Byrnes' Tax & Wealth Management Blog

William Byrnes graduate law programs blog

Sexual Violence during War and Peace

Posted by williambyrnes on October 1, 2014


Dr. Jelke Boesten, Kings College (London) (faculty profile and books)

http://www.palgrave.com/page/detail/sexual-violence-during-war-and-peace-jelke-boesten/?K=9781137383440

book coverThe idea that rape is widely used as a weapon of war has taken root in international institutions, influencing how post-conflict justice and transitional justice are perceived and pursued. Despite this global attention, there has been no progress eradicating or even mitigating sexual violence in war or in peace and very little progress prosecuting crimes of sexual violence. With particular reference to post-conflict justice, this book asks what sexual violence means from a socio-political perspective and in what ways contemporary “peacetime” violence is linked to wartime rape. Evidence from Peru and the internal armed conflict of 1980-2000 shows that acts of wartime rape are deeply embedded in existing configurations of gender and power and that sexual violence serves not only wartime terror but also peacetime hierarchies.

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Miscellaneous Deductions Can Cut Taxes

Posted by williambyrnes on October 15, 2014


IRS logoMiscellaneous Deductions Can Cut Taxes

You may be able to deduct certain miscellaneous costs you pay during the year. Examples include employee expenses and fees you pay for tax advice. If you itemize, these deductions could lower your tax bill. Here are some things the IRS wants you to know about miscellaneous deductions:

Deductions Subject to the Two Percent Limit.  You can deduct most miscellaneous costs only if their total is more than two percent of your adjusted gross income. These include expenses such as:

  • Unreimbursed employee expenses.
  • Expenses related to searching for a new job in the same line of work.
  • Certain work clothes and uniforms.
  • Tools needed for your job.
  • Union dues.
  • Work-related travel and transportation.

Deductions Not Subject to the Two Percent Limit.  Some deductions are not subject to the two percent limit. They include:

  • Certain casualty and theft losses. Generally, this applies to damaged or stolen property that you held for investment. This includes items such as stocks, bonds and works of art.
  • Gambling losses up to the amount of your gambling winnings.
  • Losses from Ponzi-type investment schemes.

There are many expenses that you can’t deduct. For example, you can’t deduct personal living or family expenses. You claim allowable miscellaneous deductions on Schedule A, Itemized Deductions.

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SEC Investor Bulletin: Trading Suspensions

Posted by williambyrnes on October 13, 2014


SECThe SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about the SEC’s rules and regulations related to trading suspensions.  The federal securities laws generally allow the SEC to suspend trading in any stock for up to ten business days.  This bulletin answers some of the typical questions we receive from investors about trading suspensions.  A list of companies whose stock is currently subject to an SEC trading suspension, or which previously has been subject to an SEC trading suspension, may be found here.

Why would the SEC suspend trading in a stock?

The SEC may suspend trading in a stock when the Commission is of the opinion that a suspension is required to protect investors and the public interest.  Circumstances that might lead the Commission to suspend trading include:

  • A lack of current, accurate, or adequate information about the company, for example, when a company is not current in its filings of periodic reports;
  • Questions about the accuracy of publicly available information, including in company press releases and reports, about the company’s current operational status, financial condition, or business transactions;
  • Questions about trading in the stock, including trading by insiders, potential market manipulation, and the ability to clear and settle transactions in the stock.

Why couldn’t the SEC forewarn investors that it was about to suspend trading in a stock?

The SEC cannot announce that it’s working on a suspension.  We conduct this work confidentially to maintain the effectiveness of any related investigation we may be conducting.  Confidentiality also protects a company and its shareholders if the SEC ultimately decides not to issue a trading suspension.  The SEC is mindful of the seriousness of suspensions, and carefully considers whether it is in the public interest and for the protection of investors to order a trading suspension.

What happens when the ten business day suspension period ends?

The SEC will not comment publicly on the status of a company when the ten-day suspension period ends because the company may still have serious legal problems.  For instance, the SEC may continue to investigate a company to determine whether it has defrauded investors.  The public would not know if the SEC is continuing its investigation unless the SEC publicly announces an enforcement action against the company.

Furthermore, when an SEC trading suspension ends, a broker-dealer generally may not solicit investors to buy or sell the previously-suspended over-the-counter (“OTC”) stock until certain requirements are met.  Before soliciting quotations or resuming quotations in an OTC stock that has been subject to a trading suspension, a broker-dealer must file a Form 211 with the Financial Industry Regulatory Authority (“FINRA”) representing that it has satisfied all applicable requirements, including those of Rule 15c2-11 and FINRA Rule 6432.

Among other things, Rule 15c2-11 requires broker-dealers to review and maintain certain documents and information about the company, including in certain cases:

  1. the company’s state of organization, business line, and names of certain control affiliates;
  2. the title and class of the securities outstanding; and
  3. the company’s most recent balance sheet and its profit and loss and retained earnings statement.

No broker-dealer may solicit or recommend that an investor buy an OTC stock that has been subject to a trading suspension unless and until FINRA has approved a Form 211 relating to the stock.  If there are continuing regulatory concerns about the company, its disclosures, or other factors, such as a pending regulatory investigation, a Form 211 application may not be approved.

However, limited or “unsolicited” trading can occur in an OTC stock that has been subject to a trading suspension after the suspension ends but before a Form 211 is approved.  This may allow investors to trade the stock when a broker or adviser has not solicited or recommended such a transaction.  Even though such trading is allowed, it can be very risky for investors without current and reliable information about the company.

Will trading automatically resume after ten days?

It depends on the market where the stock trades.  Different rules apply in different markets.

For stocks that quote in the OTC market (which includes stocks quoted on the Bulletin Board and OTC Link (f/k/a Pink Sheets)), quoting doesnot automatically resume when a ten-day suspension ends.  Before OTC stock quoting can resume after a suspension period, SEC regulations require a broker-dealer to review specific information about the company in accordance with Exchange Act Rule 15c2-11 and FINRA Rule 6432.  If a broker-dealer does not have confidence that a company’s financial statements are reasonably current and accurate in all material respects, especially in light of the questions that may have been raised by the SEC suspension action, then a broker-dealer may not publish a quote for the company’s stock.  The OTC markets function through dealer systems where only broker-dealers may quote and facilitate trading in OTC stocks.

In contrast to stocks that trade in the OTC market, stocks that trade on an exchange resume trading as soon as an SEC suspension ends.

If the suspended stock resumes trading, why is it trading at a much lower price?

The trading suspension may raise serious questions and cast doubts about the company in the minds of investors.  While some investors may be willing to buy the company’s stock, they will do so only at significantly lower prices.

Take precautions following an SEC trading suspension: check for reliable information.

Investors should be very cautious in considering an investment in a stock following a trading suspension.  At the very least, investors should assure themselves that they have current and reliable information about a company before investing.

  • Research the Company: Always research a company before buying its stock, especially following a trading suspension.  Consider the company’s finances, organization, and business prospects.  This type of information often is included in filings that a company makes with the SEC.
  • Review the Company’s SEC Filings: This information is free and can be found on the Commission’s EDGAR filing system.  Some companies are not required to file reports with the SEC.  These are known as “non-reporting” companies.  Investors should be aware of the risks of trading the stock of such companies, as there may not be current and accurate information that would allow investors to make an informed investment decision.
  • Be Skeptical: Investors should always ask why someone provides them a “hot” tip. Investors should also do their own research and be aware that information from online blogs, social networking sites, and even a company’s own website  may be inaccurate and sometimes intentionally misleading:

If current, reliable information about a company and its stock is not available, investors should consider seriously whether this may be a good investment.

