Foreign Tax Compliance Act and What It Means for US Citizens

FATCA, or the Foreign Tax Compliance Act, say international tax attorneys, is a new U.S law that will have a significant effect on the reporting of financial information and tax compliance for foreign accounts when it is implemented in 2014. The aim of this act is to combat tax evasion and recover finances owed to the U.S. government by requiring foreign banks to report their dealings with U.S. citizens and, similarly, individuals to report on their dealings with foreign banks.

The FATCA timeline:

• 2010. On March 18^th, as part of the Hiring      Incentives to Restore Employment Act (HIRE), FATCA was signed into law by      the U.S. government. On August 27^th, the IRS issues Notice      2010-60. This notice defines “foreign financial institution”, declares      FATCA exemptions, account documentation and reporting requirements.
• 2011. On April 8^th, IRS Notice 2011-34      revises requirements and provides clarity on priority concerns. On July 14^th,      IRS Notice 2011-53 gives foreign financial institutions more time to enter      FATCA agreements and meet the requirements.
• 2012. On February 8^th, proposed regulations      are released with important changes, including updated timelines for      grandfathered debt obligations, reporting and withholding.
• 2013. Final regulations are issued on January 17^th.      On February 14^th, Switzerland and the U.S. sign an agreement on      international tax compliance and the implementation of FATCA. On August 9^th,      the IRS portal opened and by December 31^st, the foreign      financial institution Agreement came into effect.
• 2014. The 1^st of January will be the      cut-off date for grandfathered obligation. April 25^th will be      the last date on which foreign financial institutions have to register for      inclusion on the FFI list (safe harbor). The list will be published on 2^nd      June. 31^st December is the deadline for FFI’s to complete      remediation on pre-existing high-value accounts.
• 2015. On January 1^st, foreign financial      institutions will begin withholding on high-valued accounts that have been      identified as noncompliant. They, along with U.S. Withholding Agents will      also begin withholding on payments to identified noncompliant passive      non-financial foreign entities. On March 15^th, tax return      reporting and information return reporting will begin.
• 2016. March 15^th is the due date for annual      tax return reporting and information reporting. Participating forging      financial institutions (PFFIs) will begin withholding on all noncompliant      individual accounts and undocumented entity accounts that were      pre-existing accounts.
• 2017. On January 1^st, withholding will      begin on gross proceeds for USWAs, WAs and PFFIs. This includes      withholding on “passthru payments”.
• 2018. On March 15^th, gross proceeds will be      included for year-end 2017.

Christopher J Byrne can help you with all of your financial reporting needs. Our team of tax specialists is experienced with FATCA, FBAR compliance, PFIC reporting, and more.  For more information on FATCA or any other advice on foreign tax, please contact us at christopherbyrne.com today and speak to one of our experienced international tax attorneys.

Understanding OVDI- Offshore Voluntary Disclosure Initiative

A globalized economy means that in today’s day and age many individuals see much more mobility than in prior decades. It is common to see assets such as rental properties, stocks and securities, bank accounts, etc that are spread out globally because of this mobility. However, how does this affect you as a United States citizen?

The United States taxes its citizens and residents on their worldwide income and imposes annual reporting of certain foreign assets. This can be problematic for members of global families with these world-wide assets as many individuals for one reason of another inadvertently have left one or more of these assets off of their U.S. income tax returns. Failure to come into U.S. tax compliance can result in severe financial penalties, prosecution, and even mandatory jail time. There are tax amnesty programs that have been put into place via the IRS to help avoid this issue; it is called Offshore Voluntary Disclosure Initiative .

Penalties are still payable by those who engage in the program, but take note of the clear benefits. In short the penalties are as follows:

• Currently 20% accuracy-related penalty of the total underpaid tax amount for all the years of missed tax payments.
• A penalty of 27.5% of the highest aggregate balance in offshore accounts or value of foreign assets during the period of the tax amnesty program.

There is unmistakably no price tag that can be placed on the peace of mind given to participants of the program who become tax compliant and no longer have to fear prosecution for tax evasion.

When it comes to international tax and taxation, taxpayers are better off with the services of a reputable tax attorney. You can maximize these and other advantages of the OVDI TaxAmnesty Programs with the guidance of a certified public accountant and tax attorney.

For more information about OVDI you can work closely with Christopher J. Byrne. I bring over 20 years of experience with me to every case I work with and I also keep a close team of highly educated individuals on the case as well. We also work with FBAR compliance and PFIC reporting. Stay on top of your taxation requirnments and needs with Christopher J. Byrne PLLC at christopherbyrne.com.

For more information about the tax amnesty programs such as the Offshore Voluntary Disclosure Program, contact Christopher Byrne. Bringing over 20 years of experience, you know that you are working with a team who knows exactly how to help you properly file your international tax returns.