Archive for 2014
Posted by William Byrnes on February 7, 2014
The Canadian Department of Finance has addressed various aspects and concerns of its newly signed FATCA intergovernmental agreement (IGA) between Canada and the United States. The Department stated that Draft legislation to implement the agreement will be released for comment shortly.
Contributing author Jean Richard to the LexisNexis Guide to FATCA Compliance will be providing the 2nd edition purchasers a Canadian chapter update via LexisNexis. Meanwhile, I excerpt below from the series of questions and answers of Canadian Revenue for the immediate benefit of the Lexis FATCA subscribers.
Reporting and Privacy?
Canadian financial institutions will report information on their U.S. clients directly to the Canada Revenue Agency (CRA), which will ensure that the collection and use of the information is consistent with Canadian privacy laws. In addition, exchanged information will be protected by the provisions of the Canada-U.S. Tax Convention.
Does the IGA respect the privacy rights of Canadians?
FATCA has raised a number of concerns in Canada – among both dual Canada-U.S. citizens and Canadian financial institutions. One key concern was that the reporting requirements would force financial institutions to report accountholder information directly to the IRS, which would raise concerns about consistency with Canadian privacy laws.
Under the IGA, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on U.S. residents and U.S. citizens will be reported to the CRA, similar to existing tax reporting by financial institutions to the CRA on their clients. The exchange of tax information between Canada and the U.S., including on an automatic basis, is already a longstanding practice, is authorized under Article XXVII of the Canada-U.S. tax treaty, and includes safeguards with respect to the use of the exchanged information. The information on U.S. accountholders obtained by the CRA will be exchanged with the IRS through these existing provisions, an approach that is consistent with Canadian privacy laws.
Limits on Reporting?
The IGA exempts key Canadian savings vehicles from being reviewed and reported on, including most federally registered accounts such as:
- Registered Retirement Savings Plans
- Registered Retirement Income Funds
- Pooled Registered Pension Plans
- Registered Pension Plans
- Tax-Free Savings Accounts
- Registered Disability Savings Plans
- Registered Education Savings Plans
- Deferred Profit Sharing Plans
Smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt.
Reciprocity?
The IGA is reciprocal, meaning that information will flow both ways between the tax administrations of the two countries to assist each in administering its own domestic tax laws. The information exchanged will provide tax authorities with greater information on accounts held by their taxpayers in the other country.
U.S. Tax Filing Obligations?
Since 1913, U.S. persons in Canada, including dual citizens, have been required under U.S. tax law to file an annual U.S. federal income tax return with the U.S. Internal Revenue Service (IRS). In addition, since 1972, these persons have been obliged to file an annual Foreign Bank Account Reporting (FBAR) form with the U.S. Department of the Treasury.
The IRS has a streamlined process to recognize that some U.S. persons living abroad have not filed timely U.S. federal income tax returns or FBAR forms. Information on this process can be found on the IRS website.
I am a U.S. citizen living in Canada and was not aware that the U.S. wants me to file tax returns. Will the IGA mean that I now have to pay U.S. taxes?
The IGA is strictly an information sharing agreement and does not involve the imposition by the U.S. of any new or higher taxes.
Unlike Canada, the U.S. taxes its citizens who reside in other countries on their worldwide income. The U.S. citizenship-based taxation regime has been in place since 1913, and is not altered by the enactment of FATCA, or the signing of any IGAs. For U.S. citizens resident in Canada, their U.S. tax obligations exist independently of their awareness of these obligations.
Canada respects the sovereign right of the U.S. to use citizenship as a basis for taxation. At the same time, citizenship-based taxation is a departure from the residence-based approach generally followed by Canada and most of the rest of the world, and creates unique challenges for U.S. citizens who reside in other countries. U.S. taxation of its non-resident citizens on their worldwide income, when these individuals are also subject to taxation on their worldwide income by their country of residence, can result in significant compliance burden on these individuals, even when they owe no U.S. tax.
What is the Government doing to protect dual citizens living in Canada against claims by the IRS?
While the Canada-U.S. tax treaty contains a provision that allows a country to collect the taxes imposed by the other country, the treaty does not apply to penalties under laws that impose only a reporting requirement. For example, the CRA will not assist in the collection of U.S. penalties associated with the Report on Foreign Bank and Financial Accounts (commonly known as the FBAR), which is a non-tax form required by the U.S. Treasury under the U.S. Bank Secrecy Act that requires the person filing the form to provide details of assets held at non-U.S. financial institutions.
Furthermore, the CRA will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose (whether or not the individual was also a U.S. citizen at that time).
U.S. Taxes and Penalties?
The IGA will not impose any new U.S. taxes or penalties for non-compliance with U.S. tax laws on U.S. persons holding accounts at Canadian financial institutions, or provide for additional assistance in collection beyond that already permitted by the Canada-U.S. Tax Convention. The IGA is strictly an information-sharing agreement.
The IGA also protects Canadians and Canadian financial institutions from the tax withholding provisions in FATCA.
Does the IGA mean that Canada will be enforcing U.S. tax laws?
Legislation to give effect to the provisions of the IGA will be proposed to Parliament in order to ensure that financial institutions can rely on Canadian law when implementing their procedures for complying with the IGA. The CRA, rather than the U.S., will be responsible for administering the IGA. Canadian financial institutions will report information to the CRA.
What are the benefits to Canada of the IGA?
Under the IGA:
- Canadian financial institutions will not report any information directly to the IRS. Rather, accountholder information on U.S. residents and U.S. citizens will be reported to the Canada Revenue Agency (CRA). The CRA will transfer the information to the IRS under the authority of the existing provisions of, and protected by the confidentiality safeguards under, the Canada-U.S. tax treaty.
- The 30 percent FATCA withholding tax will not apply to clients of Canadian financial institutions, and can apply to a Canadian financial institution only if the financial institution is in significant and long-term non-compliance with its obligations under the IGA.
- The FATCA requirement that Canadian financial institutions be required to close accounts or refuse to offer services to clients in certain circumstances will be eliminated.
- A number of accounts will be exempt from FATCA reporting, including Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, and Tax-Free Savings Accounts.
- Smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt from reporting.
- The IRS will provide the CRA with enhanced and increased information on certain accounts of Canadian residents held at U.S. financial institutions.
Will Canada be signing similar agreements with other countries?
The IGA is consistent with the Government’s support for recent G-8 and G-20 commitments to multilateral automatic exchange of information for tax purposes. In September 2013, G-20 Leaders committed to automatic exchange of information as the new global standard and endorsed an OECD proposal to develop a global model for automatic exchange of information. The model being developed is based on due diligence and reporting procedures similar to those in the Canada-U.S. IGA.
Canada is actively participating in the work of the OECD to develop the new multilateral standard.
LexisNexis FATCA Compliance Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in FATCA | 1 Comment »
Posted by William Byrnes on February 6, 2014
An Intergovernmental Agreement (IGA) between the Government of Canada and the Government of the United States for the enhanced exchange of tax information under the Canada-United States Tax Convention was signed on February 5, 2014, in Ottawa. See http://www.fin.gc.ca/treaties-conventions/notices/fatca-eng.asp The IGA will enter into force once Canada has notified the United States that the procedures required by Canadian law for the bringing into force of the IGA have been completed. It is proposed that the IGA have effect as of July 1, 2014.
FATCA has raised a number of concerns in Canada—among both dual Canada-U.S. citizens and Canadian financial institutions. One key concern was that the reporting obligations in respect of accounts in Canada would compel Canadian financial institutions to report information on account holders who are U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) directly to the IRS, thus potentially violating Canadian privacy laws. Without an agreement in place, obligations to comply with FATCA would have been unilaterally and automatically imposed on Canadian financial institutions and their clients as of July 1, 2014.
Jean Richard, banking expert and contributing author for the Canadian compliance chapter to the LexisNexis® Guide to FATCA Compliance added: “Canada’s Finance Minister Jim Flaherty stated that the lengthy negotiations resulted in obtaining significant exemptions and other relief. Do these exemptions and relief, different from those found in the models IGA and other IGA signed, address the Canadian citizens concerns about the extratoriality affect of the US tax system? According Canada National Revenue Minister, Kerry-Lynne D. Findlay,
“This is strictly a tax information-sharing agreement. This agreement will not impose any U.S. taxes or penalties on U.S. citizens or U.S. residents holding accounts in Canada.The CRA does not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose. This includes dual Canada-U.S. citizens. That will not change under this agreement.”
Jean Richard continued: “There is still much Canadian taxpayer concern about how this sensitive issue of risk of double jeopardy for Canadian Citizens who are also US Citizens or Green Card holders is to be dealt with. Canada is a country that is said to have over one million Canadian citizen who happen to be also a US Citizen, perhaps by birth or a parent. Canada and the US tax systems are not perfectly aligned, leading to the potential for double taxation.”
“The double tax agreement has a US-centric feature known as a “savings clause” that subjects US persons to US tax regardless of the applicability of the treaty. The inevitable result is an increase in the tax compliance and tax filing costs for Canadians that also have US nationality or a Green Card. These additional costs must be addressed by the respective authorities and then solutions communicated to the general Canadian population. These costs are in addition to those borne, estimated at about a billion Canadian dollars, by the Canadian financial industry to design and implement FATCA compliant reporting systems.”
Other IGAs including a new corresponding DTA announced by US Treasury
“FATCA implementation is critical to combating international tax evasion and promoting transparency,” said Deputy Assistant Secretary for International Tax Affairs Robert B. Stack. “The agreements announced today clearly demonstrate the considerable international support behind FATCA and we are proud to lead the global charge on this pressing issue.” The U.S. Department of the Treasury recently announced that the United States has signed intergovernmental agreements (IGAs) with Hungary and Mauritius, the latter of which also signed a new tax information exchange agreement. Treasury reports that the United States has signed 22 IGAs and has 12 agreements in substance to date.
