An interesting read by the Telegraph that walks an Accidental American through the process of renunciation of American citizenship to avoid paying a life time of US taxes, penalties, interest, and potentially criminal offences for non-filing. Read it here. Excerpts below:
The context: Form 8938 was created by the IRS to meet the reporting requirements mandated by Internal Revenue Code S. 6038D. S. 6038D was mandated by S. 511 of the HIRE Act.
On May 23, 2016, Internal Revenue Bulletin 2016-21 was released which proposes amendments to the regulations governing IRC 6038A.
The regulations are proposed to be applicable for taxable years ending on or after the date that is 12 months after the date these regulations are published as final regulations in the Federal Register.
Over the past several, years, the U.S. government has signed intergovernmental agreements (IGAs) with dozens of partner countries (83 altogether at latest count), which are designed to promote the implementation of the FATCA law requiring financial institutions (mainly banks and investment houses) outside the U.S. to report information on financial accounts held by their U.S. customers to the IRS.
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.
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?
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