Why would the SEC suspend trading of a stock when it knows that such action will hurt current shareholders?

The SEC suspends trading in a security when it is of the opinion that the suspension is required in the public interest and to protect investors.  Because a suspension often causes a dramatic decline in the price of the security, the SEC suspends trading only when it believes that the public may be making investment decisions based on a lack of information, or false or misleading information.  A suspension may prevent potential investors from being victimized by a fraud.

How can investors find out if the stock will trade again after a suspension?

Investors can contact the broker-dealer who sold you the stock or a broker-dealer who quoted the stock before the suspension. Ask the broker-dealer if it intends to resume publishing a quote in the company’s stock.

If there is no market to sell my security, what can investors do with their shares?

If there is no market to trade the shares, they may be worthless.  Investors may want to contact their financial or tax advisers to determine how to treat such a loss on their tax returns.

What can investors do if the company acted wrongfully and they have lost money?

If investors want to get their money back, they will need to consider taking legal action on their own.  The SEC cannot act as their lawyer.  Investors must pursue all of their legal remedies themselves or with the assistance of legal counsel they engage themselves.  For more information about how to protect your legal rights, including finding a lawyer who specializes in securities law, read our flyer, How the SEC Handles Your Complaint or Inquiry.

To learn how to file an arbitration action against a broker-dealer, investors can contact the Director of Arbitration at FINRA.  FINRA also offers mediation as an option before going to arbitration.

Where can investors get information about trading suspensions?

Investors can find a list of companies whose stocks have been suspended by the SEC since October 1995 on our website.

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International Wealth Management Considerations for American Expatriates

Posted by williambyrnes on October 10, 2014


by Edward D. Nieto

Expatriates often require international financial services to manage their investments, minimize their tax burdens, comply with offshore tax reporting requirements, and manage their wealth through tax and estate planning. An expatriate’s financial and tax situation becomes more complex when assets are acquired, investments are made, and-or business activities are conducted overseas. American expatriates have additional banking and tax reporting requirements that require special considerations when managing wealth. International banking is vastly becoming more difficult for Americans due to new reporting requirements under the Foreign Account Tax Compliance Act. In many cases, foreign banks are closing the bank accounts of Americans and preventing the purchase of investment products due to the cost and time involved with compliance. …

read Edward Nieto’s article at AdvisorFYI

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Tax Treatment of Offshore Real Estate Holdings and Foreign Housing Expenses

Posted by williambyrnes on October 6, 2014


AdvisorFYI » Tax Treatment of Offshore Real Estate Holdings and Foreign Housing Expenses.

by Mr. Edward D. Nieto

The Internal Revenue Service (IRS) does not require that offshore real estate be reported as a foreign financial asset such as a personal residence or a rental property held by an American expatriate or a United States Government employee working overseas.1It is only when the real estate is held through a foreign entity such as a corporation, partnership, trust or estate, that the interest in the entity needs to be specified and reported as foreign financial asset if the total value of all specified foreign financial assets is greater than the applicable reporting threshold.2

Read on at AdvisorFYI » Tax Treatment of Offshore Real Estate Holdings and Foreign Housing Expenses

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BEPS – China and India: Official Responses to UN BEPS Questionnaire | Let’s Talk Tax

Posted by williambyrnes on October 6, 2014


BEPS – China and India: Official Responses to UN BEPS Questionnaire | Let’s Talk Tax.

, a tax manager at Mazars, has written am informative article:

United Nations Subcommittee on Base Erosion and Profit Shifting (BEPS) had invited the developing countries to provide feedback by answering the UN Questionnaire including 10 questions. This summary focuses on the responses provided by China and India.

China and India responses to BEPS QuestionnaireBoth China and India confirmed that BEPS is very important issue for them and shared the global concern. ….

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Learn About the Federal Tax System

Posted by williambyrnes on October 6, 2014


IRS logo

Want to learn about the federal tax system?  

Did you know there’s a free, online program to help teachers and students learn the “hows” and “whys” of taxes? The IRS calls it “Understanding Taxes.” It was designed by the IRS and teachers to make learning about federal taxes as easy as A-B-C.

  • Accessible (web-based)
  • Brings learning to life
  • Comprehensive

Here are six more reasons to check out the Understanding Taxes program:

1. There are thirty-nine easy, relevant and fun lessons available 24/7.

2. A student can quickly look through the program and skip around.

3. A series of tax tutorials guides through the basics of tax preparation.  Another feature is a chance to test knowledge through tax trivia. There’s also a glossary of tax terms.

4. Teachers can customize the interactive program.  It’s easy to add to a school’s curriculum.

5. No need to register or login to use the program.

6. The program is a great way to learn about the history and theory of taxes in the USA.

IRS YouTube Videos:

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Jury Determines 150-Percent FBAR Penalty and U.S. Seeks FBAR Related Forfeiture of $12 Million!”

Posted by williambyrnes on October 4, 2014


International Financial Law Prof Blog.

In Zwerner, the government assessed civil FBAR penalties equivalent to 50 percent of the highest account balance for each of tax year 2004, 2005, 2006 and 2007, aggregating $3,488,609.33 for an account that appears to have had a high balance of $1,691,054 during the relevant time period! The IRS asserted a 75-percent civil income tax fraud penalty for tax years 2004, 2005 and 2006. …  The jury trial in Zwerner began on May 19, 2014 …

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ÉTICA Y COMPLIANCE: AMORES REÑIDOS

Posted by williambyrnes on October 3, 2014


ÉTICA Y COMPLIANCE: AMORES REÑIDOS.

a colleagues blog about compliance (in Spanish)

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Crackdown on Fashion Industries Money Laundering for Drug Cartels

Posted by williambyrnes on October 3, 2014


read it on International Financial Law Prof Blog

Extensive law enforcement operations have revealed evidence that money laundering activities and Bank Secrecy Act (BSA) violations are pervasive throughout the Los Angeles Fashion District, which includes more than 2,000 businesses. ,,, more than 1,000 federal, state and local law enforcement officials were in the Fashion District, where they executed dozens of search warrants and arrest warrants linked to businesses suspected to be engaged in money laundering schemes and evasions of required BSA reporting.

Posted in Financial Crimes | Tagged: , , , | 1 Comment »

Is FATCA failing? Here is my reply. (Haydon Perryman)

Posted by williambyrnes on October 2, 2014


Originally posted on GATCA:

Is FATCA failing? A reply.

This is a question that can be asked given that only 104K of FFIs had registered on the IRS Portal by September 24, 2014.

http://apps.irs.gov/app/fatcaFfiList/flu.jsf

When you compare 104K to the IRS estimate that between 400K and 600K need to register, 104K does indeed look small.

On the face of it that means there are a lot of Non Participating FFIs out there. A look at the regulations will tell us that withholding starts in 2014.

It is a fact that the regulations state that withholding starts in 2014. But let me ask a question: is that actually what happens in reality?