Joint Statements and Signed Bilateral Agreements
Canada IGA Quick Facts
- Under the agreement, financial institutions in Canada will not report any information directly to the IRS. Rather, relevant information on accounts held by U.S. residents and U.S. citizens (including U.S. citizens who are residents or citizens of Canada) will be reported to the Canada Revenue Agency (CRA). The CRA will then exchange the information with the IRS through the existing provisions and safeguards of the Canada-U.S. Tax Convention. This is consistent with Canada’s privacy laws.
- The IRS will provide the CRA with enhanced and increased information on certain accounts of Canadian residents held at U.S. financial institutions.
- Significant exemptions and relief have been obtained. For instance, certain accounts are exempt from FATCA and will not be reportable. These include Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, Tax-Free Savings Accounts, and others. In addition, smaller deposit-taking institutions, such as credit unions, with assets of less than $175 million will be exempt.
- The 30 percent FATCA withholding tax will not apply to clients of Canadian financial institutions, and can apply to a Canadian financial institution only if the financial institution is in significant and long-term non-compliance with its obligations under the agreement.
- The agreement is consistent with Canada’s support for recent G-8 and G-20 commitments intended to fight tax evasion globally and to improve tax fairness. In September 2013, G-20 Leaders committed to automatic exchange of tax information as the new global standard and endorsed a proposal by the Organisation for Economic Co-operation and Development to develop a global model for the automatic exchange of tax information. They also signaled an intention to begin exchanging information automatically on tax matters among G-20 members by the end of 2015.
- Draft legislation to implement the agreement will be released for comment shortly on the Department of Finance website.
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in FATCA | Tagged: Canada, FATCA, IGA | Leave a Comment »
Posted by William Byrnes on February 6, 2014
This > article < by Professor William Byrnes describes the ancient legal practices, codified in Biblical law and later rabbinical commentary, to protect the needy.
The ancient Hebrews were the first civilization to establish a charitable framework for the caretaking of the populace. The Hebrews developed a complex and comprehensive system of charity to protect the needy and vulnerable. These anti-poverty measures – including regulation of agriculture, loans, working conditions, and customs for sharing at feasts – were a significant development in the jurisprudence of charity.
The first half begins with a brief history of ancient civilization, providing context for the development of charity by exploring the living conditions of the poor. The second half concludes with a searching analysis of the rabbinic jurisprudence that established the jurisprudence of charity.
This ancient jurisprudence is the root of the American modern philanthropic idea of charitable giving exemplified by modern equivalent provisions in the United States Tax Code.
However, the author normatively concludes that American law has in recent times deviated from these practices to the detriment of modern charitable jurisprudence. A return to the wisdom of ancient jurisprudence will improve the effectiveness of modern charity and philanthropy.
Number of Pages in PDF File: 41 (link is http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2304517)
Keywords: charity, charitable tax deduction, charitable tax exemption, history of charity, Jewish history, Jewish law, Israel
Posted in Tax Exempt Orgs, Tax Policy | Tagged: charitable tax deduction, charitable tax exemption, charity law, history of charity, Israel, Jewish history, Jewish law, Jurisprudence, Legal History | Leave a Comment »
Posted by William Byrnes on February 5, 2014
Q. In general, what are the tax benefits of real estate investment?
What limitations may restrict enjoyment of those benefits?
As a general rule, an investor takes the same deductions and credits and recognizes income whether the investor owns the property directly or has an interest in a limited partnership that “passes through” the deductions, credits, and income. However, …..
For the three-page analysis of Income, Interest, Taxes, Credits, Depreciation, Deductions, Limitations, and other issues, read William Byrnes and Robert Bloink of Tax Facts Online on > Think Advisor <
2014 Tax Facts on Investments provides clear, concise answers to often complex tax questions concerning investments. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Investments delivers the latest guidance on:
- Mutual Funds, Unit Trusts, REITs
- Incentive Stock Options
- Options & Futures
- Real Estate
- Stocks, Bonds
- Oil & Gas
- Precious Metals & Collectibles
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting investments, including changes from the American Taxpayer Relief Act of 2012
- Expanded coverage of Reverse Mortgages
- Expanded coverage of Real Estate Investment Trusts (REITs)
- More than 30 new Planning Points, written by practitioners for practitioners, in the following areas:
- Limitations on Loss Deductions
- Charitable Gifts
- Reverse Mortgages
- Deduction of Interest and Expenses
- REITs
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
Posted in Taxation, Uncategorized | Tagged: Byrnes, Credits, Deductions, Depreciation, Income, Interest, Limitations, Property, Real estate, Taxes | Leave a Comment »
Posted by William Byrnes on February 4, 2014
Tax and financial advisors will now have a new tool for helping individuals and small businesses navigate today’s toughest tax questions …
NEW YORK, /PRNewswire/ — In order to aid professionals faced with complicated, confusing tax questions, National Underwriter has released the newest addition to its highly popular Tax Facts library, Tax Facts on Individuals & Small Business, an essential tax reference for financial advisors & planners, insurance professionals, CPAs, attorneys, and other practitioners advising small businesses and individuals.
For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.
Due 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 brand-new resource 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.
“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”
The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.
“The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.
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.
ABOUT NATIONAL UNDERWRITER
For over 110 years, National Underwriter has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions. With respected resources available in print, online, and in eBook formats, National Underwriter remains at the forefront of the evolving insurance industry, delivering the thorough and easy-to-use resources you rely on for success. National Underwriter is a Summit Professional Network.
ABOUT SUMMIT PROFESSIONAL NETWORKS
Summit Professional Networks supports the growth and vitality of the insurance, financial services and legalcommunities by arming professionals with the knowledge and education they need to succeed at every stage of their careers. We provide face-to-face and digital events, websites, mobile sites and apps, online information services, and magazines giving professionals multi-platform access to our critical resources, including Professional Development; Education & Certification; Prospecting & Data Tools; Industry News & Analysis; Reference Tools and Services; and Community Networking Opportunities.
Using all of our resources across each community we serve, we deliver measurable ROI for our sponsors through a range of turnkey services, including Research, Content Development, Integrated Media, Creative & Design, and Lead Generation.
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Posted in book | Tagged: income tax, national underwriter, summit, tax facts, William Byrnes | Leave a Comment »
Posted by William Byrnes on February 3, 2014
This artticle discusses one avenue for retirement planning solutions for small businesses. Financial Planners who have small business clients may consider a discussion on the automatic payroll deduction IRAs as one simple way to help employees save for retirement.
A payroll deduction individual retirement account (IRA) is one simple way for businesses to give employees an opportunity to save for retirement. The program is easy to implement; the employer sets up the payroll deduction IRA program with a bank, insurance company or other financial institution, and then the employees choose whether and how much they want deducted from their paychecks and deposited into the IRA. Depending on the IRA service provider, some employees may also have a choice of investments depending on the IRA provider. Wealth managers can add value to employees and employers by, not only establishing a plan, but by also working with employees to help them manage their IRAs.
Under a payroll deduction IRA, the employee makes all of the contributions, thus there are no employer contributions. By making regular payroll deductions, employees are able to contribute smaller amounts each pay period to their IRAs, rather than having to come up with a larger amount all at once.
One advantage of these accounts is that there is little administrative cost and no annual filings with the government. Moreover, businesses of any size can participate as there is no requirement that an employer have a certain number of employees to set up a payroll deduction IRA.
Another element that makes the program attractive to some small businesses is that the program will not be considered an employer retirement plan subject to Federal requirements for reporting and fiduciary responsibilities as long as the employer keeps its involvement to a minimum.
Here’s how the IRAs generally work: The employer sets up the payroll deduction IRA program with a financial institution, such as a bank, mutual fund or insurance company. The employee establishes either a traditional or a Roth IRA (based on the employee’s eligibility and personal choice) with the financial institution and authorizes the payroll deductions. The employer withholds the payroll deduction amounts that the employee has authorized and promptly transmits the funds to the financial institution. After doing so, the employee and the financial institution are responsible for the amounts contributed.
Generally however, the employer needs to remain neutral with respect to the IRA provider. It cannot negotiate with an IRA provider to obtain special terms for its employees, exercise any influence over the investments made or permitted by the IRA provider, or receive any compensation in connection with the IRA program except reimbursement for the actual cost of forwarding the payroll deductions.
Commonly, any employee who performs services for the business (or “employer”) can be eligible to participate. The decision to participate is left exclusively up to the employee. The employees should understand that they have the same opportunity to contribute to an IRA outside the payroll deduction program and that the employer is not providing any additional benefit to employees who participate.
Employees’ tax-deferred contributions are generally limited to a maximum annual calendar year contribution, for 2014 that maximum is $5,500.00. Additional “catch-up” contributions of currently $1,000.00 a year are permitted for employees age 50 or over, thus a total of $6,500.00 a year for 2014.
Example of time value of money
Saving $500.00 per month, for 20 years, at 6% annual return over that time will provide you $232,176.00 for retirement. See the US government’s Tools and Calculators for Investors
The new Presidential myRA to be established by Treasury in 2014
The new myRA, to be established by Treasury under request of President Obama, is covered previously in this blog at > myRA < Several blog subscribers have emailed me with policy and operational questions about the “myRA“. A vein of questions that I find particularly interesting is whether tax policy rests with the executive instead of Congress? The myRA has a tax benefit (tax exemption during the earnings period) and a cost (no fees to be passed onto the employee, but as the adage goes: “there is no free lunch”). Tax Policy (tax imposition and tax benefit) should be established by Congress as part of the democratic process of establishing a fiscal budget. Yet, this norm is not absolute because Congress handed over of both establishing and enforcing regulation to the Executive (Treasury in this case). Establishing and enforcing the regulations also impacts policy. If you care to comment directly in the blog, do so below or feel free to continue sending me your comments directly.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:
- Estate & Gift Tax Planning
- Roth IRAs
- HSAs
- Capital Gains, Qualifying Dividends
- Non-qualified Deferred Compensation Under IRC Section 409A
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
- Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
- Expanded coverage of Annuities
- New section on Structured Settlements
- New section on International Tax
- More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, IRA, payroll deduction, Retirement, Retirement planning | Leave a Comment »
Posted by William Byrnes on February 3, 2014
The IRS has published IRS Tax Tip 2014-04 addressing “E-Filing”.
