receive gifts
9. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – FATCA
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – Non qualified insurance policies
• Amnesty
• Q&A
10. Former FIFA Exec
• No idea whether the reports are true but online, it is
being alleged…
• That the IRS and Homeland Security are looking
• If the allegations are true, it may fall under the IRS
Criminal Investigation (CI) team. This unit is comprised of
approximately 3,500 employees worldwide,
approximately 2,600 of whom are special agents whose
investigative jurisdiction includes tax, money laundering
and Bank Secrecy Act laws. The CI conviction rate is
legendary. It is one of the highest in federal law
enforcement. I understand that since CI’s inception in
1919 to the present, the conviction rate for Federal tax
prosecutions has never fallen below 90%.
11. Former Guardian / UTC Exec
• Undercover sting
• Picked up at MIA
• According to a November 15th article in the New York
Times, at the IRS, dozens of undercover agents chase
suspected tax evaders worldwide, by posing as tax
preparers, accountants, drug dealers or yacht buyers and
more, court records show.
• Interestingly, undercover agents at the I.R.S., appear to
have far more latitude than do those at many other
agencies
• I.R.S. rules say that, with prior approval, “an undercover
employee or cooperating private individual may pose as
an attorney, physician, clergyman or member of the
news media.”
12. Sovereign Management & Legal, Ltd
• Dec 14th 2014 press release on DOJ website -
http://www.justice.gov/usao/nys/pressreleases/December14/Sovereign
ManagementJohnDoeSummonsesPR.php
• “Court Authorizes IRS To Issue Summonses For Records Relating To U.S.
Taxpayers Who Used Services Of Sovereign Management & Legal, Ltd., To
Conceal Offshore Accounts, Assets, Or Entities”
• Sovereign is a multi-jurisdictional offshore services provider that offers
clients, among other things, the formation and administration of
anonymous corporations and foundations in Panama as well as offshore
entities. Related services provided by Sovereign include the maintenance
and operation of offshore structures, mail forwarding, the availability of
virtual offices, re-invoicing, and the provision of professional managers
who appoint themselves directors of the client’s entity while the client
maintains ultimate control over the assets.
• During the IRS’s investigation of Sovereign’s conduct, one taxpayer,
making a voluntary disclosure of tax non-compliance to avoid
prosecution, reported that Sovereign helped the taxpayer form an
anonymous corporation in Panama that the taxpayer used to control
assets without appearing to own them.
13. Common Thread
• A recent Tax Notes Today article reports on the Criminal Fraud and Tax Controversy Conference
in Las Vegas, sponsored by the American Bar Association Section of Taxation. Ajay
Gupta, Offshore Enforcement to Remain Top Priority in 2015, 2014 TNT 240-6 (12/13/14)-
• “[David Horton LB&I director for international compliance] warned of 'a lot more John Doe
summonses' in the next 12 to 24 months, in other parts of the world and 'beyond banks.' The
focus will be on intermediaries, he said, referring to those who promoted or facilitated
transactions for stashing money abroad.“
• With a normal summons, the IRS seeks information about a specific taxpayer whose identity it
knows. A John Doe summons allows the IRS to get the names of all taxpayers in a certain group.
The IRS needs a judge to approve it, but recent IRS success may to lead to more.
• A John Doe Summons is ideal for pursuing investors in tax shelters, account holders at financial
institutions, attendees at an event, donors of real estate, etc. After sniffing out American
taxpayers with UBS accounts, the IRS did the same with HSBC in India. But the IRS tells its own
examiners to use a John Doe Summons only after trying other routes. The IRS Manual says it
may be possible to obtain taxpayer identities without issuing a John Doe summons.
14. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – FATCA
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – Non qualified insurance policies
• Amnesty
• Q&A
15. FATCA
• The Foreign Account Tax Compliance Act (FATCA) is codified as Chapter 4 of the Internal Revenue Code. It represents the Treasury
Department's efforts to prevent U.S. taxpayers who hold financial assets in non-U.S. financial institutions (foreign financial
institutions or FFIs) and other offshore vehicles from avoiding their U.S. tax obligations.
• The intent behind the law is for foreign financial institutions (FFIs) to identify and report to the IRS U.S. persons holding assets
abroad and for certain non-financial foreign entities (NFFEs) to identify their substantial U.S. owners.
• In order to comply with the rules, FFIs are required to enter into an FFI agreement with the U.S. Treasury or comply with
intergovernmental agreements (IGAs) entered into by their local jurisdictions.
• U.S. withholding agents (USWAs) must document all of their relationships with foreign entities in order to assist with the
enforcement of the rules. Failure to enter into an agreement or provide required documentation will result in the imposition of a
30% withholding tax on certain payments made to such customers and counter-parties.
• Failure to impose the requisite withholding under FATCA requirements could result in significant financial exposure.