Withholding occurs on NP-FFI (Non Participating FFIs) and RAH (Recalcitrant Account Holders).

FATCA has been factored into on boarding. For those who doubt this, just try opening an account – you’ll soon find that there are questions in the onboarding process that address…

View original 1,115 more words

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Is FATCA failing? What do the October 1st numbers say?

Posted by williambyrnes on October 1, 2014


International Financial Law Prof Blog.

Haydon Perryman and I have had long running discussions about different aspects of FATCA.  I think that I bring an academic, albeit American, perspective.  He certainly brings the practical, Tier 1, institution perspective.

FATCA_roll

The two most interesting debates that we hold are regarding documentation (the W8s and acceptable equivalents by IGA) and the pool of FFIs (including EAG members) that should register to acquire a GIIN.  Last month, the GIIN list included 99,861 FFIs (mind you that a substantial number of these registrations are not unique, but instead represent affiliates within EAGs) – see our previous analysis links below.  It is October and only 104,344 are now registered, less than 5,000 these past thirty days.

Non-IGA Countries = 149

Only 5,257 (5%) of these 104,344 registrations are from the 149 countries that have not had an IGA announced with the US.  That means that these 149 countries are already having a 30% FATCA chapter 4 withholding imposed by US withholding agents on most of their US financial investments. Chapter 4 withholding is on more types of income/payments than Chapter 3 withholding (albeit the harshest gross proceeds withholding is not yet imposed).

But at least Bonaire, Sint Eustatius and Saba registration is up almost 100%! (well, 12 to 22 is a less exciting number to report).

download for free –> LexisNexis® Guide to FATCA Compliance

IGA Countries = 101

Which country had the most movement?  … read on at International Financial Law Prof Blog.

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The IRS’ International Collection Efforts Not Up to Par, TIGTA Audit Finds

Posted by williambyrnes on October 1, 2014


International Financial Law Prof Blog.

International tax noncompliance remains a significant area of concern for the IRS. However, the IRS’s collection efforts need to be enhanced to ensure that delinquent international taxpayers become compliant with their U.S. tax obligations.

 

Posted in international taxation | Tagged: , , | Leave a Comment »

FDIC Forces Merrick Bank To Stop Deceptive Payment Protection Credit Card Practices

Posted by williambyrnes on October 1, 2014


International Financial Law Prof Blog.

The Bank marketed the “PAYS Plan,” a payment protection credit card add-on product that was sold from 2008 to 2013 to consumers who had a Bank credit card. The PAYS Plan provided a benefit payment towards a consumer’s monthly credit card payment following certain life events such as involuntary unemployment, disability, and hospitalization.

The FDIC determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things: …

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How to make FATCA even more complicated

Posted by williambyrnes on October 1, 2014


Originally posted on GATCA:

The September 2014 Award for making FATCA even more complicated goes to the US IRS.

This award is well deserved as with just a little effort this complication could have made been avoided.

The subject is one of country codes. A dry subject even at the best of times but the IRS have managed to make it quite interesting and also made it more difficult for practitioners.

A foreign financial institution (FFI) needs a GIIN. GIINs are provided by the IRS upon completion of registration on the IRS FATCA Portal.

The last three digits of the GIIN contain the ISO 3166 Code of the Country to which the FFI belongs for FATCA purposes.

ISO 3166 Codes are well established:

http://www.iso.org/iso/country_codes.htm

ISO 3166 Codes also make FATCA slightly easier to wield because the last three digits of the GIIN, in theory, tell you which IGA to apply (if applicable).

It is…

View original 6,841 more words

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FATCA Supplement to the 2014 General Instructions for Certain Information Returns Reporting on Forms 1099

Posted by williambyrnes on September 29, 2014


International Financial Law Prof BlogInternational Financial Law Prof Blog.

FATCA filing requirements of certain foreign financial institutions (FFIs). If you are required to report an account that is a U.S. account under chapter 4 of the Code (chapter 4), you may be eligible to elect to report the account on Form(s) 1099 instead of on Form 8966, “FATCA Report.”

Caution: If the account is either a U.S. account held by a passive NFFE that is a U.S. owned foreign entity or an account held by an owner-documented FFI, do not file a Form 1099 with respect to such an account. Instead, you must file a Form 8966, “FATCA Report,” in accordance with its requirements and its accompanying instructions to report the account for chapter 4 purposes. …

download for free –> LexisNexis® Guide to FATCA Compliance

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Inside the New York Fed: Secret Recordings from a Whistle Blower

Posted by williambyrnes on September 29, 2014


International Financial Law Prof Blog.

Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses.

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Professor William Byrnes Develops Online Teaching Methodologies And Distance Learning In Face Of Disabilities

Posted by williambyrnes on September 29, 2014


William Byrnes pioneered the “online classroom” so he could continue teaching, despite a prognosis of lifetime disabilities resulting from traumatic injury. The program he developed to guarantee his future employment has now become a groundbreaking distance learning model used by higher education institutions and the U.S. military.

Byrnes suffered life threatening injuries in an African ski country accident and spent six months in the hospital undergoing grueling recovery from physical and brain trauma. Doctors could not predict his level of recovery, nor his future quality of life. In an effort to prepare himself for a productive future, Byrnes developed online, multi-media teaching methodologies that effectively ignore disability. ….

read the full article at International Business Times

Professor William Byrnes released remarks in the form of a white paper about teaching photodistance education methodologies called Alternative Methods of Teaching and The Effectiveness of Distance Learning For Legal Education.

Posted in Education Theory | Tagged: , , , | Leave a Comment »

4 Tax Facts about Hobbies

Posted by williambyrnes on September 29, 2014


IRS logo“Millions of people enjoy hobbies that are also a source of income. Some examples include stamp and coin collecting, craft making, and horsemanship.” the IRS stated in its Summertime Tax Tip 2014-15.

A taxpayer must report on the tax return the income earned from a hobby.  The rules for how a taxpayer reports the income and expenses depend on whether the activity is a hobby or a business.  There are special rules and limits for deductions a taxpayer can claim for a hobby.  Five tax tips  about hobbies:

1. Is it a Business or a Hobby?  A key feature of a business is that a taxpayer do it to make a profit.  Taxpayers often engage in a hobby for sport or recreation, not to make a profit. A taxpayer should consider nine factors when to determine whether an activity is a hobby.  A taxpayer must base the determination on all the facts and circumstances of the situation.

2. Allowable Hobby Deductions.  Within certain limits, a taxpayer can usually deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is appropriate for the activity.

3. Limits on Hobby Expenses.  Generally, a taxpayer can only deduct your hobby expenses up to the amount of hobby income.  If hobby expenses are more than the hobby’s income, then a loss results from the activity.  That loss is not deductible from other income.

4. How to Deduct Hobby Expenses.  A taxpayer must itemize deductions on a tax return in order to deduct hobby expenses.  Expenses may fall into three types of deductions, and special rules apply to each type.  See of Publication 535 for the rules about how you claim them on Schedule A, Itemized Deductions.

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This book provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

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Rethinking Virtual Currency Regulation in the Bitcoin Age

Posted by williambyrnes on September 28, 2014


International Financial Law Prof Blog

This Article investigates an increasingly important yet under-developed body of law: regulation of virtual currency. At its peak in March of 2014, the daily volume of Bitcoin transactions in U.S. Dollars exceeded $575,000,000. …

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Professor Byrnes Leads Online Education Workshop

Posted by williambyrnes on September 26, 2014


Professor Byrnes Leads Workshop in St. Paul Minnesota | Thomas Jefferson School of Law.

