FATCA: International Assets And Accounts

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FATCA: YOUR INTERNATIONAL BUSINESS AND ASSETS

What You Absolutely Need To Know

By: Douglas E. Castle

Published In: The Internationalist Page Blog

Related Article Published In: The Global Futurist Blog

The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010. If you are a U.S.-domiciled individual or entity with assets or accounts outside of the U.S., or if you are a non-U.S. individual or entity with assets or accounts in the U.S., you must be in compliance with FATCA or risk the imposition of civil and potentially criminal penalties. The Internal Revenue Service is charged with enforcing compliance and its (the IRS') reach is international by fiat. While FATCA purports to target individual taxpayers, entities are affected (based upon their ownership by individuals subject to FATCA), and the author believes that the issuance of actual regulatory reporting requirements for non-financial entities will be required in the near future. Here are the stated objectives of FATCA:
FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
FATCA focuses on reporting:
	By U.S. taxpayers about certain foreign financial accounts and offshore assets
	By foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest
The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting. The term “witholding” can be a euphemism for de facto forfeiture or extensive, expensive delays in transacting business or transferring balances.

If you are an individual:

U.S. citizens, U.S. individual residents, and a very limited number of nonresident individuals who own certain foreign financial accounts or other offshore assets (specified foreign financial assets) must report those assets
Use Form 8938 to report these assets
	Attach Form 8938 to the annual income tax return (usually Form 1040)
Taxpayers with a total value of specified foreign financial assets below a certain threshold do not have to file Form 8938
	If the total value is at or below $50,000 at the end of the tax year, there is no reporting requirement for the year, unless the total value was more than $75,000 at any time during the tax year
	The threshold is higher for individuals who live outside the United States
	Thresholds are different for married and single taxpayers
Taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial assets.
Penalties apply for failure to file accurately

Alert: The reporting requirement for Form 8938 is separate from the reporting requirement for the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1). An individual may have to file both forms and separate penalties may apply for failure to file each form.  See the Comparison of filing requirements for further information.
Third-party reporting: Foreign financial institutions may provide to the IRS third-party information reporting about financial accounts, including the identity and certain financial information associated with the account, which they maintain offshore on behalf of U.S. individual account holders.
Application to domestic entities: The IRS anticipates issuing regulations that will require a domestic entity to file Form 8938 if the entity is formed or used to hold specified foreign financial assets and the total asset value exceeds the appropriate reporting threshold. Until the IRS issues such regulations, only individuals must file Form 8938. For more information about domestic entity filing, see Notice 2013-10.

If you are a financial institution, or if you are simply an entity (either within or outside of the U.S.) which issues payments to individuals or other entities internationally, it might be advisable for you to “play it safe” - conduct a Google search [ https://www.google.com/#q=us+withholding+agents+fatca ]

for some basic background information regarding any reporting or other compliance requirements to which you may be subject (especially if you may be deemed a “U.S. Withholding Agent”) and follow your initial research with a consultation with competent legal and tax counsel in order to be certain that you are in compliance with the law.

Some additional informational resources follow. While these resources may indeed be helpful, they may be outdated (in some cases, as the regulations and interpretations are constantly changing) and cannot be used or construed as a substitute for professional legal and tax advice. The author does not endorse any of the firms providing the information which follows:

http://www.pwc.com/en_US/us/financial-services/publications/fatca-publications/assets/pwc-fatca-non-fs-mncs.pdf

http://www.crowehorwath.com/ContentDetails.aspx?id=8531

http://www.retire.prudential.com/media/managed/Bulletin_FATCA_0614.pdf

As always, thank you for reading me.

Douglas E. Castle

Labels, Tags, Categories, Keywords And Search Terms For This Article:

FATCA, Foreign Account Tax Compliance Act, international business, import/export, international trade, the Internal Revenue Service, offshore and overseas accounts and assets, U.S. Withholding Agents, regulatory compliance, The Global Futurist Blog, The Internationalist Page Blog, Douglas E. Castle

NOTE: THE INFORMATION CONTAINED IN THIS ARTICLE SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND REPRESENTS THE VIEW OF THE AUTHOR ONLY.

THIS ARTICLE IS COPYRIGHT 2015 BY DOUGLAS E. CASTLE, WITH ALL RIGHTS RESERVED. ANY REPRODUCTION, TRANSMITTAL OR DISTRIBUTION OF THIS ARTICLE, EITHER IN WHOLE OR PART, IS UNAUTHORIZED AND MAY BE UNLAWFUL, UNLESS FULL ATTRIBUTION IS GIVEN TO THE AUTHOR AND ALL IMAGES AND LINKS IN THE ARTICLE REMAIN INCLUDED AND “LIVE.”