• Impact on Governments, FFIs, NFFEs and US individuals
16. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – FATCA
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – Non qualified insurance policies
• Amnesty
• Q&A
17. FATCA – impact on Governments
• OECD’s Tax Information Exchange Agreements –
• FATCA was a rider to the 2010 HIRE Act but the OECDs model tax information exchange agreement dates back to at least 2002
• According to the OECD’s website, the purpose of the model agreement is to promote international co-operation in tax matters through
exchange of information. It was developed by the OECD Global Forum Working Group on Effective Exchange of Information (“the Working
Group”). The Working Group consisted of representatives from OECD Member countries as well as delegates from Aruba, Bermuda, Bahrain,
Cayman Islands, Cyprus, Isle of Man, Malta, Mauritius, the Netherlands Antilles, the Seychelles and San Marino.
• The Agreement grew out of the work undertaken by the OECD to address harmful tax practices. The lack of effective exchange of information
is one of the key criteria in determining harmful tax practices. The mandate of the Working Group was to develop a legal instrument that could
be used to establish effective exchange of information. The Agreement represents the standard of effective exchange of information for the
purposes of the OECD’s initiative on harmful tax practices.
• BEPS
• Model 1 - require FFIs to report all FATCA-related information to their own governmental agencies, which would then report the
FATCA-related information to the IRS. Some Model 1 IGAs are reciprocal, requiring the U.S. to provide certain information about
residents of the Model 1 country to the Model 1 country in exchange for the information that country provides to the U.S. An FFI
covered by a Model 1 IGA will not need to sign an FFI agreement, but it will need to register on the IRS’s FATCA Registration Portal
or file Form 8957
• Model 2 - require FFIs to report information directly to the IRS. Under such IGA, FFIs will need to register with the IRS, and certain
FFIs will sign a version of the FFI agreement modified to reflect the IGA.
20. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – FATCA
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – Non qualified insurance policies
• Amnesty
• Q&A
21. FATCA – implications for FFIs
• Firstly, they must register with the IRS directly. Form 8957
• Secondly, they must take appropriate actions to know their
customers. KYC/AML. IT and HR implications
• Thirdly, they must report the activity of US persons as required by
local law. XML
• (Our firm can assist with these responsibilities)
23. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – Non qualified insurance policies
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – FATCA
• Amnesty
• Q&A
24. Danger #1 – Non qualified
insurance policies
• Insurance policies can be treated as US qualified, US non-qualified or
a PFIC
• US qualified – if you have to ask…
• PFIC – to be discussed later
• US non qualified –
• If underlying fund (in which the policy invests) are only available to the fund
and not the general public
• If policy holder doesn’t have the right to select from menu of funds
• Then there should be no look-thru rule (not a PFIC)
25. Danger #1 – Non qualified
insurance policies
• Section 7702(g) says the “income on the contract” must be reported as ordinary
income.
• “Income on the contract” = increase in “net surrender value” during the taxable
year + “cost of life insurance” for the year – premiums paid during the year.
• “Net surrender value” = cash surrender value.
• “Cost of life insurance” should roughly equate to the annual insurance cost of the
contract – as opposed to the investment component.
• We add this annual increase to the tax basis of the policy (in addition to total
premiums).
• Sickness payments should reduce this basis with any excess generating income.
• We track policy basis with increases for premiums and taxable increases in cash
value. No loss for the years when cash value goes down.
• Everything fully disclosed in attachment to return
26. Danger #1 – Non qualified
insurance policies
• Foreign life assurance or sickness and accident policies. Must pay
customs & excise tax at a rate of 1% of the premium paid per year.
• This must be reported on Form 720 on a quarterly basis.
• To be able to file Form 720 you will first require a Employer
Identification Number . This can be obtained by completing form SS4.
• Once you have your EIN you can now complete your 720 forms
27. Danger #2 - PFICs
• Enacted in 1986 to limit tax deferral by US investors in off shore funds
• Previously off shore funds had an advantage over domestic funds. No
tax till distribution.
• Post 1986, there is a level playing field for both domestic and off
shore mutual funds. The U.S. puts the burden on the shareholder to
determine their share of the income of the investment company. The
tax code does not encourage U.S. persons to invest in mutual funds
outside the U.S.
28. Danger #2 - PFICs
• To employ this punitive regime, the IRS requires shareholders of PFICs
to effectively report undistributed earnings via choosing to be taxed
through one of three possible methods-
1. Section 1291 fund,
2. Qualified Election Fund, and
3. Mark to Market election.
35. Danger #4 - FATCA
• FATCA stands for ‘‘Foreign Account Tax Compliance Act”
• The goal is to stop US tax evasion by –
• Requiring Foreign Financial Institutions (FFIs) and non-financial foreign entities (NFFEs) to
provide information about financial accounts held by US taxpayers or foreign entities in which
US taxpayers hold a substantial ownership interest.
• Requiring US persons to report information about certain foreign financial accounts and
offshore assets on Form 8938 and attach it to their income tax return, if the total asset value
exceeds the appropriate reporting threshold.