Byrnes became involved with distance education models after he suffered a traumatic injury in a ski accident. Since then, Byrnes has developed online, multi-media teaching methodologies  that effectively ignore disability. Byrnes multi-media approach continuously incorporates the newest technologies to accommodate a wide range of disabilities, making it easier for many more individuals to achieve their educational goals.

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FATCA Updates: Substitute W-8BEN-E, non-reporting FFI GIIN Registration, and new FATCA compliant 1099s

Posted by williambyrnes on September 25, 2014


International Financial Law Prof Blog.

Treasury-Dept.-Seal-of-the-IRSFATCA Releases of September 25: 

- two new Q&As, one addressing whether a nonreporting FFI under the IGA should register for a GIIN, the other addressing whether a substitute W-8, allowed for IGA countries, is FATCA compliant.

- new FATCA compliant 1099s that have a check-box added to identify an FFI filing the 1099 to satisfy its chapter 4 reporting requirement.

download for free –> LexisNexis® Guide to FATCA Compliance

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25% student loan borrowers 90 days behind, 13.7% in default

Posted by williambyrnes on September 25, 2014


International Financial Law Prof Blog.

Still, the government’s default measure vastly underestimates the problem. The government considers people in default if they have made no payments in 360 days. A broader measure by Federal_Reserve_Governors_sealthe New York Federal Reserve—which accounts for all Americans with student loans—shows that roughly one in four borrowers are at least 90 days behind on a payment.

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IRS Video Helps Same-Sex Couples

Posted by williambyrnes on September 24, 2014


The new video, less than two minutes long, is designed to help same-sex couples file their federal income tax returns.

 

 

 

 

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IRS Notice 2014-52 – Rules Regarding Inversions and Related Transactions

Posted by williambyrnes on September 23, 2014


12833-6a00d8341bfae553ef01a3fd3e6553970b-piSECTION 1.  OVERVIEW

The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) are concerned that certain recent inversion transactions are inconsistent with the purposes of sections 7874 and 367 of the Internal Revenue Code (Code).  The Treasury Department and the IRS understand that certain inversion transactions are motivated in substantial part by the ability to engage in certain tax avoidance transactions after the inversion that would not be possible in the absence of the inversion.  In light of these concerns, this notice announces that the Treasury Department and the IRS intend to issue regulations under sections 304(b)(5)(B), 367, 956(e), 7701(l), and 7874 of the Code.

Section 2 of this notice describes regulations that the Treasury Department and the IRS intend to issue that will address transactions that are structured to avoid the purposes of sections 7874 and 367 by (i) for purposes of section 7874, disregarding certain stock of a foreign acquiring corporation that holds a significant amount of passive assets; (ii) for purposes of sections 7874 and 367, disregarding certain non-ordinary course distributions; and (iii) for purposes of section 7874, providing guidance on the treatment of certain transfers of stock of a foreign acquiring corporation (through a spin-off or otherwise) that occur after an acquisition.

Section 3 of this notice describes regulations that the Treasury Department and the IRS intend to issue that will address certain tax avoidance by (i) preventing the avoidance of section 956 through post-inversion acquisitions by controlled foreign corporations (CFCs) of obligations of (or equity investments in) the new foreign parent corporation or certain foreign affiliates; (ii) preventing the avoidance of U.S. tax on pre-inversion earnings and profits of CFCs through post-inversion transactions that otherwise would terminate the CFC status of foreign subsidiaries and/or substantially dilute the U.S. shareholders’ interest in those earnings and profits; and (iii) limiting the ability to remove untaxed foreign earnings and profits of CFCs through related party stock sales subject to section 304.

Section 4 of this notice provides the effective dates of the regulations described in this notice.  Section 5 of this notice requests comments and provides contact information for purposes of submitting comments.

Notice 2014-52, Rules Regarding Inversions and Related Transactions

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Revised Qualified Intermediary (QI) Agreement

Posted by williambyrnes on September 23, 2014


IRS logoForm 1099 Reporting Responsibility, Private Arrangement Intermediaries (PAIs) and Joint Account and Agency Options under the Revised QI Agreement,  Special Procedures for New QIs during Calendar Year 2014, and QI Application and Renewal Procedures for Central Banks of Issue

This applies to certain entities that apply to enter into or have entered into the revised Qualified Intermediary (QI) agreement published in Revenue Procedure 2014-39, 2014-29 I.R.B. 151.

I. Form 1099 Reporting Responsibility

Section 8.06 of the revised QI Agreement provides the Form 1099 reporting responsibilities of a QI and incorporates the coordination rule provided in §1.6049-4(c)(4) for Form 1099 reporting with reporting under chapter 4 or an applicable IGA.  The following paragraphs are revised as set forth below.

  • Section 8.06(A). Reportable Amount.  QI must file a Form 1099 in accordance with the instructions to the form for the aggregate amount of a particular type of reportable amount paid to an account holder that is (or is presumed) a U.S. non-exempt recipient (whether a direct or indirect account holder). However, QI is not required to file a Form 1099 on a reportable amount if–
  • Section 8.06(A)(1).  QI is a non-U.S. payor reporting the account holder of a U.S. account under its FATCA requirements as a participating FFI or registered deemed-compliant FFI (including a reporting Model 1 FFI) and the other conditions of §1.6049-4(c)(4)(i) are satisfied;
  • Section 8.06(B)(1). QI is a non-U.S. payor reporting the account holder of a U.S. account under its FATCA requirements as a participating FFI or registered deemed-compliant FFI (including a reporting Model 1 FFI) and the other conditions of §1.6049-4(c)(4)(i) are satisfied;

The corrections described above conform to the coordination rule under §1.6049-4(c)(4)(i) by eliminating the Form 1099 reporting requirement for non-U.S. payors that are reporting Model 1 FFIs if the conditions of §1.6049-4(c)(4)(i) are satisfied.  The reference to backup withholding in section 8.06(A) of the revised QI agreement is also removed to be consistent with section 8.06(B) and because the backup withholding requirements are referenced separately, to the extent applicable, in sections 8.06(A)(1)-(6) of the revised QI agreement.

II. Private Arrangement Intermediaries (PAIs) and Joint Account and Agency Options under the Revised QI Agreement

Section 4 of the QI Agreement provides the requirements for a QI that enters into an agreement with a PAI or applies the joint account or agency option to a partnership or trust.  Section 4 will include the following:

  • A QI may apply the joint account option (section 4.05 of the revised QI agreement) to a partnership or trust that is an owner-documented FFI or an NFFE (other than a WP or WT) that otherwise meets the requirements of section 4.05 of the revised QI Agreement;
  • A PAI or partnership or trust to which a QI applies the agency option (section 4.06 of the revised QI agreement) may provide its documentation and other information to the QI for inclusion in the QI’s periodic review described in section 10.04 of the revised QI Agreement instead of performing the review itself and providing the QI with a certification of its compliance;
  • A partnership or trust to which a QI applies the joint account or agency option must waive any legal prohibitions against providing its records to the QI (rather than the IRS); and
  • A QI may continue to apply the rules of sections 4 and 4A of the former QI agreement (as published in Revenue Procedure 2002-12, 2000-1 C.B. 387 (as amended)) to a PAI or a partnership or trust to which it has applied the joint account or agency option until January 1, 2015, provided that the QI has entered into an agreement with such entity prior to June 30, 2014, pursuant to the terms of the former QI agreement.