The IRS reports that 122 million taxpayers e-filed in 2013 for the 2012 tax year: IRS e-file. The IRS provides five reasons why a taxpayer should e-file your tax return:
1. Accurate and complete. E-file is the best way to file an accurate and complete tax return. The tax software does the math for you, and it helps you avoid mistakes.
2. Safe and secure. IRS e-file meets strict guidelines and uses the best encryption technology. The IRS has safely and securely processed more than 1.2 billion e-filed individual tax returns since the program began.
3. Faster refunds. E-filing usually brings a faster refund because there is nothing to mail and your return is less likely to have errors, which take longer to process. The IRS issues most refunds in less than 21 days. The fastest way to get your refund is to combine e-file with direct deposit into your bank account.
4. Payment options. If you owe taxes, you can e-file early and set an automatic payment date anytime on or before the April 15 due date. You can pay by check or money order, or by debit or credit card. You can also transfer funds electronically from your bank account.
5. E-file’s easy. You can e-file your federal return through IRS Free File, the free tax preparation program available only at IRS.gov. You can also use commercial tax software or ask your tax preparer to e-file your return. If you qualify, IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly will e-file your return for free.
IRS YouTube Videos:
The newest addition to the Tax Facts Library, Tax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules. It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals. See http://www.nationalunderwriter.com/tax-facts-on-individuals-small-business.html
Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
» Healthcare
» Home Office
» Contractor vs. Employee — clarified!
» Business Deductions and Losses
» Business Life Insurance
» Small Business Valuation
» Small Business Entity Choices
» Accounting — including guidance on how standards change as the business grows
» Capital Gains
» Investor Losses
» New Medicare Tax and Net Investment Income tax
» Individual Income Taxation
Posted in Taxation | Tagged: 1040, e-file, income tax, IRS, tax filing | Leave a Comment »
Posted by William Byrnes on February 2, 2014
The IRS released its first Tax Tip of the calendar year (IRS Tax Tip 2014-01). I have excerpted it below for your convenience:
Even if you don’t have to file a tax return, there are times when you should. Here are five good reasons why you should file a return, even if you’re not required to do so:
1. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
2. Earned Income Tax Credit. Did you work and earn less than $51,567 last year? You could receive EITC as a tax refund if you qualify. Families with qualifying children may be eligible for up to $6,044. Use the EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return and claim it.
3. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit. To claim it, you need to file Schedule 8812, Child Tax Credit, with your tax return.
4. American Opportunity Credit. Are you a student or do you support a student? If so, you may be eligible for this credit. Students in their first four years of higher education may qualify for as much as $2,500. Even those who owe no tax may get up to $1,000 of the credit refunded per eligible student. You must file Form 8863, Education Credits, with your tax return to claim this credit.
5. Health Coverage Tax Credit. Did you receive Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation? If so, you may qualify for the Health Coverage Tax Credit. The HCTC helps make health insurance more affordable for you and your family. This credit pays 72.5 percent of qualified health insurance premiums. Visit IRS.gov for more on this credit.
To sum it all up, check to see if you would benefit from filing a federal tax return. You may qualify for a tax refund even if you don’t have to file. And remember, if you do qualify for a refund, you must file a return to claim it.
IRS YouTube Videos:
Do You Need to File a Federal Income Tax Return?
You can also use the Interactive Tax Assistant tool on IRS.gov to see if you need to file.
Many people will file a 2013 Federal income tax return even though the income on the return was below the filing requirement. The questions below will help you determine if you need to file a Federal Income Tax return or if you need to stop your withholding so you will not have to file an unnecessary return in the future.
The Internal Revenue Service is providing this information as a part of our customer service and outreach efforts to Reduce Taxpayer Burden and Processing Costs. Changing your withholding and/or not filing Unnecessary Returns will save both you and the government time and money.
Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.
To determine if you need to file a Federal Income Tax return for 2013 answer the following questions:
Occasionally, individuals have one-time or infrequent financial transactions that may require them to file a Federal Income Tax return. Do any of the following examples apply to you?
- Did you have Federal taxes withheld from your pension and wages for this tax year and wish to get a refund back?
- Are you entitled to the Earned Income Tax Credit or did you receive Advance Earned Income Credit for this tax year?
- Were you self-employed with earnings of more than $400.00?
- Did you sell your home?
- Will you owe any special tax on a qualified retirement plan (including an individual retirement account (IRA) or medical savings account (MSA)? You may owe tax if you:
- Received an early distribution from a qualified plan
- Made excess contributions to your IRA or MSA
- Were born before July 1, 1942, and you did not take the minimum required distribution from your qualified retirement plan.
- Received a distribution in the excess of $160,000 from a qualified retirement plan.
- Will you owe social security and Medicare tax on tips you did not report to your employer?
- Will you owe uncollected social security and Medicare or Railroad retirement (RRTA) tax on tips you reported to your employer?
- Will you be subject to Alternative Minimum Tax (AMT)? (The tax law gives special treatment to some kinds of income and allows special deductions and credit for some kinds of expenses.)
- Will you owe recapture tax?
- Are you a church employee with income in wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security or Medicare taxes?
The newest addition to the Tax Facts Library, Tax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules. It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals. See http://www.nationalunderwriter.com/tax-facts-on-individuals-small-business.html
Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
» Healthcare
» Home Office
» Contractor vs. Employee — clarified!
» Business Deductions and Losses
» Business Life Insurance
» Small Business Valuation
» Small Business Entity Choices
» Accounting — including guidance on how standards change as the business grows
» Capital Gains
» Investor Losses
» New Medicare Tax and Net Investment Income tax
» Individual Income Taxation
Authors Professor William Byrnes and Robert Bloink
Posted in Taxation | Tagged: Earned Income Tax Credit, IRS, tax filing, tax return | 1 Comment »
Posted by William Byrnes on February 1, 2014
The Financial Crimes Enforcement Network (FinCEN) on Thursday published two administrative rulings, providing additional information on whether a person’s conduct related to convertible virtual currency brings them within the Bank Secrecy Act’s (BSA) definition of a money transmitter. The first ruling states that, to the extent a user creates or “mines” a convertible virtual currency solely for a user’s own purposes, the user is not a money transmitter under the BSA. The second states that a company purchasing and selling convertible virtual currency as an investment exclusively for the company’s benefit is not a money transmitter.
The rulings further interpret FinCEN’s March 18, 2013 Guidance Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies to address these business models. The Financial Crimes Enforcement Network (“FinCEN”) issued the March 18, 2013 interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act (“BSA”) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.
Currency vs. Virtual Currency
FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.” In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.
FIN-2014-R001: Application of FinCEN’s Regulations to Virtual Currency Mining Operations (http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R001.pdf)
FIN-2014-R002: Application of FinCEN’s Regulations to Virtual Currency Software Development and Certain Investment Activity (http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R002.pdf)
LexisNexis’ Money Laundering, Asset Forfeiture and Recovery and Compliance: A Global Guide – This eBook is designed to provide the reader with accurate analyses of the AML/CTF Financial and Legal Intelligence, law and practice in the nations of the world with the most current references and resources. The eBook is organized around five main themes: 1. Money Laundering Risk and Compliance; 2. The Law of Anti-Money Laundering and Compliance; 3. Criminal and Civil Forfeiture; 4. Compliance and 5. International Cooperation.
Each chapter is made up of five parts. Part I, “Introduction,” begins with the analysis of money laundering risks and compliance with the recommendations of the Financial Action Task Force (FATF), and then concludes with the country’s rating based on the International Narcotics Control Strategy Report (INCSR) of the U.S. State Department. Part II, “Anti-Money Laundering and Combating Terrorist Financing (AML/CTF)” and Part III, “Criminal and Civil Forfeiture,” evaluate the judicial and legislative structures of the country. Given the increasing global dimension of AML/CTF activities, these sections give special attention to how a country has created statutes, decisions, policies and the judicial enforcement procedures needed to combat money laundering and terrorist financing. Part IV, “Compliance,” examines the most critical processes for the prevention and detection of money laundering and terrorist financing. This section reflects on the practical elements that should be in place so that financial institutions can comply with AML/CTF requirements; these are categorized into the development and implementation of internal controls, policies and procedures. Part V, “International Cooperation,” reviews the compilation of international laws and treaties between countries working together to combat money laundering and terrorist financing.
As these unlawful activities can occur in any given country, it is important to identify the international participants who are cooperating to develop methods to obstruct these criminal activities. – See more at: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp;jsessionid=0AE5A4DFFE9101B2B8254B9E9191D6C7.psc1706_lnstore_001?pageName=relatedProducts&catId=&prodId=prod-us-ebook-01701-epub#sthash.prR4HmVX.dpuf
Posted in Compliance, Financial Crimes, Money Laundering | Tagged: AML, BSA, FINCEN, Money Laundering, virtual currency | Leave a Comment »
Posted by William Byrnes on January 31, 2014
Yesterday (January 30, 2014) the OECD released an initial draft of revised guidance on transfer pricing documentation and country-by-country reporting for comment by interested parties.
Action 13 of the BEPS Action Plan released on July 19, 2013 calls for a review of the existing transfer pricing documentation rules and the development of a template for country-by-country reporting of income, taxes and economic activity for tax administrations.
The OECD Announcement stated that its Committee on Fiscal Affairs believes that it is essential to obtain input from stakeholders on this Discussion Draft to advance the work. Specific issues on which comments would be appreciated are noted in the draft.
The OECD requests that comments be submitted in writing to transferpricing@oecd.org by February 23, 2014.
A public consultation event will be held at the OECD in Paris at the end of March 2014 with specifically invited persons selected from among those who provide written comments. An open discussion of the draft with all interested persons will take place at a future date to be determined in April or May.