THE INTERNATIONALIST PAGE - Douglas E Castle

http://theinternationalistpage.blogspot.com

A discussion of international business, events, markets, joint ventures, currencies, outsourcing, offshoring and financing, importing and exporting, as well as global sources of goods, services, labor, capital, trade guarantees, credit insurance and emerging markets.

Key Terms: international, global, business, trends, prediction, foreign exchange, outsourcing, supply chain, offshoring, import and export, emerging markets, the world economy, trade balance, trade finance, foreign direct investment, joint ventures, sovereignty, cultural sensitivity, diversity, emerging markets, INCOTERMS, tariffs, International Business Companies, asset protection trusts

International Business And The Foreign Corrupt Practices Act [FCPA] - Douglas E. Castle

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If you are a U.S. - based company and you conduct business overseas, or if you are planning to conduct business internationally in the interest or expanding your company's market reach, you should be certain that you are familiar with the Foreign Corrupt Practices Act (FCPA). The essence of this law is summarized below:

This article [which appears courtesy of the Chief Executive Newsletter] addresses the direction that enforcement of FCPA is taking as of the date of this writing. In sum, we're seeing fewer cases being prosecuted, but staggeringly increasing penalties for 1) failure to obey the law, and 2) failure to enforce the law where your company or its employees are concerned. The Department Of Justice (DOJ) not only demands compliance with the law; they are outright demanding that you see to it that all of your employees obey the law as well. Your responsibility and liability are personal. Please read further:

The SEC and DOJ Aim to Stop Mid-Market Firm Corruption
Two members of national law firm Dykema Gossett LLC report that the federal government plans to increase its Foreign Corrupt Practices Act investigations into mid-market companies.

Posted by: Chief Executive February 24, 2015

Watching the handling of Fortune 500 firm cases, Jonathan S. Feld and Kara B. Murphy have posted a few lessons that mid-market firms can learn from these examples on the Association of Corporate Council website. In fact, the authors note that in announcing the settlement with Smith & Wesson, the U.S. Securities and Exchange Commission’s FCPA Unit chief, Kara Brockmeyer, warned: “This is a wake-up call for small and medium-size businesses that want to enter into high-risk markets and expand their international sales.”

In light of this increased risk, the first lesson is not to let your guard down. While the number of overall cases has declined, the average fines, Feld and Murphy report, have actually gone up dramatically. Between 2012 and 2014, they say the average penalty increased sevenfold.
Second, ignorance of the law will not get you out of trouble. In fact, it could make things worse, as failure to detect and stop a misconduct will trigger increased penalties. Merely having a compliance program, they say, is not enough. More than ever the authors report, the DOJ looks behind the “paper” compliance program to determine how it is being implemented and monitored by senior management.

Finally, they are going after individuals. If the buck stops at your desk, you could be held liable for criminal wrongdoing. 

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Here's some insight into the relative positions of specific multinational industry sectors with respect to which ones spend the greatest amount (purportedly) on bribery:

The take away? Do not, in any way, shape, manner or form, ever even attempt to bribe any official of any foreign government. And going further, don't encourage a foreign entity or its employees or representatives act as your company's proxy in engaging in an attempt to bribe an official at any level of any foreign government.

As always, thank you for reading me.
 
Douglas E. Castle for The Internationalist Page Blog
 
Tags, Labels, Keywords, Categories And Search Terms For This Article:
Foreign Corrupt Practices Act, FCPA, bribery, international business, global markets, foreign governments, government officials, regulations, The Internationalist Page Blog, Douglas E. Castle

 

NOTE: THE INFORMATION CONTAINED IN THIS ARTICLE SHOULD NOT BE CONSTRUED BY THE READER AS BEING LEGAL, FINANCIAL, TAX, ACCOUNTING, ECONOMIC OR INVESTMENT ADVICE. NO OFFERING OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY IS MADE HEREBY, NOR IS A SOLICITATION FOR THE PURCHASE OF SECURITIES OR OTHER INVESTMENT INTERESTS OF ANY TYPE IN ANY ENTITY MADE HEREBY. THIS ARTICLE IS INTENDED FOR GENERAL INFORMATIONAL PURPOSES ONLY AND REPRESENTS THE VIEW OF THE AUTHOR ONLY.