The modifications described above are consistent with the provisions in the joint account and agency option section of the revised Withholding Foreign Partnership and Withholding Foreign Trust Agreements.  See sections 9.01 and 9.02 of the Withholding Foreign Partnership and Withholding Foreign Trust Agreements published in Revenue Procedure 2014-47, 2014-35 I.R.B. 393.

III. New QIs for Calendar Year 2014.

Section 1.03 of Revenue Procedure 2014-39 provides that a QI that submits an application for QI status before July 31, 2014 and is approved during calendar year 2014 may act as a QI in accordance with Revenue Procedure 2000-12 (as amended) until June 30, 2014, as if the QI agreement of such QI were effective on January 1, 2014 and expires on June 30, 2014.  The IRS is allowing an entity that submits an application for QI status at any time during the 2014 calendar year, if such application t is approved by the IRS by the end of 2014, to act as a QI in accordance with the former QI agreement from January 1, 2014, until June 30, 2014 as if the QI agreement were effective during that period.  Thus, a QI does not need to submit its application before July 31, 2014 in order to benefit from this retroactive allowance (as described in section 1.03 of Revenue Procedure 2014-39).  The IRS will specify in its approval letter to a QI how such QI may notify the IRS that it will act as a QI for the entire 2014 calendar year.  See also IRS Qualified Intermediaries News, Issue Number 2014-03, which is supplemented and modified by this issue.

IV. QI Application and Renewal Procedures for Certain Central Banks of Issue

Section 1.02 of Revenue Procedure 2014-39 provides that a central bank of issue may enter into a QI agreement.  A central bank of issue that is not required to register on the registration portal to obtain status as a participating FFI or registered deemed-compliant FFI (as described in sections 1.02 and 3.02 of Revenue Procedure 2014-39) must apply for or renew its QI agreement by submitting an application or request for renewal to the Foreign Intermediaries Program at the address provided in section 3.01 of Revenue Procedure 2014-39.  A central bank of issue described in the preceding sentence that renews its QI agreement on or before July 31, 2014, will have a QI agreement with an effective date of June 30, 2014.  If such QI renews after July 31, 2014, the effective date of the QI agreement will be the date of renewal provided in the IRS approval notice.  A central bank of issue that is not required to obtain status as a participating FFI or registered deemed-compliant FFI and that applies for QI status will have a QI agreement with an effective date of the date it is issued a QI-EIN.

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Penny Stock Frauds, Kick Backs Schemes, and FBI Stings

Posted by williambyrnes on September 23, 2014


International Financial Law Prof Blog

… arise out of a fraudulent scheme in which insiders of publicly-traded penny stock companies paid secret kickbacks to a purported corrupt hedge fund manager, who was in fact an undercover agent with the Federal Bureau of Investigation (“Fund Manager”), in exchange for the Fund Manager’s purchase of restricted stock of the penny stock companies on behalf of his purported hedge fund (“the Fund”), which did not actually exist. …

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Meeting of G20 Finance Ministers and Central Bank Governors

Posted by williambyrnes on September 23, 2014


Cairns, 20-21 September 2014

OCDE_10cm_4c• Part I – Base Erosion and Profit Shifting, Automatic Exchange of Information and Tax and
Development and Part II – Global Forum on Transparency and Exchange of Information for Tax Purposes, OECD Secretary-General Report to the G20 Finance Ministers and Central Bank Governors, September 2014.

• G20 Common Reporting Standard Implementation Plan, September 2014.
G20 Response to 2014 Reports on Base Erosion and Profit Shifting and Automatic Exchange of Tax
Information for Developing Economies, G20 Development Working Group, September 2014.
o Two other reports which support our agreement on tax and development can be found at
http://www.g20.org/official_resources.
Financial Action Task Force Progress Report to the G20, September 2014

download for free –> LexisNexis® Guide to FATCA Compliance

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OECD and G20 pursue efforts to curb multinational tax avoidance and offshore tax evasion in developing countries

Posted by williambyrnes on September 22, 2014


OCDE_10cm_4cThe OECD and its Global Forum on Transparency and Exchange of Information have today been mandated by the G20 to develop toolkits to support developing countries addressing base erosion and profit shifting (BEPS) and to launch pilot projects to assist them to move towards automatic exchange of information. This mandate comes in response to two reports:

  • a Report on the Impact of Base Erosion and Profit Shifting in Low Income Countries (Part 2); and
  • a Roadmap for developing country participation in the new global standard for the automatic exchange of information between jurisdictions.

The OECD will report to the G20 Leaders in November on its plan to deepen the involvement of developing countries in the OECD/G20 BEPS project and ensure that their concerns are addressed.

Detection of tax evasion is critical for developing countries in particular: US$8.5 trillion of household assets are held abroad. In 2012, more than 25% of all Latin American and almost 33% of all Middle Eastern and African household wealth was held abroad compared to the worldwide average of 6%7.  Estimates of tax revenue and illicit financial flows lost by developing countries generally range in the hundreds of billions of US dollars per year, exceeding the amount of official development assistance.

BEPS in Low Income Countries

Following-up on the release of the first set of BEPS recommendations last week, this new report recognises that the risks faced by developing countries from BEPS, and the challenges faced in addressing them, may differ to those faced by advanced economies. It draws on extensive consultations with developing countries to discuss BEPS issues which are a key priority to them, for example transfer pricing and the abuse of tax treaties, as well as issues that are not part of the BEPS Action Plan, such as tax incentives which may erode the tax base in the developing world but do little to attract inward investment.

Acknowledging that developing countries face specific policy issues and implementation challenges that are not always shared with developed countries, the report sets out areas where additional guidance and tools are required to ensure that the BEPS outcomes fully benefit lower capacity countries. It also highlights the actions developing countries have taken, many with international support, that indicate there are good opportunities to raise additional revenues from addressing BEPS issues and to create a more certain and stable investment climate for business.

Many Global Forum members reported this as a key benefit of AEOI and evidence supports this conclusion. For example, in Denmark, a 2010 study found that tax evasion occurred only in 0.3% of cases where income was subject to third-party reporting, but in 37% cases for self-reported income. In the US, 99% compliance was achieved for individuals whose income was reported to the tax administration by financial institutions whereas misreporting by individuals was found in 56% of cases in which there was little or no third party reporting.

Roadmap for developing country participation in AEOI

The Roadmap points the way to developing country participation in the new standard on automatic exchange of information. Drawing on the Global Forum’s extensive consultations with developing countries, the World Bank Group, other international organisations and civil society, the Roadmap provides a stepped approach to ensuring developing countries can overcome obstacles in implementing the new standard. It identifies the benefits, costs and the fundamental building blocks that developing countries need in order to meet the standard.