Transfer pricing rules are an inescapable part of doing business internationally, and the LexisNexis Practical Guide to U.S. Transfer Pricing provides an in-depth analysis of the U.S. rules. This product is designed to help multinationals cope with the U.S. transfer pricing rules and procedures, taking into account the international norms established by the Organisation for Economic Co-operation and Development (OECD). It is also designed for use by tax administrators, both those belonging to the U.S. Internal Revenue Service and those belonging to the tax administrations of other countries, and tax professionals in and out of government, corporate executives, and their non-tax advisors, both American and foreign.
Posted in OECD, Transfer Pricing | Tagged: BEPS, OECD, transfer pricing | Leave a Comment »
Posted by William Byrnes on January 31, 2014
free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671 Number of Pages in PDF File: 58
On January 25, Kathryn Keneally, assistant attorney general of the Justice Department’s Tax Division, served as the keynote speaker for the American Bar Association Section of Taxation 2014 Midyear Meeting. to provide agency updates – including on the Switzerland banks non-prosecution agreement program that expired December 31.
David Voreacos of Bloomberg News reported that Kathryn Keneally, in her keynote remarks, stated that 106 Swiss banks (of approximately 300 total) filed the requisite letter of intent to join the Program for Non-Prosecution Agreements or Non-Target Letters (the “Program“) by the December 31, 2013 deadline. Renown attorney Jack Townsend reported on his blog on December 31st a list of 47 Swiss banks that had publicly announced the intention to submit the letter of intent, as well as each bank’s category for entry: six announced seeking category 4 status, eight for category 3, thirty-three for category 2. 106 is a large jump from the mid-December report by the international service of the Swiss Broadcasting Corporation (“SwissInfo”) that only a few had filed for non prosecution with the DOJ’s program (e.g. Migros Bank, Bank COOP, Valiant, Berner Kantonalbank and Vontobel). [1]
SwissInfo reported that Migros Bank selected Program Category 2 because “370 of its 825,000 clients, mostly Swiss citizens residing temporarily in the US or clients with dual nationality”, met the criteria of US taxpayer. Valiant told SwissInfo that “an internal review showed it had never actively sought US clients or visited Americans to drum up business. The bank said less than 0.1% of its clients were American.” The DOJ reported that in July 2013, Liechtensteinische Landesbank AG, a bank based in Vaduz, Liechtenstein, entered into a non-prosecution agreement and agreed to pay more than $23.8 million stemming from its offshore banking activities, and turned over more than 200 account files of U.S. taxpayers who held undeclared accounts at the bank.
William R. Davis and Lee A. Sheppard of Tax Analysts’ Worldwide Tax Daily reported that “one private practitioner estimated that some 350 banks holding 40,000 accounts have not come in.” (see “ABA Meeting: Keneally Reports Success With Swiss Bank Program”, Jan. 28, 2014, 2014 WTD 18-3.)
Two court orders entered in November 2013 in a New York federal court will further aid the offshore compliance investigations by authorizing the IRS to serve what are known as “John Doe” summonses on five banks to obtain information about possible tax fraud by individuals whose identities are unknown. The John Doe summonses direct the five banks to produce records identifying U.S. taxpayers holding interests in undisclosed accounts at Zurcher Kantonalbank (ZKB) and its affiliates in Switzerland and at The Bank of N.T. Butterfield & Son Limited (Butterfield) and its affiliates in Switzerland, the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta and the United Kingdom. The summonses also direct the five banks to produce information identifying foreign banks that used ZKB’s and Butterfield’s correspondent accounts at the five banks to service U.S. clients.
Swiss banks Wegelin ceased operations because of the DOJ investigation and its consequent guilty plea. Bank Frey followed suit because of the DOJ investigation and costs of future compliance with FATCA (its former head of private banking was indicted, and an > attorney in the same indictment pled guilty to conspiracy to commit tax fraud <). Frey bank, in a November 28, 2013 statement, defended itself: “In October, the former Bank Frey & Co. AG decided to cease its banking activities and to terminate all of its client relationships. Beforehand, the Bank verified the tax compliance of all its US clients, and an external auditor confirmed so. In addition, the Bank examined all of its other clients to determine whether they had any link to the US. Again, an external auditor checked and confirmed these findings. As a result, it was determined that Bank Frey did not have any clients with potential US tax issues.”
What is the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks?
The Tax Division of the Department of Justice > released a statement on December 12 < strongly encouraging Swiss banks wanting to seek non-prosecution agreements to resolve past cross-border criminal tax violations to submit letters of intent by a Dec. 31, 2013 deadline required by the Program for Non-Prosecution Agreements or Non-Target Letters (the “Program“). The Program was announced on Aug. 29, 2013, in a > joint statement < signed by Deputy Attorney General James M. Cole and Ambassador Manuel Sager of Switzerland (> See the Swiss government’s explanation of the Program < ). Switzerland’s Financial Market Supervisory Authority (FINMA) has issued a deadline of Monday, December 16, 2013 for a bank to inform it with its intention to apply for the DOJ’s Program.[2]
The DOJ statement described the framework of the Program for Non-Prosecution Agreements: every Swiss bank not currently under formal criminal investigation concerning offshore activities will be able to provide the cooperation necessary to resolve potential criminal matters with the DOJ. Currently, the department is actively investigating the Swiss-based activities of 14 banks. Those banks, referred to as Category 1 banks in the Program, are expressly excluded from the Program. Category 1 Banks against which the DoJ has initiated a criminal investigation as of 29 August 2013 (date of program publication).
On November 5, 2013 the Tax Division of the DOJ had released > comments about the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks < .
Swiss banks that have committed violations of U.S. tax laws and wished to cooperate and receive a non-prosecution agreement under the Program, known as Category 2 banks, had until Dec. 31, 2013 to submit a letter of intent to join the program, and the category sought.
To be eligible for a non-prosecution agreement, Category 2 banks must meet several requirements, which include agreeing to pay penalties based on the amount held in undeclared U.S. accounts, fully disclosing their cross-border activities, and providing detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest. Providing detailed information regarding other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed is also a stipulation for eligibility. The Swiss Federal Department of Finance has released a > model order and guidance note < that will allow Swiss banks to cooperate with the DOJ and fulfill the requirements of the Program.
The DOJ’s November comments responded to such issues as: (a) Bank-specific issues and issues concerning individuals, (b) Choosing which category among 2, 3, or 4, (c) Qualifications of independent examiner (attorney or accountant), (d) Content of independent examiner report, (e) Information required under the Program – no aggregate account data, (f) Penalty calculation – permitted reductions, (g) Category 4 banks – retroactive application of FATCA Annex II, paragraph II.A.1, and (h) Civil penalties.
Regarding which category to file under, the DOJ replied: “Each eligible Swiss bank should carefully analyze whether it is a category 2, 3 or 4 bank. While it may appear more desirable for a bank to attempt to position itself as a category 3 or 4 bank to receive a non-target letter, no non-target letter will be issued to any bank as to which the Department has information of criminal culpability. If the Department learns of criminal conduct by the bank after a non-target letter has been issued, the bank is not protected from prosecution for that conduct. If the bank has hidden or misrepresented its activities to obtain a non-target letter, it is exposed to increased criminal liability.”
Category 2 Banks against which the DoJ has not initiated a criminal investigation but have reasons to believe that that they have violated US tax law in their dealings with clients are subject to fines of on a flat-rate basis. Set scale of fine rates (%) applied to the untaxed US assets of the bank in question:
– Existing accounts on 01.08.2008: 20%
– New accounts opened between 01.08.2008 and 28.02.2009: 30%
– New accounts after 28.02.2009: 50%
Category 2 banks must delivery of information on cross-border business with US clients, name and function of the employees and third parties concerned, anonymised data on terminated client relationships including statistics as to where the accounts re-domiciled.
Category 3 banks have no reason to believe that they have violated US tax law in their dealings with clients and that can have this demonstrated by an independent third party. A category 3 bank must provide to the IRS the data on its total US assets under management and confirmation of an effective compliance programme in force.
Category 4 banks are a local business in accordance with the FATCA definition.
Regarding the requirement of the independence of the qualified attorney or accountant examiner, the DOJ stated that the examiner “is not an advocate, agent, or attorney for the bank, nor is he or she an advocate or agent for the government. He or she must provide a neutral, dispassionate analysis of the bank’s activities. Communications with the independent examiner should not be considered confidential or protected by any privilege or immunity.” The attorney / accountant’s report must be substantive, detailed, and address the requirements set out in the DOJ’s non-prosecution Program. The DOJ stated that “Banks are required to cooperate fully and “come clean” to obtain the protection that is offered under the Program.”
In the ‘bottom line’ words of the DOJ: “Each eligible Swiss bank should carefully weigh the benefits of coming forward, and the risks of not taking this opportunity to be fully forthcoming. A bank that has engaged in or facilitated U.S. tax-related or monetary transaction crimes has a unique opportunity to resolve its criminal liability under the Program. Those that have criminal exposure but fail to come forward or participate but are not fully forthcoming do so at considerable risk.”
[1] See Mathew Allen, US tax deal could prove deadly for small banks, SwissInfo, December 10, 2013, available at http://www.swissinfo.ch/eng/politics/US_tax_deal_could_prove_deadly_for_small_banks.html?cid=37506872
[2] See Supermarket banks sign up to US tax probe, SwissInfo, December 11, 2013, available at http://www.swissinfo.ch/eng/business/Supermarket_banks_sign_up_to_US_tax_probe.html?cid=37516028 (accessed December 12, 2013).
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in Compliance, FATCA, Financial Crimes, information exchange | Tagged: DOJ, FATCA, offshore, secrecy, Swiss banking | 2 Comments »
Posted by William Byrnes on January 31, 2014
The 2014 tax filing season opens today. This is the first day that the IRS will accept 2013 federal income tax returns. If you are working on your taxes and need tax help, the IRS website has both tax help and tax information.
- Tax Forms and Publications. Download tax forms and publications. Many publications are also available in Spanish.