THIS ARTICLE IS COPYRIGHT 2015 BY DOUGLAS E. CASTLE, WITH ALL RIGHTS RESERVED. ANY REPRODUCTION, TRANSMITTAL OR DISTRIBUTION OF THIS ARTICLE, EITHER IN WHOLE OR PART, IS UNAUTHORIZED AND MAY BE UNLAWFUL, UNLESS FULL ATTRIBUTION IS GIVEN TO THE AUTHOR AND ALL IMAGES AND LINKS IN THE ARTICLE REMAIN INCLUDED AND “LIVE.”

THE INTERNATIONALIST PAGE - Douglas E Castle

http://theinternationalistpage.blogspot.com

A discussion of international business, events, markets, joint ventures, currencies, outsourcing, offshoring and financing, importing and exporting, as well as global sources of goods, services, labor, capital, trade guarantees, credit insurance and emerging markets.

Key Terms: international, global, business, trends, prediction, foreign exchange, outsourcing, supply chain, offshoring, import and export, emerging markets, the world economy, trade balance, trade finance, foreign direct investment, joint ventures, sovereignty, cultural sensitivity, diversity, emerging markets, INCOTERMS, tariffs, International Business Companies, asset protection trusts

FATCHA Alert: Foreign Account Tax Compliance Act

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If you are a U.S. citizen conducting business overseas, even if you are not physically domiciled in the United States, You had best be aware and keep current on news about legislation, regulation and enforcement of FATCHA - the Foreign Account Tax Compliance Act.

Practically speaking,the U.S. is not in the best fiscal shape financially, and through the operations of the IRS, The Treasury Department, and other investigative and enforcement agencies, we can anticipate redoubled efforts on the government's part to collect any and all income generated by any U.S. Citizen, either directly or indirectly -- especially if the amounts of offshore or foreign earnings are believed to be substantial. The common threat to foster compliance is criminal prosecution.

While government rhetoric is very positive concerning export, international joint ventures and "building bridges with the rest of the world," the fact remains that the U.S. Government does not want any U.S. currency, earnings or wealth leaving the country.

In reviewing the latest news (02.12.2013) on the Act, you might even want to consider changing your citizenship, depending upon your circumstances.

For further information regarding this, you might want to read a recent article which appeared in Yahoo! News, titled "SHOULD YOU RENOUNCE YOUR US CITIZENSHIP?"

Read more about the particulars of FATCHA (which coincidentally rhymes with "Catch Ya") in the report which follows:

	On January 17, 2013, the United States Treasury Department and the Internal Revenue Service (IRS) issued comprehensive final regulations implementing the information reporting and withholding tax provisions for foreign financial institutions (FFIs) under the Foreign Account Tax Compliance Act (FATCA). FATCA was enacted by Congress in March 2010 and is intended to ensure that the US tax authorities obtain information on financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest, with FFIs. Failure by an FFI to disclose information would result in a requirement to withhold 30% tax on US-source income. In order to avoid the withholding tax under FATCA, a participating FFI will have to enter into an agreement with the IRS to identify US accounts, report certain information to the IRS regarding US accounts, and withhold the 30% tax on certain US-connected payments to non-participating FFIs and account holders who are unwilling to provide the required information. FFI registration will take place through an online system. The issuance of the final regulations is intended to "mark a key step in establishing a common intergovernmental approach to combating tax evasion," and to provide additional certainty for FFIs and foreign government counterparts by finalizing the step-by-step process for US account identification, information reporting and withholding requirements for FFIs, other foreign entities and US withholding agents. "These regulations give the Administration a powerful set of tools to combat offshore tax evasion effectively and efficiently," said Deputy Treasury Secretary Neal Wolin. "The final rules mark a critical milestone in international cooperation on these issues, and they provide important clarity for foreign and US financial institutions." The Treasury confirmed that the final regulations build on intergovernmental agreements. It has collaborated with foreign governments to develop and sign intergovernmental agreements that facilitate the effective and efficient implementation of FATCA by eliminating legal barriers to participation, reducing administrative burdens and ensuring the participation of all non-exempt financial institutions in a partner jurisdiction. While the start date of January 1, 2014, has not been extended, the final regulations also phase in over an extended transition period to provide sufficient time for financial institutions to develop necessary systems. In addition, to avoid confusion and unnecessary duplicative procedures, the final regulations align the regulatory timelines with the timelines prescribed in the intergovernmental agreements. In addition, the scope of payments not subject to withholding is also extended and clarified. To limit market disruption and reduce administrative burdens, the final regulations provide relief from withholding with respect to certain grandfathered obligations and certain payments made by non-financial entities. For example, to align better the obligations under FATCA with the risks posed by certain entities, the final regulations expand and clarify the treatment of certain categories of low-risk institutions, such as governmental entities and retirement funds; provide that certain investment entities may be subject to being reported on by the FFIs with which they hold accounts rather than being required to register as FFIs and report to the IRS; and clarify the types of passive investment entities that must be identified and reported by financial institutions. More streamlined registration and compliance procedures are also provided for groups of financial institutions, including commonly managed investment funds, and additional detail is given regarding FFIs' obligations to verify their compliance under FATCA. Since the proposed regulations were published on February 15, 2012, the US Treasury has collaborated with foreign governments to develop two alternative model intergovernmental agreements that facilitate the effective and efficient implementation of FATCA. The models should serve as the basis for concluding bilateral agreements for the exchange of tax information with interested jurisdictions and help implement the law in a manner that removes domestic legal impediments to compliance, secures wide-spread participation by every non-exempt financial institution in the partner jurisdiction, fulfills FATCA's policy objectives and further reduces burdens on FFIs located in partner jurisdictions. Seven countries have already signed or initialed these agreements, and the Treasury announced that Norway has now joined the United Kingdom, Mexico, Denmark, Ireland, Switzerland, and Spain as countries that have done so. It was further disclosed that Treasury is engaged with more than 50 countries and jurisdictions, and more signed agreements are expected to follow in the near future.