Pilot projects with developing countries are one of the key ways in which the Roadmap will be implemented. The pilot projects will take a progressive approach to implementation, with a focus on meeting the particular needs of each developing county pilot and ensuring that all confidentiality standards are reached. The pilot projects will be undertaken with the support of the World Bank Group and G20 countries, and include partnerships with more experienced countries. The results of these pilot projects will help to redress the knowledge imbalance between tax administrations in developing countries and tax evaders.

Over half of the Global Forum’s 121 member jurisdictions are developing countries and stand to benefit from the Roadmap and its implementation.

book cover

download for free –> LexisNexis® Guide to FATCA Compliance (Chapter 1, Background and Current Status of FATCA)

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Wolf of Wall Street Back With a Pack, Seeking Vengeance

Posted by williambyrnes on September 22, 2014


International Financial Law Prof Blog

…bankers and brokers defiantly have hardened in their quest for bigger and bigger paydays. Wolf of Wall Street? What we’re seeing is a pack of wild dogs that continue to use any means necessary to line their pockets no matter the fines, convictions and settlements that regulators throw at them.

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COLA Increases for Dollar Limitations on Benefits and Contributions

Posted by williambyrnes on September 22, 2014


IRS logoThe Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans.  IRC Section 415 requires the limits to be adjusted annually for cost-of-living increases.  The IRS announced on October 31, 2013 cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2014.

Please see the COLA Increases Table below for prior years’ dollar limitations and Internal Revenue Code references.


 

2014 2013

2012

IRAs

IRA Contribution Limit $5,500 $5,500 $5,000
IRA Catch-Up Contributions 1,000 1,000 1,000

IRA AGI Deduction Phase-out Starting at

Joint Return 96,000 95,000 92,000
Single or Head of Household 60,000 59,000 58,000

SEP

SEP Minimum Compensation 550 550 550
SEP Maximum Contribution 52,000 51,000 50,000
SEP Maximum Compensation 260,000 255,000 250,000

SIMPLE Plans

SIMPLE Maximum Contributions 12,000 12,000 11,500
Catch-up Contributions 2,500 2,500 2,500

401(k), 403(b), Profit-Sharing Plans, etc.

Annual Compensation 260,000 255,000 250,000
Elective Deferrals 17,500 17,500 17,000
Catch-up Contributions 5,500 5,500 5,500
Defined Contribution Limits 52,000 51,000 50,000
ESOP Limits 1,050,000
210,000
1,035,000205,000 1,015,000200,000

Other

HCE Threshold 115,000 115,000 115,000
Defined Benefit Limits 210,000 205,000 200,000
Key Employee 170,000 165,000 165,000
457 Elective Deferrals 17,500 17,500 17,000
Control Employee (board member or officer) 105,000 100,000 100,000
Control Employee (compensation-based) 210,000 205,000 205,000
Taxable Wage Base 117,000 113,700 110,100

 

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This book provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Posted in Retirement Planning | Tagged: , , , | Leave a Comment »

Mafia Takes Over FirstPlus Financial, Drains it Into Bankruptcy

Posted by williambyrnes on September 21, 2014


International Financial Law Prof Blog.

According to court documents and evidence introduced at the trial of his coconspirators, Scarfo is a made member of the Lucchese organized crime family.  In April 2007, Scarfo, Salvatore Pelullo and others devised a scheme to take over FirstPlus.  Scarfo and Pelullo used threats of economic harm to intimidate and remove the prior management and board of directors and replaced those officers with individuals beholden to Scarfo and Pelullo.   

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Willingness to Pay to Reduce White Collar and Corporate Crime?

Posted by williambyrnes on September 21, 2014


International Financial Law Prof Blog

Utilizing a contingent valuation survey approached that has been used to estimate the cost of street crimes, the average willingness to pay for a 10% reduction in each of these four offenses is estimated to range between $70 and $75 per household. In the case of consumer fraud and financial fraud – where estimates of prevalence are available, this translates into a willingness to pay of $2,700 per consumer fraud and $21,000 for financial fraud. In contrast, the out-of-pocket costs to victims of consumer fraud have been estimated to average about $100, and about $200 to $250 for various types of financial frauds. These figures also compare favorably to the willingness to pay for a reduced household burglary of $18,000.

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Four Things to Know about Net Investment Income Tax

Posted by williambyrnes on September 17, 2014


IRS Tax Tip 2014-48

Starting in 2013, some taxpayers may be subject to the Net Investment Income Tax. You may owe this tax if you have income from investments and your income for the year is more than certain limits. Here are four things from the IRS that you should know about this tax:

1. Net Investment Income Tax.  The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.

2. Net investment income.  This amount generally includes income such as:

  • interest
  • dividends
  • capital gains
  • rental and royalty income
  • non-qualified annuities

This list is not all-inclusive. Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony. Net investment income also does not include any gain on the sale of your main home that you exclude from your income.

After you add up your total investment income, you then subtract your deductions that are properly allocable to this income. The result is your net investment income. Refer to the instructions for Form 8960, Net Investment Income Tax for more on how to figure your net investment income or MAGI.

3. Income threshold amounts.  You may owe the tax if you have net investment income and your modified adjusted gross income is more than the following amount for your filing status:

Filing Status                            Threshold Amount
Single or Head of household            $200,000
Married filing jointly                        $250,000
Married filing separately                  $125,000
Qualifying widow(er) with a child       $250,000

4. How to report.  If you owe this tax, you must file Form 8960 with your federal tax return. If you had too little tax withheld or did not pay enoughestimated taxes, you may have to pay an estimated tax penalty.

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This book provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Posted in Taxation, Uncategorized | Tagged: | Leave a Comment »

Court Grants US Extraterritorial Search of Emails

Posted by williambyrnes on September 17, 2014


Feds Pose Privacy Risk by Grabbing Overseas ISP E-mails

read the synopsis by the law firm of Pepper Hamilton LLP …

Warrant Issued Pursuant to the SCA

This matter began with an application by the United States for a “search and seizure warrant” targeting a specific @msn.com e-mail account provided by Microsoft, and used by a person who is the subject of a government narcotics investigation. Magistrate Judge James C. Francis IV issued the warrant, after which Microsoft undertook to locate the data associated with the account. Microsoft determined that there were two buckets of data related to the account, one stored in the United States and the other in Ireland.

The “noncontent” bucket consisted of information such as the sender and recipient e-mail addresses as well as date and time information. Microsoft stored this information in the United States, and produced it in response to the warrant. The “content” bucket of information included the substance of the e-mails and their subject lines. For this particular user, Microsoft stored this information at a data center operated by a Microsoft subsidiary in Dublin, Ireland. Microsoft did not produce this information and instead moved to quash the warrant to the extent that it required information from the Dublin data center. Notably, Microsoft began the practice of using foreign data centers in 2010 to address the problem of “latency” that occurred when the servers were too far away from the user. The Irish data center would typically serve users that live closer to Ireland than the United States.

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OECD releases first BEPS recommendations for international approach to combat tax avoidance

Posted by williambyrnes on September 16, 2014


Full Video of BEPS release and the Post link is here.

The first 7 elements of the Action Plan released today focus on helping countries to:

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UK trusts under the UK-US Intergovernmental Agreement (IGA)

Posted by williambyrnes on September 16, 2014


August 2014, STEP, alongside ICAEW and The Law Society of England and Wales, updated their joint guide to the treatment of UK trusts under the UK-US Intergovernmental Agreement (IGA) to take into account minor revisions from HMRC. The trust tests (left hand side of the flowchart) have been amended. Detailed questions in Appendix II of the guidance have also been revised to reflect this.  The changes are not fundamental.