- IRS Tools. You’ll find several tools and self-service options on IRS.gov to help you with your taxes. Here are just a few:
When you are ready to file your tax return beginning Jan. 31, there are several, free options that you should consider. Taxpayers who have visited IRS Taxpayer Assistance Centers in prior years for free tax preparation should be aware that, beginning this year, these offices are no longer offering this service. Other options for free tax preparation include:
- Use Free File to e-file for free. Most people e-file their tax return these days. Everyone can use IRS Free File to prepare and e-file their federal taxes for free. The only way to use this program is through the IRS website. If you made $58,000 or less, you can use free tax software. If your income is more than $58,000 and you feel comfortable doing your own taxes, use Free File Fillable Forms. This option has the electronic versions of IRS paper forms.
- Get taxes done with VITA or TCE. You may be able to get free tax preparation at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site. IRS-trained volunteers can help you get the tax credits and deductions you’re entitled to claim. The VITA program generally offers free tax return preparation and e-filing to people who earn $52,000 or less. The TCE program offers help mainly to people 60 or older. Thousands of free tax preparation sites around the nation will open in late Jan. and early Feb. Visit IRS.gov to find the one nearest you.
IRS YouTube Videos:
The newest addition to the Tax Facts Library, Tax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules. It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals. See http://www.nationalunderwriter.com/tax-facts-on-individuals-small-business.html
Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
» Healthcare
» Home Office
» Contractor vs. Employee — clarified!
» Business Deductions and Losses
» Business Life Insurance
» Small Business Valuation
» Small Business Entity Choices
» Accounting — including guidance on how standards change as the business grows
» Capital Gains
» Investor Losses
» New Medicare Tax and Net Investment Income tax
» Individual Income Taxation
Posted in Taxation | 1 Comment »
Posted by William Byrnes on January 30, 2014
The IRS released Tax Tip 2014-03 today: Which Tax Form Should You File?
The IRS is promoting its free tax software or Fillable Forms option that allows you to fill in your tax forms using a computer. You can e-file the completed forms for free!
The IRS offers the following tips for choosing the correct tax form:
You can generally use the 1040EZ if:
- Your taxable income is below $100,000;
- Your filing status is single or married filing jointly;
- You are not claiming any dependents; and
- Your interest income is $1,500 or less.
The 1040A may be best for you if:
- Your taxable income is below $100,000;
- You have capital gain distributions;
- You claim certain tax credits; and
- You claim adjustments to income for IRA contributions and student loan interest.
However, reasons you must use the 1040 include:
- Your taxable income is $100,000 or more;
- You claim itemized deductions;
- You are reporting self-employment income; or
- You are reporting income from sale of a property.
IRS YouTube Videos:
The newest addition to the Tax Facts Library, Tax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules. It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals. See http://www.nationalunderwriter.com/tax-facts-on-individuals-small-business.html
Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
» Healthcare
» Home Office
» Contractor vs. Employee — clarified!
» Business Deductions and Losses
» Business Life Insurance
» Small Business Valuation
» Small Business Entity Choices
» Accounting — including guidance on how standards change as the business grows
» Capital Gains
» Investor Losses
» New Medicare Tax and Net Investment Income tax
» Individual Income Taxation
Authors Professor William Byrnes and Robert Bloink
Posted in Taxation | Tagged: IRS, IRS tax forms, tax filing, tax season | Leave a Comment »
Posted by William Byrnes on January 30, 2014
A “qualified rollover contribution” can be made from a traditional IRA or any eligible retirement plan to a Roth IRA. Amounts that are held in a SEP or a SIMPLE IRA that have been held in the account for two or more years also may be converted to a Roth IRA.
Read the three page of planning tips from William Byrnes and Robert Bloink’s Tax Facts Online analysis at > Think Advisor <
The new myRA, to be established by Treasury under request of President Obama, is covered previously in this blog at > myRA < Several blog subscribers have emailed me with policy and operational questions about the “myRA“. A vein of questions that I find particularly interesting is whether tax policy rests with the executive instead of Congress? The myRA has a tax benefit (tax exemption during the earnings period) and a cost (no fees to be passed onto the employee, but as the adage goes: “there is no free lunch”). Tax Policy (tax imposition and tax benefit) should be established by Congress as part of the democratic process of establishing a fiscal budget. Yet, this norm is not absolute because Congress handed over of both establishing and enforcing regulation to the Executive (Treasury in this case). Establishing and enforcing the regulations also impacts policy. If you care to comment directly in the blog, do so below or feel free to continue sending me your comments directly.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:
- Estate & Gift Tax Planning
- Roth IRAs
- HSAs
- Capital Gains, Qualifying Dividends
- Non-qualified Deferred Compensation Under IRC Section 409A
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
- Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
- Expanded coverage of Annuities
- New section on Structured Settlements
- New section on International Tax
- More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, Individual Retirement Account, IRA, Retirement, Roth IRA, Traditional IRA | Leave a Comment »
Posted by William Byrnes on January 29, 2014
Since many persons have asked me for the link, I copy the new myRA information from the President’s announcement below. Creating the “myRA” – a Simple, Safe, and Affordable Starter Savings Account to Help Millions of Americans Start Saving for Retirement….
In the State of the Union, the President announced that he will use his executive authority to direct the Department of the Treasury to create “myRA” – a new simple, safe and affordable “starter” retirement savings account that will be offered through employers and will ultimately help millions of Americans begin to save for retirement.
- Starter Savings Account: Making It Easier to Start Saving for Retirement. This new product will be targeted to the many Americans who currently lack access to workplace retirement savings plans, which is usually the most effective way to save for retirement. Starting to save is just the first step towards a secure retirement, and the President wants to help more Americans save for their future.
- Safe and Secure: Principal Protection So Savers’ Account Balance Will Never Go Down. The product will be offered via a familiar Roth IRA account, and savers will benefit from principal protection, so the account balance will never go down in value. The security in the account, like all savings bonds, will be backed by the U.S. government. Contributions can be withdrawn tax free at any time.
- User-Friendly for Savers: Portable Account with Contributions that Are Voluntary, Automatic, and Small. Initial investments could be as low as $25 and contributions that are as low as $5 could be made through easy-to-use payroll deductions. Savers have the option of keeping the same account when they change jobs and can roll the balance into a private-sector retirement account at any time.
- Favorable Investment Return: Same Secure Investment Return Available to Federal Employees. Savers will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund.
- Widely Available: Available to Millions of Middle Class Americans Through Their Employer. This saving opportunity would be available to the millions of low- and middle-income households earning up to $191,000 a year. These accounts will be offered through an initial pilot program to employees of employers who choose to participate by the end of 2014. The accounts are little to no cost and easy for employers to use, since employers will neither administer the accounts nor contribute to them. Participants could save up to $15,000, or for a maximum of 30 years, in their accounts before transferring their balance to a private sector Roth IRA.
…
The President remains committed to working with Congress to help secure a dignified retirement for all Americans. While Social Security is and must remain a rock-solid, guaranteed progressive benefit that every American can rely on, the most secure retirement requires a three-legged stool that includes savings and pensions. That’s why the President is using his executive authority to create the “myRA” and has already proposed to work with Congress on the following proposals to help Americans save for their retirement:
- Giving Every Employee Access to Easy, Payroll-Based Savings Through the Auto-IRA. About half of all American workers do not have access to employer-sponsored retirement plans like 401(k)s, which puts the onus on individuals to set up and invest in an Individual Retirement Account (IRA). Up to 9 out of 10 workers automatically enrolled in a 401(k) plan through their employer make contributions, even years later, while fewer than 1 out of 10 workers eligible to contribute to an IRA voluntarily do so. The President’s budget will propose to establish automatic enrollment in IRAs (or “auto-IRAs”) for employees without access to a workplace savings plan, in keeping with a plan that he has proposed in every budget since he took office. Employers that do not provide any employer-sponsored savings plan would be required to connect their employees with a payroll deduction IRA. This proposal could provide access to one-quarter of all workers, according to a recent study.
—– Making Sure the Auto-IRA Works for Workers and Small Businesses. Workers would not be required to contribute and are free to opt out. Employers would also not contribute. The plan would also help defray the minimal administrative costs of establishing auto-IRAs for small businesses, including through tax incentives.
- Removing Inefficient Retirement Tax Breaks for the Wealthiest While Improving Them for the Middle Class. The Auto-IRA will spread the tax benefits for retirement savings to millions more middle-class Americans. Current retirement tax subsidies disproportionately benefit higher-income households, many of whom would have saved with or without incentives. An estimated two-thirds of tax benefits for retirement saving go to the top 20% of earners, with one-third going to the top 5 percent of earners. Our tax incentives for retirement can be designed more efficiently. According to one 2012 study, additional tax expenditures are a comparatively inefficient way to generate additional saving. The President has proposed to limit the benefits of tax breaks, including retirement tax preferences, for high income households to a maximum of 28 percent. The President has also proposed to limit contributions to tax-preferred savings accounts once balances are about $3.2 million, large enough to fund a reasonable pension in retirement.
* Importance of Securing a Dignified Retirement for All Americans *
- Many Americans lack access to workplace retirement savings plans – usually the most effective and generous means of saving for retirement. About half of all workers and 75 percent of part-time workers lack access to employer-sponsored retirement plans.
- The financial crisis dealt a severe blow to the retirement outlook for many families, wiping out more than $12 trillion dollars in household wealth. While financial markets have returned to their pre-crisis levels, median household wealth has only recovered 45 percent of the losses during the recession.
- The risk of an insecure retirement is especially great for women, minorities, and low-income Americans. Women continue to be less prepared for retirement than men and comprise 63 percent of the elderly living below the poverty line. White households have six times the wealth, including retirement savings, of African Americans or Hispanics. And low-wage and part-time workers are just one-third as likely as high-wage and full-time workers to participate in an employer-based retirement plan.
Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.
Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:
- Estate & Gift Tax Planning
- Roth IRAs
- HSAs
- Capital Gains, Qualifying Dividends
- Non-qualified Deferred Compensation Under IRC Section 409A
- And much more!