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A good resource to learn about some possible strategies to minimize your issues with respect to FATCHA and with respect to other laws and factors concerning the global marketplace, including, but not limited to international business re-domiciliation is at ICS - International Connection Services, which has some excellent resources for all of the readers of The Internationalist Page Blog who are interesting in worldwide business opportunities and international trade.

Labels, Tags, Keywords, Categories And Search Terms For This Article: Internal Revenue Service, United States Treasury Department, FATCHA, international business, offshore income, citizenship, FFI, The Internationalist Page Blog, Douglas E Castle, renouncing U.S. citizenship, global business, international trade, ICS - International Connection Services, CFI - CrowdFunding Incubator LLC, Global Edge Technologies Group LLC, OCRA, banking privacy, international cooperation treaties, foreign jurisdictions, financial planning, tax minimization, re-domiciliation,

As always, you are advised to seek the opinion of expert international legal and tax counsel prior to embarking on any type of business which takes you beyond the borders of your
country of citizenship.

Douglas E. Castle 

for The Internationalist Page Blog, and sponsored by
CFI - CrowdFunding Incubator LLC 

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Related articles

• US issues final regulations to combat Caribbean offshore tax evasion (caribbean360.com)
• Final Regulations Under FATCA Address Phased-In Due Diligence, IGAs, Compliance Obligations and More (joyoftaxlaw.com)
• Thomson Reuters Helps FFIs with FATCA Compliance (finovate.com)
• Bern signs tax disclosure agreement with US (thelocal.ch)
• Newswire: Markit and CTI Launch FATCA Compliance Service for Global Fund Industry (risk-technology.typepad.com)

U.S. EXPORTERS' RESOURCE CENTER - UPDATE!

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Dear Friends:





This is not really a post at all. Yes, yes, I know that it looks a great deal like a post, but it really isn't. I won't belittle you. THE WHOLE REASON THAT THIS IS HERE IS TO LET YOU KNOW THAT THE LAST POST (THE U.S. EXPORTERS' RESOURCE CENTER) HAS BEEN UPDATED AS OF 25 JANUARY, 2007. Simply scroll down to the last post (or simply hit "older posts" below, right) if it is not already on your Favorites menu.

Seems foolish to have to do this, but those technophiles at Google simply won't let me change the date on an "old post" when it is updated. You can update your blog, but you can't update a post. Ridiculous. I'm trying hard not to be discouraged.


Anyway, take a look at the post, and make it one of your FAVORITES.

And, as always, should you have any questions or ideas regarding the post, export or international trade, please email me directly at FreeDECastle001@yahoo.com. And Scott, if you should find any more typographical or grammatical errors, I hope that you will tell me immediately, as you have so judiciously done in the past. And Nancy, thank you for the information on Coface -- good call. As usual, I am in your debt. Joanne...thank you for suggesting the TREND LETTER as a resource.


Faithfully,

Douglas Castle
INTERNATIONALIST


p.s. I feel so foolish. I completely forgot to click off the "bold" key. But hey, how about that picture up on top?