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download for free –> LexisNexis® Guide to FATCA Compliance (Chapter 1, Background and Current Status of FATCA)

 

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Mark Cuban joins critics of SEC’s ‘broken windows’ policy

Posted by williambyrnes on September 15, 2014


International Financial Law Prof Blog.

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Back-to-School Tax Credits

Posted by williambyrnes on September 15, 2014


IRS logoThe IRS revealed in its Summertime Tax Tip 2014-23 that some of the costs a taxpayer pays for higher education can lead to a taxpayer owing less tax.  Here are several important tax facts about “education tax credits” from the IRS:

  • American Opportunity Tax Credit.  The AOTC can be up to $2,500 annually for an eligible student. This credit applies for the first four years of higher education. Forty percent of the AOTC is refundable. That means a taxpayer may be able to get up to $1,000 of the credit as a refund payment from the IRS, even if no tax is owed.
  • Lifetime Learning Credit.  With the LLC, a taxpayer may be able to claim a tax credit of up to $2,000 on the federal tax return. There is no limit on the number of years the LLC can be claimed for an eligible student.
  • One credit per student.  A taxpayer may claim only one type of education credit per student on the federal tax return each year. If more than one student qualifies for a credit in the same year, then the taxpayer can claim a different credit for each student.
  • Qualified expenses.  A taxpayer may include qualified expenses to calculate the credit.  This may include amounts paid for tuition, fees and other related expenses for an eligible student.
  • Eligible educational institutions.  Eligible schools are those that offer education beyond high school. This includes most colleges and universities. Vocational schools or other postsecondary schools may also qualify.
  • Form 1098-T.  In most cases, a taxpayer will receive Form 1098-T, Tuition Statement, from the school.  This form reports the qualified expenses to the IRS and to the taxpayer. A taxpayer may notice that the amount shown on the form is different than the amount actually paid.  Some of the paid costs may not appear on Form 1098-T.  For example, the cost of textbooks may not appear on the form, but these textbook costs still may be able to be claimed as part of the credit.
  • Nonresident alien.  A F-1 student visa usually files a federal tax return as a nonresident alien.  A nonresident alien may not claim an education tax credit for any part of the tax year unless electing to be treated as a resident alien for federal tax purposes.
  • Income limits. These credits are subject to income limitations and may be reduced or eliminated, based on the taxpayer’s income.

<iframe width=”560″ height=”315″ src=”//www.youtube.com/embed/Q3anIwlsvLQ” frameborder=”0″ allowfullscreen>

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This book provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Posted in Taxation | Tagged: , , | Leave a Comment »

Credit Suisse Expands Private Banking to Canada

Posted by williambyrnes on September 11, 2014


International Financial Law Prof Blog -

The number of Canadian millionaires increased 7.2 percent last year, helping make North America the wealthiest region in the world, according to a June 18 report by consulting firm Cap Gemini SA and Royal Bank of Canada. Canadians with at least $1 million in investable assets climbed to 320,000 people, about 1 percent of the country’s population, with a collective wealth of $979 billion, according to the report.

Posted in Wealth Management | Tagged: | Leave a Comment »

Recharacterizing Roth IRAs Smartly: Use Multiple Roths

Posted by williambyrnes on September 11, 2014


International Financial Law Prof Blog -

The benefits of creating a stream of tax-free income during retirement is key to most successful retirement income strategies, and a Roth conversion that allows the client to “undo” the transaction if investments perform poorly is an attractive option for accomplishing this goal. However, despite the benefits that recharacterizing a Roth conversion can offer, this route can sometimes function as a double-edged sword by erasing the gains on successful investments within the account. Despite this, …

Posted in Retirement Planning, Wealth Management | Tagged: | Leave a Comment »

OECD releasing recommendations for combating international tax avoidance by multinational enterprises

Posted by williambyrnes on September 10, 2014


International Financial Law Prof BlogThe OECD will release its first recommendations for a coordinated international approach to combat tax avoidance by multinational enterprises under the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project on Tuesday 16 September 2014. …

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Six Indicted For $500 Million FATCA Avoidance Scheme for 100 US Clients

Posted by williambyrnes on September 10, 2014


International Financial Law Prof BlogFor example, in response to a request received by a U.S. corrupt client from a U.S. transfer agent who had to determine whether the proceeds from manipulative stock trading transaction were taxable under U.S. law, the defendant Bandfield forwarded an IRS Form signed by co-defendant Godfrey as the nominee for the shell company which had been set up at the request of the client.  At one point during the government’s investigation, Bandfield boasted to an undercover law enforcement agent that he had specifically designed this “slick” corporate structure to counter President Barack Obama’s new laws, a reference to FATCA….

Posted in Compliance, FATCA, Financial Crimes, Money Laundering | Leave a Comment »

Fixed Annuity Sales Rising in 2014, but Why ?

Posted by williambyrnes on September 10, 2014


International Financial Law Prof Blog – New studies show that, despite relatively stable conditions, fixed annuity sales have increased considerably in 2014 over 2013, as a perhaps unexpected number of clients flock toward these traditional guaranteed income products. 

Posted in Retirement Planning, Wealth Management | Tagged: , , | Leave a Comment »

Will Delaware Give Up Its Status as the #1 Corporate Tax Haven?

Posted by williambyrnes on September 6, 2014


International Financial Law Prof Blog.

The tiny state is perennially at the top of the list of global tax havens and has gained a reputation as place where those with something to hide – embezzlers, arms merchants, money launders, drug dealers and the like – can set up shop, no questions asked. This is thanks to Delaware laws that allow the true owners of a corporate entity to remain a secret.

Posted in Money Laundering, OECD | Tagged: , , | 1 Comment »

Did Russian State Sponsored Hackers Attack 5 US Banks To Retaliate Against Sanctions? Or the NSA Attacks Against Russia?

Posted by williambyrnes on September 4, 2014


International Financial Law Prof Blog -

At least one of the banks has linked the breach to Russian state-sponsored hackers, said one of the people. The FBI is investigating whether the attack could have been in retaliation for U.S.-imposed sanctions on Russia, said the second person, who also asked not to be identified, citing the continuing investigation.

Code WH13743849

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Follow Up on FATCA’s Soft GIIN Registration Numbers – or – Why Isn’t Every FFI Excited to Register WIth the IRS?

Posted by williambyrnes on September 4, 2014


free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

Think my response to Michael Deblis’ FATCA post may interest my readers – Michael’s article: https://taxconnections.com/taxblog/getting-it-right-on-fatca/#.VAgOLZRdXh6

The actual response to your previous Tax Connections post is that you “should” be correct. I have now lost three ‘should’ bets (July, Aug and Sept) as to the number of registrants.

My educated ‘guess’ back in March (I prefer to call it ‘analysis’ but I’ve been too far off to use that term) put the number of book coverGIIN registrants at close to 200,000 at this point. Moreover, I calculated with some precision, and understanding of the industry, that the UK would have 10,000 FFI GIINs registered, while France and Germany would each have 5,000.

