TaxConnections Member Manasa Nadig

A lot has been written about the Foreign Account Tax Compliance Act {FATCA} in the past year. As this year comes to a close and I write up this post, I wanted to give you all, my dear readers a synopsis at your finger-tips, a round-up, if you will of some major FATCA events for 2015:

1. FBAR Deadlines Changed:

On July 31, 2015 President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 into law, which modified the due date of several key forms for Americans with foreign income and Americans living abroad. That includes the Report of Foreign Bank and Financial Accounts, or Form 114, colloquially known as the FBAR.

Any U.S. person with a financial interest in, or signatory authority over, foreign financial accounts must file the FBAR, if at any time, the aggregate value of their relevant foreign account or accounts exceeds $10,000. An account over Read More

Introduction – what this post is about …

I attended the hearing in Vancouver, B.C. on August 4, 5 2015. At that time I wrote a group of posts (here and here) discussing my perception of the hearing. Those posts included expressions of my opinion that Justice Martineau was highly engaged, was working hard on understanding the issues, and was affording all parties a fair hearing. Although, disappointed with his decision (handed down on September 16, 2015), and not agreeing with his conclusions, I reaffirm my sentiments in the previous posts.

This post is more about the “system” than it is about Justice Martineau specifically. In a judicial system, it is possible for “reasonable people” to have “reasonable Read More

This post is Part 1 of my thoughts on Justice Martineau’s decision.

I  left my root canal appointment this afternoon to a message announcing that Justice Martineau had rendered his decision. We did not win round 1. Notice that I did NOT say that the Government won round 1.

Here is the decision:

T-1736-14 decision sept-16-2015

Before, I comment specifically on the decision, I want to be clear on the following points: Read More

The FFI GIIN List Update (Lists from June 1, 2014 through June 1, 2015)

On 1 June 2015 the IRS published its thirteenth FATCA GIIN list of “approved FFIs” (a list of the financial firms that have registered on the IRS FATCA portal).  Total approved FFIs reached 165,461, and increase of only 2,851 during the month of May.  This FATCA registration trend since January has been described as lethargic, with April’s increase just 2,600 additional firms joining, 3,734 additional during March, and 2,479 in February.  But when compared to what was forecast by the IRS, by industry, and by the UK, it’s a troubling low figure. Read More

I keep saying this, “The world is shrinking!”, ad nauseum perhaps, but I just cannot seem to get over that. When I went into the tax profession 15 years ago, I never thought I’d be reading as many tax treaties as I do now! I found out that the US had a Tax Treaty with Ukraine this year! Go figure!

Speaking of a shrinking globe, Inter-Governmental Agreements and Tax Treaties, it was uncanny this tax season, I had more than my share of clients who had a property or two in foreign countries by way of an inheritance or purchase and after having held it for a while as investments, they were now contemplating turning them into rentals.

I had written about owning foreign real estate a few blog-posts ago. You can read Read More

In a recent blog entitled, “FATCA GIIN January 2015 FFI Registration Analysis … by the numbers,” Professor William Byrnes provides a brilliant commentary on the IRS’s publication of its first FATCA GIIN list of the new year (published on New Years Day!). The FATCA GIIN list is a list of “approved FFIs (Foreign Financial Institutions)” that have registered on the IRS FATCA portal by December 23, 2014.

For those who have never heard of a “GIIN” and who may have initially confused it with a certain type of drink that mixes exceptionally well with tonic, GIIN stands for “Global Intermediary Identification Number.” A Foreign Financial Institution (FFI) that registers on the “FATCA Registration Website,” upon approval, receives a Global Intermediary Identification Number (GIIN) from the IRS (unless the FFI is treated as a Limited FFI). The GIIN is a Read More

This May Be Your One Last Opportunity to Avoid Criminal Prosecution and Increased Civil Penalties!

Since July 1, 2014, the most feared U.S. legislation regarding international tax enforcement – Foreign Account Tax Compliance Act (“FATCA”) – is being implemented by most banks around the world. As part of this compliance, foreign banks from around the world are sending letters to account holders that they believe have, or had, a U.S. tax nexus (or other U.S. connection) requesting information to determine whether such account holders have disclosed their foreign bank accounts to the IRS. The letters from foreign banks generally require an account holder to disclose whether the account has been declared to the IRS through the filing of a Report of Foreign Bank and Financial Accounts (commonly known as Read More

Under the Foreign Account Tax Compliance Act (“FATCA”), foreign banks, insurers and investment funds must send the Internal Revenue Service (IRS) information about Americans’ and United States permanent residents’ offshore accounts worth more than $50,000.  Institutions that fail to comply could effectively be frozen out of U.S. markets.  As of this blog posting, the U.S. has entered into Intergovernmental Agreements (“IGA’s”) with 48 countries for the implementation of FATCA.

The 48 countries with IGA’s already in place are:


Read More

Under one of the provisions of the Foreign Account Tax Compliance Act (“FATCA”), withholding agents are required to withhold 30% of certain payments to a foreign financial institution (“FFI”) unless the FFI has entered into an agreement with IRS to report certain information with respect to U.S. accounts in an effort to bring an end to international tax evasion. Recently, in Notice 2013-43 and Notice 2013-31 IRB 113, the Treasury Department and the IRS extended the deadline for certain FFIs to implement certain FATCA requirements.

What is FATCA?

FATCA is an IRS initiative aimed at preventing U.S. citizens and taxpayers from avoiding paying income tax on their foreign investments and accounts. The law was enacted Read More

The United Kingdom’s Law Society, Institute of Chartered Accountants, and STEP published guidance that is intended to help United Kingdom trustees and their advisers determine whether FATCA registration is required.

The Law Society states that:

“This guidance is relevant for all UK trusts and trustees, whether or not they have any known US connections. UK financial institutions must meet the requirements of the Treaty and UK legislation in order to avoid the withholding tax. All UK trusts and trustees, whether or not they have any known US connections, need to consider their status under the UK/US agreement. If they are required to register with the IRS under the agreement, Read More

64 IGAs Published or in Effect

Sixty-four IGAs are published and treated as in effect as of May 11, 2014, comprised of twenty-seven published Model 1s, five published Model 2s, whereas thirty Model 1s have been agreed in substance and two Model 2s agreed.

148 IGAs still left to be agreed by Treasury?

The USA recognizes 195 independent states in the world, 67 dependencies of states, and has contacts with Taiwan.  But only approximately 16 dependencies of the 67 have both local responsibility with regard to tax policy and more than de minimis US source income exposure, such as investments in US Treasuries, for the local authorities to sign an IGA Read More