Key updates for 2014:
- Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
- Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
- Expanded coverage of Annuities
- New section on Structured Settlements
- New section on International Tax
- More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans
Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.
Posted in Retirement Planning | Tagged: IRA, myRA, Retirement planning, State of Union speach | 2 Comments »
Posted by William Byrnes on January 29, 2014
As of January 29, 2013 the U.S. has nineteen IGAs signed and published, although others have been agreed in principle but not yet signed. Sixteen of the current nineteen IGAs are based on Model 1: Costa Rica, Denmark, France, Germany, Guernsey, Ireland, Isle of Man, Italy, Jersey, Malta, Mexico, the Netherlands, Norway, Spain, the UK. Three IGAs are based on Model 2, being Bermuda, Japan and Switzerland.
The following jurisdictions are treated as having an intergovernmental agreement in effect:
Model Intergovernmental Agreements (Model Agreements)
Following the enactment of FATCA, Treasury published the Model Intergovernmental Agreement to Improve Tax Compliance and to Implement FATCA. Use the links here to find the current version of the agreement you need.
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in FATCA | Tagged: FATCA, IGA, intergovernmental agreement | Leave a Comment »
Posted by William Byrnes on January 28, 2014
Yesterday, the IRS Tax Stats Dispatch (#2014-2) included the link for the summation of data from all 2012 Gift Tax Returns. (see http://www.irs.gov/uac/SOI-Tax-Stats—Total-Gifts-of-Donor,-Total-Gifts,-Deductions,-Credits,-and-Net-Gift-Tax)
Interestingly, the total reported gifts of 2012 of approximately $135 billion was substantially more than double the 2011 year of approximately $51 billion, and previous years before that. The significant pickup in reported gift giving over the last several years compared to 2012 is in the category $1 million and larger gifts.
Will be interested to read your comments as to why this may be ? By example, is this the result of the now settled Estate and Gift tax rates ? Is it a result of the timing of retiring baby boomers wealth transfer to the next generation of their progeny? Is it charitably driven ?
Were financial planners prepared for the planning of this more than doubling of gifts to future generations and for charitable / legacy purposes?
Use Comments below.
|
Tax status and size of taxable gifts, current period [1]
|
Total gifts [2] |
Total annual exclusions |
Total included amount of gifts |
Total deductions [3] |
Taxable gifts, current period [4] |
| Number |
Amount |
Number |
Amount |
Number |
Amount |
Number |
Amount |
Number |
Amount |
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
(10) |
| All returns, taxable and nontaxable |
258,393 |
$134,846,285,766 |
244443 |
11794733033 |
191816 |
123051555062 |
5606 |
8120138820 |
190401 |
114968624890 |
| $0 |
67992 |
5822167968 |
67680 |
4054653753 |
1415 |
1767514212 |
1415 |
1767514212 |
0 |
0 |
| Less than $2,500 |
7612 |
362423498 |
6528 |
233021040 |
7612 |
129402627 |
24 |
119914708 |
7612 |
9487920 |
| $2,500 under $5,000 |
7433 |
412615201 |
7075 |
262415929 |
7433 |
150200871 |
407 |
123,960,592 |
7433 |
26240997 |
| $5,000 under $10,000 |
9294 |
563330627 |
8934 |
321839948 |
9294 |
241490859 |
264 |
172533814 |
9294 |
68957045 |
| $10,000 under $25,000 |
26161 |
1366229180 |
25611 |
924979071 |
26161 |
441250106 |
217 |
17,630,195 |
26161 |
423619911 |
| $25,000 under $50,000 |
23829 |
1731665895 |
22746 |
796632342 |
23829 |
935033551 |
397 |
84434152 |
23829 |
850599399 |
| $50,000 under $75,000 |
13048 |
1239385141 |
12504 |
400229648 |
13048 |
839155682 |
17 |
38,557,818 |
13048 |
800621940 |
| $75,000 under $100,000 |
8306 |
996198369 |
7583 |
183011743 |
8306 |
813186628 |
6 |
91,801,097 |
8306 |
721385532 |
| $100,000 under $250,000 |
29570 |
6071771849 |
26863 |
961754449 |
29570 |
5110017617 |
311 |
338746401 |
29570 |
4771297431 |
| $250,000 under $500,000 |
17,470 |
$7,519,686,206 |
16193 |
709363682 |
17470 |
6810322321 |
662 |
439160459 |
17470 |
6371161683 |
| $500,000 under $1 million |
16,149 |
$12,885,834,594 |
14609 |
773330454 |
16149 |
12112504390 |
390 |
346832003 |
16149 |
11765882467 |
| $1 million or more |
31,529 |
$95,874,977,236 |
28117 |
2173500974 |
31529 |
93701476195 |
1497 |
4579053368 |
31529 |
89159370564 |
Posted in Retirement Planning, Tax Exempt Orgs, Wealth Management | Tagged: charitable, estate tax, financial planning, gift tax, gifts, IRS, IRS statistics | Leave a Comment »
Posted by William Byrnes on January 27, 2014
Q. When are funds in an IRA taxed?
Funds accumulated in a traditional IRA generally are not taxable until they actually are distributed. Funds accumulated in a Roth IRA may or may not be taxable on actual distribution. Special rules may treat funds accumulated in an IRA as a “deemed distribution” and, thus, includable in income.
Read the three page planning tips and analysis of William Byrnes and Robert Bloink at Tax Facts Online > Think Advisor <
Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, Individual Retirement Account, IRA, Retirement | Leave a Comment »
Posted by William Byrnes on January 24, 2014
This >
article < by Professor William Byrnes studies this American political debate on the charitable tax exemption from 1864 to 1969, in particular, the debate regarding philanthropic, private foundations. The article’s premise is that the debate’s core has little evolved since that between the 1850s and 1870s.
To create perspective, a short brief of the modern economic significance of the foundation sector follows. Thereafter, the article begins with a review of the pre- and post-colonial attitudes toward charitable institutions leading up to the 1800s debates, illustrating the incongruity of American policy regarding whether and to what extent to grant charities tax exemption. The 1800s state debates are referenced and correlated to parts of the 1900s federal debate to show the similarity if not sameness of the arguments against and justifications for exemption. The twentieth century legislative examination primarily focuses upon the regulatory evolution for foundations. Finally, the article concludes with a brief discussion of the 1969 tax reform’s changes to the foundation rules and the significant twentieth century legislation regulating both public and private foundations.
Number of Pages in PDF File: 97 (link to article: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2304044)
Posted in Tax Exempt Orgs, Tax Policy | Tagged: charitable tax deduction, charitable tax exemption, charity, history of charity | Leave a Comment »
Posted by William Byrnes on January 23, 2014
The countries of the world, pushed by a U.S. Treasury promotional campaign, have inevitably capitulated to the U.S. unilateral demand for information although the per-country compliance cost may exceed one billion dollars and privacy protection laws must be amended. However, push back by important U.S. trading partners resulted in the U.S. Treasury entering into an expanding network of bi-lateral intergovernmental agreements that in most instances provide for automatic exchange between the competent authorities of the required financial information to fulfill FATCA compliance. These agreements may lead to an imposition of FATCA reporting compliance, though to a lesser extent, upon U.S. financial institutions, that the U.S. Treasury may in turn provide automatically to the foreign competent authority.
FATCA should not be observed in a historical vacuum but instead requires at least an understanding of the U.S. previous attempt to collect such information under the qualified intermediary (‘QI’) regime. Moreover, FATCA should not be observed in a unilateral vacuum but instead requires an overview of the EU and OECD information exchange initiatives and challenges thereto, tax collection and remission alternatives, as well as an overview of the spawn of FATCA (e.g. the UK’s son-of-FATCA approach).
This discussion will also explore the general nature, issues, and challenges of information collection and exchange. During this discussion we will digress into the topic of the information of a business’ financials and of its operations, the topic of domestic and cross border asymmetry of information, as well as the dialogue for global harmonization of information (such as standardization of accounts and of tax base determination), and for exchange of such information. Such conversation is necessary for a robust understanding of the topics of base erosion and the efforts of countries to control ‘transfer pricing’.
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives crafted into one, coherent voice by primary author William Byrnes. The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in FATCA | Tagged: FATCA, information exchange, international tax | 2 Comments »
Posted by William Byrnes on January 22, 2014
Following his October presentation in Moscow at Moscow Finance University organized with University of Amsterdam, Professor William Byrnes was invited to lecture last week for the intersession international tax course of the University of Amsterdam’s Centre for Tax Law. While at the University of Amsterdam, he engaged with Dean Dr. Edgar du Perron on collaborative distance education opportunities, and attended the European Law Student Association’s (ELSA) annual Groot Juridisch Dictee of the Amsterdam chapter.
William Byrnes noted, “Dr. Dennis Weber, the Director of the Amsterdam Centre for Tax Law, is a renowned jurist and author on tax issue brought before the European Court of Justice. He is frequently referred to as a powerhouse among European Tax Law faculty. In 2015, Amsterdam will begin offering the LL.M. of International Taxation in English for a very selective group of professionals. With his robust full-time tax faculty and cadre of Ph.D. candidates from around the world, I expect it to quickly become the premier international tax degree within Europe, perhaps globally.”
Professor Dennis Weber included, “I visited Thomas Jefferson’s campus last February when I lectured to its tax students about international tax risk management and also about practical aspects of careers in the tax field. I became very intrigued with how Associate Dean William Byrnes dynamically engaged students on campus and worldwide through leveraging communication and multimedia technologies. We are investigating potentially collaborating on joint online initiatives in the future and look forward to discussing these further when I return to San Diego this March to deliver my next international tax lectures.”