• In the future, requiring domestic entities to file Form 8938 if the entity is formed or used to
hold specified foreign financial assets and the total asset value exceeds the appropriate
reporting threshold. Until the IRS issues such regulations, only individuals must file Form 8938.
36. Danger #4 - FATCA
• The Foreign Account Tax Compliance Act (FATCA) is codified as Chapter 4 of the Internal Revenue Code. It represents the
Treasury Department's efforts to prevent U.S. taxpayers who hold financial assets in non-U.S. financial institutions (foreign
financial institutions or FFIs) and other offshore vehicles from avoiding their U.S. tax obligations.
• The intent behind the law is for foreign financial institutions (FFIs) to identify and report to the IRS U.S. persons holding assets
abroad and for certain non-financial foreign entities (NFFEs) to identify their substantial U.S. owners.
• In order to comply with the rules, FFIs are required to enter into an FFI agreement with the U.S. Treasury or comply with
intergovernmental agreements (IGAs) entered into by their local jurisdictions.
• U.S. withholding agents (USWAs) must document all of their relationships with foreign entities in order to assist with the
enforcement of the rules. Failure to enter into an agreement or provide required documentation will result in the imposition
of a 30% withholding tax on certain payments made to such customers and counter-parties.
• Failure to impose the requisite withholding under FATCA requirements could result in significant financial exposure.
37. Danger #4 - FATCA
Penalty - Up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose,
for a potential maximum penalty of $60,000; criminal penalties may also apply
38. Outline
• Responsibilities of US persons in general
• Citizenship vs residency based taxation
• Pay
• Report
• Recent media coverage
• Former FIFA Exec
• Former Guardian Exec
• Sovereign Management & Legal, Ltd
• What is FATCA
• Impact of FATCA –
• Governments
• FFIs
• Individuals
• Governments –
• Model 1
• Model 2
• FFIs
• Register
• Report
• Individuals
• Danger #1 – Non qualified insurance policies
• Danger #2 – PFICs
• Danger #3 – FBARs
• Danger #4 – FATCA
• Amnesty
• Q&A
40. TAX Amnesty
“willfulness”
• Willfulness as a “voluntary, intentional violation of a known legal duty” was
“conclusively” affirmed in Cheek v. United States 498 U.S. 192 (1991).
• The two essential holdings of the Supreme Court were:
1. A genuine, good faith belief that one is not violating the Federal tax law based on
a misunderstanding caused by the complexity of the tax law (e.g., the complexity
of the statute itself) is a defense to a charge of "willfulness", even though that
belief is irrational or unreasonable.
2. A belief that the Federal income tax is invalid or unconstitutional is not a
misunderstanding caused by the complexity of the tax law,[16] and is not a
defense to a charge of "willfulness", even if that belief is genuine and is
held in good faith
41. TAX Amnesty
• Streamlined –
• No penalty for offshore
• 5% penalty for domestic
• OVDP –
• 27.5%
• A 50% offshore penalty applies if either a
foreign financial institution at which the
taxpayer has or had an account or a
facilitator who helped the taxpayer
establish or maintain an offshore
arrangement has been publicly identified
as being under investigation or as
cooperating with a government
investigation.
43. TAX Amnesty
U.S. Department of Justice (DOJ) and the Swiss Federal Department of Finance - http://www.ustaxprogram.com/banks/
• Category 1 - Any Swiss bank currently under formal criminal investigation
44. TAX Amnesty
U.S. Department of Justice (DOJ) and the Swiss Federal Department of Finance
• Category 2 –
• Bank has reason to believe that it may have committed tax-related offenses under U.S. Code title 18 (the U.S. criminal code); U.S. Code title 26 (the Internal
Revenue Code); or monetary transaction offenses under Section 5314 (reporting requirements) or Section 5322 of title 31 of the U.S. Code, which governs
financial activities in connection with an undeclared U.S.-related account. Category 2 Banks may request a nonprosecution agreement from the DOJ.
Category 2 Banks also must agree to disclose information and evidence, perform certain due-diligence steps verified by an independent examiner, and pay a
penalty that can range from 20% to 50% of the aggregate maximum value of their undisclosed U.S. accounts.
• Participants include Union Bancaire Privee, the Geneva-based bank used by American Jordan Belfort, according to his memoir “The Wolf of Wall Street,”
• Category 3 – Banks without undeclared U.S. clients that are applying for confirmation from the DoJ that they aren’t being investigated
• Category 4 - Swiss banks with only local clients
57. Kovell Letters
• Without such an agreement, communication between the client and the accountant would not be
protected from discovery by the IRS because there is no accountant-client privilege under federal
law. It is called a "Kovel Letter" because it is based on the case of United States v. Kovel, 296 F.2d
918 (2nd Cir. 1961). Practitioners, however, should review the recent case of United States v.
Adlman, 68 F.3d 1495 (2nd Cir. 1995) for limitations on the "Kovel" doctrine. The letter can be
used for both civil and criminal matters.