Today, Wednesday, August 10, 2016 is the deadline for Cayman Islands financial institutions to complete their notification and reporting of American clients’ accounts to the Cayman Tax Information Authority, under the US Foreign Account Tax Compliance Act (FATCA).
Archive for FATCA
The Organization for Economic Cooperation and Development has asked the G20 governments to approve its proposed three-step formula for deciding which international financial centers are to be blacklisted as non-cooperative.
Since their inception in 2009, the IRS tax amnesty programs have been fairly successful in encouraging delinquent taxpayers to come forward and disclose their offshore activities to the IRS. As the IRS receives more bank account information from foreign institutions however, it may begin to revisit amnesty applications to see whether the bank account info provides evidence that forgiven taxpayers did not in fact qualify for amnesty.
Financial Crimes Enforcement Network (FinCEN) is a bureau of the Treasury Department. Authorized under the Bank Secrecy Act, foreign bank account reporting, commonly referred to as “FBAR”, is electronically reported to the IRS via FinCen Form 114, separate and distinct from filing a U.S. income tax return.
In general, the QI agreement allows foreign persons to enter into an agreement with the Internal Revenue Service (IRS) to simplify their obligations as a withholding agent under FATCA chapters 3 and 4 and as a payer under chapter 61 and section 3406 for amounts paid to their account holders.
The Foreign Account Tax Compliance Act, better known as FATCA, was enacted March 18, 2010 and requires filing IRS Form 8938. It is important to note that this foreign financial asset reporting requirement does not replace or otherwise affect a taxpayer’s obligation to file a FinCEN Form 114. Basically, if you are a US taxpayer holding foreign financial assets you must file IRS Form 8938 if you have an obligation to file IRS Form 1040 reporting income.
On August 28, 2013, we discussed the US putting pressure on Swiss Banks, acknowledging 2009 as the time when Switzerland’s biggest bank UBS agrees to turn over more than 4,450 client names and pay a $780 million fine after admitting to criminal wrongdoing in selling tax-evasion services to wealthy Americans.
Yesterday, we took a preliminary look at the new 2016 revised edition of W-8BEN-E. Below is the second part of the examination of this form since the 2016 revision more represents a technical correction release for the evolution of FATCA and its IGAs since 2014 than substantive changes.
We get all sorts of fascinating questions from established US taxpayers in addition to those experiencing internationalism for the first time. It seems, regardless of the degree of sophistication in US income tax filing obligations, most people are out to lunch when it comes to arcane acronyms and filing requirements.
This month we turn our attention to the recently revised 2016 W-8BEN-E form which has 30 parts over eight pages that can be cataloged into four sections. The IRS released its previous substantial update of the W-8BEN-E in February 2014 and in April 2016 its most recent updated form with accompanying updated instructions. The 2016 revision more represents a technical correction release for the evolution of FATCA and its IGAs since 2014 than substantive changes. The 2014 W-8 series update, on the other hand, was a major departure from the previous series, exemplified by the former W-8BEN in use since 2006 had just four parts. The 2014 Forms may continue to be used by institutions until October 2016 when it becomes mandatory to switch to the new 2016 W-8BEN-E.
Like many, I was saddened to learn of the death of Muhammad Ali. Most of the media discussion of Ali’s death focused on his boxing career; there was far less attention paid to Ali’s refusal to accept induction into the United States military. This refusal led to his being stripped of his boxing license (why anyone would need a license to box is beyond me) and interestingly, the revocation of his passport (if you can’t box in America, we will prevent you from boxing outside America). Hmmm. Does Ali’s passport revocation remind you of any recent or past events?
I looked up my last blog post and realized I have not posted here since January! What a tax season it was, and how did time get away from me? Oh wait…I know how!
The past few years have seen a steady growth of a client base that has foreign accounts: no complaints there! Most clients have very routine FBAR filing requirements but then sometimes things are a little out of the ordinary and that gets me all excited…yes, I know..it does! That either tells you about my lack of a life during tax season or we should just notch it up to tax nerd-iness!