Thursday, December 31, 2015

Hee-Haw! It's All Serious Business At The 2015 FATCA Roundup!!



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 my 89th 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 which a person has signature authority but no ownership interest is included in this computation.



The new due date for the FBAR will be April 15th with a maximum 6-month extension till October 15th. For US citizens living abroad the deadline will be June 15th. The new deadlines are effective starting for the 2016 tax returns due in 2017. 

More details on the new FBAR deadline in my blog post here.

2. More countries entered into IGAs with the USA:


More than 50 countries have entered into Inter-Government Agreements (IGAs) with the US since FATCA came into existence. 

Countries that sign the FATCA Agreement or Inter Governmental Agreement (IGA) are considered tax compliant. This means the banks/ foreign financial institutions (FFI) in these countries send information as demanded by the IRS to their own tax authorities which is then shared with the IRS. This is "Model 1". 


Other countries, like Switzerland, for example, leave it up to the banks/ financial institutions to come to an agreement with the IRS, this is a "Model 2" agreement. 

The consequence of these IGAs have been varied and wide-spread, the harshest being many banks in these countries do not want to do business with US citizens any more. 



More on this in my blog post here.

3. New Rules on Gifts & Inheritances from Expats to any US person Proposed by the IRS:

Under the proposed regulations, if an expatriate meets the covered expatriate definition in Sec. 877A, he or she is considered a covered expatriate for Sec. 2801 purposes at all times after the expatriation date, except during any period beginning after that date during which he or she is subject to U.S. estate or gift tax as a U.S. citizen or resident. 

This new component { Prop. Reg. 28.2801-1} says that US taxpayers who receive gifts & inheritances from people who had previously expatriated are subject to  gift and/or estate taxes on the receipt of such gift or bequest. This tax is imposed on US Citizens who receive, directly or indirectly, "covered" gifts or "covered" bequests from a "covered" expatriate. 

More on this on my blog post here.

4. Offshore Compliance Programs-OVDP/ Streamlined Procedures/Swiss Bank Programs:

These disclosure programs are not new to 2015 but the Internal Revenue Service has been increasingly coming up with new rules and penalties through these programs. More banks signing agreements with the USA have resulted in increased penalties for those with accounts in such banks going into the OVDP. 

I wrote in detail about these programs earlier this year in this post here.


5. Final Regulations on Form 8938:

A release from the Internal Revenue Service on the 10th of March, 2015 incorporated into the Form 8938 instructions for reporting requirements made under the Final Regulations for § 6038D of the Internal Revenue Code. It also contains additional information not included in the published 2014 Instructions for Form 8938.

More about the final regulations in my blog post here



6. You Owe Taxes? Your Passport Could Be Confiscated!:


December 4th, 2015, President Obama signed into law the "FAST Act". FAST stands for Fixing America's Surface Transport, tucked away in this Act, is a provision that the Dept. of State  can deny a passport/ deny renewal/ revoke passport previously issued ti a seriously delinquent tax payer. 

The "seriously delinquent taxpayer" is defined as one who has a tax debt greater than $50,000, including interest and penalties, this debt should have been assessed and a notice of lien or notice of levy should have been filed. 

Although this does not strictly fall under the FATCA rules, a large number of US citizens who live abroad are concerned about this. One of the primary reasons being that the IRS still does not have the means to process foreign addresses which are in a different format than US addresses and due to this many times IRS notices/ letters to such citizens living abroad are returned undelivered. 

7. Case Filed Against Imposition of FATCA by Rand Paul Et Al:


A case was filed against the enforcement of FATCA by Senator Rand Paul and other opponents of this Act. It suffered an initial set-back when Judge Thomas Rose of the United States District Court refused to grant preliminary injunctive relief in October 2015. 

The latest news on this case is that a plaintiff's memorandum was filed by James Bopp, Jr from The Bopp Law Firm of Indiana. Mr. Bopp has argued that the plaintiffs should be granted relief requested based on their claims for four reasons: the IGAs are unconstitutional sole executive agreements, reporting requirements violate equal protection for Americans living abroad, the challenged penalties violate the Excessive Fines Clause, and reporting requirements violate the Fourth Amendment.

We will have to wait and watch what Judge Rose's ruling will be on this matter. 

Entire document here. 

Dear Readers: Thank you all so much for your following on Google Plus, Tax connections and LinkedIn. Wish you all a fantastic and "compliant" 2016! 

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As always, read my disclaimer here. Please consult a qualified tax professional for your unique tax needs. More of my contact information is on my website, www.mntaxbiz.com.