“Of all my international invitations” Professor Byrnes added, “University of Amsterdam is my favorite because I am an alumni and have fond memories and friends from my three years on campus when I studied international tax law, and participating as an active member of ELSA Amsterdam. The University of Amsterdam led to my initial academic opportunities in South Africa because my fellowship dissertation on transfer pricing profit-margin based methodologies was, at that time, quite unique and South Africa was re-thinking its tax system. With the G20 and OECD’s new agenda against base erosion and profit shifting (BEPS), transfer pricing is now a prominent topic of study in most tax law programs, but two decades ago only Amsterdam offered me the opportunity to delve deeply into it via a shared research program at the IBFD.”cts of careers in the tax field. I became very intrigued with how Associate Dean William Byrnes dynamically engaged students on campus and worldwide through leveraging communication and multimedia technologies. We are investigating potentially collaborating on joint online initiatives in the future and look forward to discussing these further when I return to San Diego this March to deliver my next international tax lectures.”
Professor Byrnes continued, “Also, Dr. Weber, Bruno Da Silva, and I had the opportunity to discuss several future collaborative publications stretching out through 2015 and beyond, including authoring a Lexis book on international tax for the Asian academic and professional market to be translated into several local languages, reworking a Lexis publication on tax treaties, and finally, expansion of my Lexis transfer pricing publication from the U.S. perspective to a global, comparative approach. Bruno Da Silva, who is just completing his doctoral candidacy at UvA on the topic of information exchange, and I just collaborated on the second edition of LexisNexis Guide to FATCA Compliance. His representation of the China Territory of Macau, his OECD research and his work with Loyens and Loeff is establishing him as a leader among his European colleagues for understanding cross border information information flows.”
“Moreover, I explored with Dr. Edgar du Perron, Dean of University of Amsterdam Faculty of Law, and Dr. Weber the ‘flipping the classroom’ approach to distance education and how we may implement some joint international tax courses in this regard that can receive status as professional designations from various financial service authorities and associations. Such courses could become the starting point for Amsterdam to leverage for the undergraduate law courses. It was interesting to learn from Dean Perron that a group of entrepreneurial Amsterdam law students have captured lecture recordings of some of their courses, splicing them into multimedia course outlines and then selling them, albeit potentially without obtaining the faculty members authorization.”
Posted in Courses, Education Theory, FATCA, Uncategorized | Tagged: Dennis Weber, edgar du perron, FATCA, information exchange, international tax, University of Amsterdam, William Byrnes | 1 Comment »
Posted by William Byrnes on January 22, 2014
This > article < by Professor William Byrnes traces Roman charity from its incipient meager beginnings during Rome’s infancy to the mature legal formula it assumed after intersecting with the Roman emperors and Christianity. During this evolution, charity went from being a haphazard and often accidental private event, to a broad undertaking of public, religious, and legal commitment. Charitable giving within ancient Rome was quite extensive and longstanding, with some obvious differences from the modern definition and practice of the activity.
The main differences can be broken into four key aspects. First, as regards the republican period, Roman charity was invariably given with either political or ego-driven motives, connected to ambitions for friendship, political power or lasting reputation. Second, charity was almost never earmarked for the most needy. Third, Roman largesse was not religiously derived, but rather drawn from personal, or civic impetus. Last, Roman charity tended to avoid any set doctrine, but was hit and miss in application. It was not till the imperium’s grain dole, or cura annonae, and the support of select Italian children, or alimenta were established in the later Empire that the approach became more or less fixed in some basic areas. It was also in the later Empire that Christianity made an enormous impact, helping motivate Constantine – who made Christianity the state religion – and Justinian to develop legal doctrines of charity.This study of Roman charitable activities will concern itself with several streams of enquiry, one side being the historical, societal, and religious, versus the legal. From another angle, it will follow the pagan versus Christian developments. The first part is a reckoning of Roman largesse in its many expressions, with explanations of what appeared to motivate Roman benefactors. This will be buttressed by a description of the Roman view of society and how charity fit within it. The second part will deal with the specific legal expressions of euegertism (or ‘private munificence for public benefit’ ) that typify and reveal the particular genius that Romans had for casting their activities in a legal framework. This is important because Rome is the starting point of much of charity as we understand the term, both legally and institutionally in the modern world. So studying Roman giving brings into highlight and contrast the beginnings of Charity itself – arguably one of the most important developments of the civilized world, and the linchpin of the Liberal ethos.
Number of Pages in PDF File: 68 (link is http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2314731)
Posted in Tax Exempt Orgs, Tax Policy | Tagged: Catholic, charitable giving, charity, Christian-Judeo, Jurisprudence, Legal History, Roman Law, tax | 1 Comment »
Posted by William Byrnes on January 20, 2014
As clients have begun to feel the shifting winds with respect to the general economy, the annuity market is now undergoing its own type of evolution.
While products that tie fluctuations in an annuity’s cash surrender value to prevailing market interest rates may have seemed unacceptably risky to most clients just a few months ago, changes in today’s interest rate environment now have clients flocking to find these features.
Annuities with market value adjustment (MVA) features may be the next hot product for clients looking to beat the return on other conservative investment products, so read the full analysis of this emerging trend by Professor William Byrnes and Robert Bloink at Think Advisor !
ThinkAdvisor.com supports the professional growth and vitality of the Investment Advisory community, from RIAs and wealth managers of all kinds, to independent broker-dealer and wirehouse representatives. We provide unparalleled access to the knowledge, information and critical resources they need to succeed at every stage in their career, including professional development, education and certification, industry news and analysis, reference tools and services, and community networking opportunities.
Posted in Insurance, Pensions, Retirement Planning, Wealth Management | Tagged: Brokerages, Business, Collective investment scheme, Financial services, Investing, Investment, Investment Advisory, Life annuity | Leave a Comment »
Posted by William Byrnes on January 16, 2014
Published via the IRS Newswire (IR-2014-3) and on the Taxpayer Advocate website of the IRS on January 9, 2014, National Taxpayer Advocate Nina E. Olson released her 2013 annual report to Congress. The Taxpayer Advocate, replying on State Department statistics, cited that “7.6 million U.S. citizens reside abroad and many more U.S. residents have FBAR filing requirements, the IRS received only 807,040 FBAR submissions in 2012.”{1} The Taxpayer Advocate noted that “more than one million U.S. citizens reside in Mexico and many Mexican citizens reside in the U.S.” The Report pointed out that most persons that worked in Mexico had to pay into a government mandated retirement account (known as a AFORES), and that this retirement account may be reportable to the IRS as a foreign trust.
Regarding individual international tax compliance initiatives, the IRS Newswire reported that “Analyzing results from the IRS’s 2009 OVD program, the Advocate found the median offshore penalty was about 381% of the additional tax assessed for taxpayers with median-sized account balances, and 580% of the tax assessed for taxpayers with the smallest account balances (i.e., the bottom 10%, with an average $44,855 account balance). Taxpayers who “opted out” of the OVD program and agreed to subject themselves to audits fared better but still faced penalties of nearly 70% of the tax and interest.”
The Report stated: “Since 2009, the IRS has generally required those who failed to report offshore income and file one or more related information returns (e.g., the Report of Foreign Bank and Financial Accounts (FBAR)) to enter into successively more punitive offshore voluntary disclosure (OVD) programs. … The programs were punitive, charging average penalties of more than double the unpaid tax and interest associated with the unreported accounts. … On average, the IRS assessed penalties of nearly 70% of the unpaid tax and interest in the audits of those who opted out.” The FBAR penalty of 50% of the account balance, for up to six years of non-compliance, equals a potential maximum FBAR penalty of 300% of the account itself, without regard to the actual tax due, interest thereupon, and tax penalties.
The finding that small account holding benign taxpayers paid penalties of nearly 600% of the actual tax due appears to be a miscarriage of the intent of policy makers. This situation has also led the Taxpayer Advocate to conclude that benign actors, in particular those with small non-reported accounts, made either soft disclosures or prospectively began to comply “… without subjecting themselves to the lengthy and seemingly-unfair OVD process.”
Regarding the 2012 IRS Streamlined OVD program, the taxpayer Advocate found that as of September 2013 2,990 taxpayers had submitted returns reporting an additional $3.8 million in taxes.
{1} Report Volume 1, Page 229.
Posted in FATCA, Tax Policy | Tagged: Byrnes, income tax, IRS, offshore, OVD, Taxpayer Advocate | 6 Comments »
Posted by William Byrnes on January 15, 2014
A new product feature has emerged to help clients looking to supplement retirement income or protect against the risk of outliving their assets, and, in an unusual twist, this feature is not attached to an annuity. Insurance carriers have thrown universal life insurance policies into the retirement income game by offering accelerated benefit riders that make it easier than ever for clients to access the value of their policies.
For clients looking to secure life insurance protection, longevity insurance, and a steady stream of retirement income, these new guaranteed income withdrawal riders could be the perfect solution!
Read the full analysis of Professor William Byrnes and Robert Bloink at Think Advisor !
Professor William Byrnes is a full time academic providing unbiased, informative critique to his readers. Subscribers of Tax Facts and of National Underwriters receive weekly strategic industry intelligence such as retirement strategies and client case studies. ThinkAdvisor.com, an industry news site, supports the professional growth and vitality of the Investment Advisory community, from RIAs and wealth managers of all kinds, to independent broker-dealer and wirehouse representatives. We provide unparalleled access to the knowledge, information and critical resources they need to succeed at every stage in their career, including professional development, education and certification, industry news and analysis, reference tools and services, and community networking opportunities.
Posted in Insurance, Retirement Planning, Wealth Management | Tagged: Business, Cash value, Financial services, insurance, Investment Advisory, life insurance, Retirement, term life insurance | Leave a Comment »
Posted by William Byrnes on January 14, 2014
Revenue Procedure 2014-13 (2014-3 I.R.B. 419), published January 13, 2014, contains corrections to the FFI agreement released on December 26, 2013.
Below are the links to the Revenue Procedure 2014-13 (2014-3 I.R.B. 419), published January 13, 2014, that contain corrections to the FATCA FFI Agreement released on December 26, 2013. The FFI Agreement is contained within the Revenue Procedure publication and accessible below.
The corrections can be found in sections 3.03(B)(1), 4.02(C), 5.01, 6.07, 9.02(B), 9.02(D) and 10.03 of section 5 (FFI Agreement) of Revenue Procedure 2014-13. The January 1, 2014, effective date of Revenue Procedure 2014-13 is unchanged.
