Archive | December, 2012

HIRE Foreign Account Tax Compliance: 40% Penalty

December 31, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

The HIRE Act gives the IRS assessment and collection remedies unavailable with respect to the FBAR penalty. A 40% accuracy-related penalty is imposed for underpayment of tax attributable to transactions involving undisclosed foreign financial assets.  Undisclosed foreign financial assets include foreign financial assets that are subject to information reporting but the required information was not […]

Read More »

FATCA – Foreign Financial Assets

December 31, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

U.S. Taxpayers who hold any interests in specified foreign financial assets during the tax year must attach their tax returns for the year certain information with respect to each asset if the aggregate value of all assets exceeds $50,000. An individual who fails to furnish the required information is subject to a penalty of $10,000. […]

Read More »

FATCA – Summary of HIRE and Foreign Account Tax Compliance Act

December 28, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (“HIRE”) Act (P.L. 111-147) (The “Act”) which included the Foreign Account Tax Compliance Act containing new foreign account tax compliance rules. Under the Act, new reporting and disclosure requirements for foreign assets will  be phased in between 2010 – 2013: 1. Foreign […]

Read More »

FATCA – Withholding Agents

December 28, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

The Foreign Account Tax Compliance Act (The “Act”) expands withholding rules and additional reporting requirements for foreign financial institutions and non-financial foreign entities. Under U.S. tax law, a withholding agent must deduct or withhold a tax equal to 30% on any withholdable payment (e.g., interest, dividends, rents, salaries, wages, premiums, annuities, compensations, and other fixed […]

Read More »

FBAR – Hedge Funds

December 27, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

After the landmark agreement between the U.S. and Swiss government over secret (UBS) Swiss bank accounts, held by U.S. Citizens, the IRS is now focusing on hedge funds in the Cayman Islands. Recently, IRS officials advised that certain U.S. investors in off-shore hedge funds must file a FBAR. On June 12, 2009, an IRS official […]

Read More »

FBAR – Amended Tax Returns and the Risks of Voluntary Disclosure

December 26, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

U.S. Taxpayers who fail to report offshore accounts by filing FBAR (TD F 90.22-1) face criminal and civil penalties: 1. Failure to Report Income (3 Felonies and 1 Misdemeanor) up to 14 years in jail, plus 75% Civil Tax Fraud Penalty, 25% Failure to Pay Tax Penalty. 2. Failure to File FBAR’s (a maximum annual […]

Read More »

U.S. Tax Planning for Passive Investments

December 26, 2012  |   Posted by :   |   International Tax Planning   |   Comments Off on U.S. Tax Planning for Passive Investments

By Gary S. Wolfe, Esq. The Wolfe Law Group, Los Angeles, CA David E. Richardson Mid-Ocean Consulting, Nassau, Bahamas In her 10/18/06 Wall St. Journal article, Insuring Against Hedge-Fund Taxes, Rachel Emma Silverman stated: “A small but growing number of wealthy investors have discovered a legal way to invest in hedge funds without paying income […]

Read More »

Tax Compliance – CFC/PFIC

December 20, 2012  |   Posted by :   |   International Tax Planning   |   0 Comments

The Internal Revenue Code limits tax-deferral on foreign-based income realized by U.S. shareholders of foreign corporations. Undistributed foreign corporation income is taxed either annually, or upon investment sale. There are two primary anti-tax deferral regimes: Controlled Foreign Corporation (“CFC”) and Passive Foreign Investment Company (“PFIC”) (I) Controlled Foreign Corporation (“CFC”) Annual Tax U.S. shareholder pays […]

Read More »

FBAR – U.S. Taxpayer Tax Compliance Issues

December 20, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

FBAR rules are not found in the Code. Rather, they are set forth in the Bank Secrecy Act, first enacted by Congress in 1970. Since 2003, however, the IRS bears ­re­sponsibility for enforcing these rules. The FBAR rules require that every U.S. Person report (i) any financial interest or authority over a (ii) financial account […]

Read More »

FBAR – Civil and Criminal Penalties

December 20, 2012  |   Posted by :   |   FATCA/FBAR   |   0 Comments

Each U.S. Person who has a financial interest in, or signature or other authority over, one or more foreign financial accounts (value over $10,000, at any time during a calendar year) is required to report the account on Schedule B/Form 1040, and TD F 90-22.1 (Report of Foreign Bank and Financial Accounts (FBAR)), due by […]

Read More »