In my defense, back in April and May I was still of the opinion that only 300,000 FFIs, by that FATCA definition (after exemptions by regulation and by IGA, after sponsored entities), would need to actually register. However, I have been later convinced, in talking with high level bank and financial institution compliance officers in charge of FATCA, that the number if certainly north of 500,000. How far North? There is much disagreement.  I think that my discussions with Haydon Perryman of Streveus have been most enlightening for my sometimes myopic US goggles.

How many sponsored entities will there be? Will sponsored entities seek a GIIN anyway (I have heard that this may be the case)?

For countries without a USA DTA, will FFIs simply divest because collecting all the W8s / equivalents is costs more than the relative safety of the T-bill? Some investment professionals say the precipice of divestment is the quarter leading up to gross proceeds withholding. Others say that gross proceeds withholding is the real FFI registration deadline.

And anyway, with the probably adoption of the OECD’s Common Reporting Standards, whether it’s a W8 or an OECD equivalent, all institutions investing in the OECD (and likely BRIC) are going to be collecting tax information.  Haydon Perryman sent me PwC’s interesting article on the friction of the US forms versus everyone else’s (well, at least the UK’s) http://www.pwc.com/en_US/us/tax-accounting-services/newsletters/global-information-reporting-withholding/assets/pwc-the-interaction-us-fatca-uk-cdot-poses-unique-challenges.pdf  Until I see a Rev Proc blessing another form, it’s still a W8 world. 

But along this argument, one potential for the foot dragging is that institutions are figuring out how to handle the back office complexities of collecting the required tax information for at least each country of investment/doing business in. It’s not that they are protesting FATCA. It’s just that FATCA is one piece of an increasingly complex data gathering, management and dissemination puzzle, along with the UK’s requirements and its tax forms (the UK we know about), and how many other countries? And the OECD.

On the other hand, in 2003 I wrote a 900 page report about this exact same FATCA type issue. Same horror stories except then it was called the European Union Tax Savings directive. While compliance for the EU states’ institutions, territories that were drug into it, and 3rd party states like Switzerland, may have been expensive, they survived. Capital flight from Switzerland and the Channel Islands to SIngapore was exactly as predicted. But the compliance was like a snowball rolling down a cliff. Most of the institutions came on-line only at the last moment.

Will October finally see the big jump? Probably not based on the decline of September’s results. But just looking at the UK for a moment, the UK professional associations set an internal suggested best practice deadline of October 25th for GIIN registration. So the November list – I expect to see the UK registration to be higher than the Cayman Islands. The UK Revenue stated, after the IGA was signed, that 75,000 UK entities were still impacted (and I read that as most requiring registration). Cut the 75,000 in half – so at least 30,000 for UK November seems reasonable.

China, Brazil? They’ll register in big numbers – on December 31st. I have read on other blogs that their institutions may roll their interest earning US investments into bonds or securities and hold out another year.  Automatic financial information exchange has reached inevitability.   So kicking and screaming they may come to the dinner table, but come they will.

free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

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Tax Information for Students Who Had a Summer Job

Posted by williambyrnes on September 3, 2014


In IRS Special Edition Tax Tip 2014-13, it discussed the tax issues of students who work summer jobs.  Many students take a job in the summer after school lets out. The IRS provided eight tax tips for students who take a summer job.

1. The IRS stated that a student should not be surprised when an employer withholds taxes from the paycheck.  But if the student is self-employed, then he or she may have to pay estimated taxes directly to the IRS on certain dates during the year. This is called a “pay-as-you-go” tax system.

2. As a new employee, a student must complete a Form W-4, Employee’s Withholding Allowance Certificate.  An employer will use it to figure how much federal income tax to withhold from the paycheck. The IRS Withholding Calculator tool on IRS.gov can help a student fill out the form.

3. Keep in mind that all tip income is taxable. If a student receives tips, then the student must keep a daily log so that he or she can report them to the IRS.  A student must report $20 or more in cash tips in any one month to the employer.  All yearly tips must be reported on the tax return.

4. Money earned doing work for others is taxable.  Some work may count as self-employment. This can include jobs like baby-sitting and lawn mowing. Keep good records of expenses related to this work.  Some expenses may be deducted from the income on the tax return. A deduction may help lower the final tax due.

5. If a student is ROTC, then active duty pay, such as pay received for summer camp, is taxable.  But the subsistence allowance while in advanced training is not taxable.

6. A student may not earn enough from a summer job to owe income tax.  But an employer usually must withhold Social Security and Medicare taxes from any pay. If a student is self-employed, then the student must pay these directly to the IRS.  Yet, these count toward coverage under the Social Security system.

7. If a student is a newspaper carrier or distributor, special rules apply. If certain conditions, then the student is considered self-employed.  But if those conditions are not met and the student is under age 18, then the student is usually exempt from Social Security and Medicare taxes.

8. The student may not earn enough money from a summer job to be required to file a tax return. Even if that is true, the student will probably want to file.  For example, if an employer withheld income tax from the paycheck, then the employee will need to file a return to receive a refund of those taxes.  The student can prepare and e-file a tax return for free using IRS Free File.

Finally, see tax rules for students.

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This book provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.

Posted in Taxation, Uncategorized | Tagged: , | Leave a Comment »

BPI Fined $125,000 for Money Laundering Violations, Shuts Down its MSB Operation

Posted by williambyrnes on September 2, 2014


The Financial Crimes Enforcement Network (FinCEN) today imposed a civil money penalty of $125,000 against BPI, Inc., a New Jersey money services business (MSB), for willful and repeated violations of the Bank Secrecy Act (BSA).  In November 2013, BPI’s parent, Banco BPI, S.A., received approval from the Board of Governors of the Federal Reserve System to establish representative offices in New Jersey and Massachusetts and BPI ceased operations as an MSB in March 2014.  

read the entire article International Financial Law Prof Blog.

Posted in Financial Crimes, Money Laundering | Tagged: , , | Leave a Comment »

FATCA FFI Update and It Doesn’t Look Pretty. September Did Not Break 100,000!

Posted by williambyrnes on September 2, 2014


The IRS published its September list of 99,861 FFIs registered for FATCA.  But that’s just an increase of about 4,500 registrations since the August list of 95,239.  The disappointing September result is a harbinger of the rough waters ahead for general FATCA compliance.  Considering the growth in registrations has slowed dramtically from the July to August increase of only7,246 additional entities (up from 87,993 in July), many industry watchers are sounding the alarm bells.

How Many Foreign Financial Institutions Are Still Not Registered?  Most!

read the country by country analysis at International Financial Law Prof Blog.

Read the August analysis and a country-by-country, and IGA, breakdown at International Financial Law Professor

Who We Are?

Haydon Perryman, FATCA Compliance expert of Strevus, and I have been undertaking (and publishing) the leading, same-day, analysis of the previous June 2nd  and the July 1st  of the FATCA FFI GIIN list by country, by IGA, by EAG, as well as exploring other interesting aspects of registered FFIs, and FATCA compliance documentation (e.g. W-8s and equivalent forms allowed by IGA). Haydon brings the practical side to bear having established the FATCA compliance system for Tier 1 UK institutions and Tier 1 EU ones, and I the academic side being the primary author of Lexis’ Guide to FATCA Compliance and an international tax professor.

free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

Posted in FATCA | Tagged: , , | 1 Comment »

 
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