Rev. Proc. 2014–13
FFI Agreement for Participating FFI and Reporting Model 2 FFI
Table of Contents
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives crafted into one, coherent voice by primary author William Byrnes.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in FATCA | Tagged: FATCA, FFI agreement | 2 Comments »
Posted by William Byrnes on January 13, 2014
As of December 31, 2013 the U.S. has eighteen IGAs signed and published, although others have been agreed in principle but not yet signed. Fifteen of the current eighteen IGAs are based on Model 1: Costa Rica, Denmark, France, Germany, Guernsey, Ireland, Isle of Man, Jersey, Malta, Mexico, the Netherlands, Norway, Spain, the UK. Three IGAs are based on Model 2, being Bermuda, Japan and Switzerland.
Joint Statements and Signed Bilateral Agreements
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide 600 pages of expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems. The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. Chapters include by example an in-depth analysis of the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
Posted in FATCA | Tagged: Bermuda, Cayman Islands, Costa Rica, FATCA, Germany, Guernsey, IGA, Implement FATCA, Isle of Man, United States | 1 Comment »
Posted by William Byrnes on January 10, 2014
The American Association of Law Schools (AALS) President reported at the Sunday morning Section Officers’ breakfast on January 4, attended by Associate Dean William Byrnes of Thomas Jefferson School of Law, that this year’s conference had the second highest registration in AALS history.
During the AALS annual conference in New York City, LexisNexis sponsored the breakfast held at the Hilton Midtown for the Workgroup on Distance Education for Legal Education. The sit down breakfast, filled at room capacity of stakeholders from among law schools, is the third annual breakfast during AALS and seventh meeting of the workgroup.
The Lexis sponsored breakfast provided Professor Rebecca Purdom (pictured left), renown environmental law academic and leader of Vermont Law School’s Environmental online program, the opportunity to lead a stakeholder discussion on the Workgroup’s Report of Best Practices before the second edition publication in March. Professor Purdom also presented the agenda of the March 2014 three-day Workgroup meeting sponsored by Washington University School of Law (St. Louis). Professor Purdom stated, “The Workgroup evolved from a 2011 project presented at the Harvard Law School – New York Law School initiative of conferences ‘The Future of Legal Education 2.0’. Over the past two years, law schools’ interest has substantially grown in the workgroup’s best practices and case examples output as the schools leap forward into providing online courses and programs for their JD and LLM students.”
William Byrnes, as chair of the Report subgroup (Best Practices for Distance Learning in Legal Education: A “Blue Paper” Summary of Delivery Models, Regulatory Issues, and Recommended Practices), has been coordinating input from academics from a representation of backgrounds, law school rankings, and regions, discussing and organizing contributions from workgroup members. Replying to the question: “What were some of highlights of the AALS conference this year?” Professor Byrnes answered, “The most significant “wake up” call of the AALS conference was the presentation about the ABA variance granted William Mitchell College of Law for a flexible hybrid, distance delivered JD degree. The newly announced hybrid short residence – online JD degree combines intensive, one week on-campus seminars once a semester with online course work during the semester. This variance is a game changer regarding thinking about delivery of U.S. legal education and I expect distance hybrid programs to be wildly popular.”
The American Bar Association general restrictions for earning distance education credits (Standard 306) are being relaxed as well. Under current ABA accreditation standards, a JD student may not earn any distance education during the first year of law school, and after the first year the student is restricted to no more than four distance education credit hours in any one semester, and a maximum 12 credits total may apply to the juris doctorate degree. The new accreditation standard (Standard 311) will remove the maximum distance education credits per semester restriction, and increase the allowance to 15 credits toward the degree. However, in light of the newly announced variance, it is expected that several schools will also seek to expand the curriculum and practice-oriented opportunities afforded by distance education, especially schools in low population density regions.
William Byrnes said “As the pioneer of distance learning delivered law degrees by ABA institutions, I am glad to see other law schools finally understanding the strengths offered by technology. At Thomas Jefferson, my understanding of distance education pedagogy has deepened, and is frequently called upon by other schools, promoting Thomas Jefferson an academic leader among the ABA schools.”
“How will this impact students?” William Byrnes continued “For students, it opens the possibility, by example, of combining 15 hours of distance credits for electives with externship credits and independent study credits to complete a full academic year while perhaps undertaking a practical externship in a foreign country. The student could begin the overseas, practical experience in January of the second year and return December the third year, allowing a full 12 months immersion, and not be penalized with a late graduation. The last semester at the home school is a good idea to allow the student to engage in the necessary local state bar procedure courses and other bar preparation common for impending graduate, as well as reintegrate with student organizations and friends. Of course, technology like video/web conference applications such as Skype, Google Chat, and Polycom allow students off campus to remain engaged with home school students organizations and the like. Still, technology doesn’t replicate throwing frisbee on Pacific Beach with friends or replace the unexpected meeting at the Starbucks down the street from the law school.”
“Quality of education was a concern on many minds which I think will in turn increase interest in the workgroup’s best practices project and report. I also expect several more variances and online programs to be applied for in 2014”. Professor Byrnes concluded “The March 2014 distance education workgroup meeting has opened a third day to address requests from law schools to provide practical online course examples of tools and techniques.”
The first edition of the workgroup’s best practices report may be downloaded from the Harvard website. The vastly expanded, and refined, second edition of Best Practices for Distance Learning in Legal Education: A “Blue Paper” Summary of Delivery Models, Regulatory Issues, and Recommended Practices will be published at the March 6 – 8, 2014 workshop. Contact William Byrnes for more details (https://profwilliambyrnes.com/about-2/).
Posted in Education Theory | Tagged: best practices, Distance education, Distance Learning, Legal education, pedagogy, Rebecca Purdom, William Byrnes | 1 Comment »
Posted by William Byrnes on January 9, 2014
Published via the IRS Newswire (IR-2014-3) and on the Taxpayer Advocate website of the IRS, National Taxpayer Advocate Nina E. Olson today released her 2013 annual report to Congress, urging the Internal Revenue Service to adopt a comprehensive Taxpayer Bill of Rights (TBOR).
The Newswire reminds the public that in a prior report, Olson analyzed the IRS’s processing of applications for tax-exempt status and concluded its procedures violated eight of the ten taxpayer rights she has proposed. The current Report though provided a broad rationale, based on internal coherence, collection efficiency, and international practices for Congress to codify a Taxpayer Bill of Rights, and for the meanwhile the IRS to issue its own. Examples of international practice included, by example, references to OECD Reports and to Canada’s practice. The Report quotes Thomas Jefferson: “A bill of rights is what the people are entitled to against every government on earth, general or particular; and what no just government should refuse, or rest on inferences.”{1}
The Newswire quotes the Report “Taxpayer rights are central to voluntary compliance. If taxpayers believe they are treated, or can be treated, in an arbitrary and capricious manner, they will mistrust the tax system and be less likely to comply with the laws voluntarily. If taxpayers have confidence in the fairness and integrity of the system, they will be more likely to comply.”
Regarding efficiency, the Newswire focuses on the report’s emphasis that the U.S. tax system is built on voluntary compliance: 98% percent of all tax revenue the IRS collects is paid timely and voluntarily. Only 2% results from IRS enforcement actions. While arguing that knowledge of taxpayer rights promotes voluntary compliance, the report cites a survey of U.S. taxpayers conducted for TAS in 2012 that found less than half of respondents believed they have rights before the IRS and only 11 percent said they knew what those rights are.
Regarding coherence, the Report states: “The Internal Revenue Code provides dozens of real, substantive taxpayer rights. However, these rights are scattered throughout the Code and are not presented in a coherent way. Consequently, most taxpayers have no idea what their rights are and therefore often cannot take advantage of them.”
The report calls on the IRS to take the taxpayer rights that already exist and group them into ten broad categories, modeled on the U.S. Constitution’s Bill of Rights. The report says the “simplicity and clarity” of a thematic, principle-based Taxpayer Bill of Rights would help taxpayers understand their rights in general terms.
1. The Right to Be Informed
2. The Right to Quality Service
3. The Right to Pay No More than the Correct Amount of Tax
4. The Right to Challenge the IRS’s Position and Be Heard
5. The Right to Appeal an IRS Decision in an Independent Forum
6. The Right to Finality
7. The Right to Privacy
8. The Right to Confidentiality
9. The Right to Retain Representation
10. The Right to a Fair and Just Tax System, Including Access to the Taxpayer Advocate Service
Read the complete Report at http://www.taxpayeradvocate.irs.gov/2013-Annual-Report/full-2013-annual-report-to-congress/
{1} Report Volume 1, Page 7.
Posted in Tax Policy | Tagged: Bill of Rights, Byrnes, IRS, Taxpayer Advocate | Leave a Comment »
Posted by William Byrnes on January 8, 2014
Read about the events that transpired including the announcement during an ABA session for the first ABA variance given to an online JD degree …
> Professor Byrnes Attends AALS Conference | Thomas Jefferson School of Law <
Posted in Education Theory | Tagged: AALS, ABA, American Bar Association, Byrnes, Distance education, Distance Learning, Purdom | 1 Comment »
Posted by William Byrnes on January 8, 2014
The IRS has published the following FATCA FAQs about the FATCA Registration Portal and System, including these topics:
- FATCA Registration System – Overview
- Registration System Resource Materials
- General System Questions
- FATCA Account Creation and Access
- Registration Status and Account Notifications
- Expanded Affiliated Groups (EAG)
- Registration Updates
- Global Intermediary Identification Number (GIIN) – Overview
- GIIN Format
| # |
Questions |
Answers |
| FATCA Registration System – Overview |
| Q1. |
What is the FATCA Registration System? |
An overview of the FATCA Registration System is available, along with other Registration Resources and Support Information, on the FATCA Registration Resources Page. |
| Registration System Resource Materials |
| Q2. |
What training is available for the Registration System? |
In addition to these Q&As, the FATCA Registration Online User Guide will provide information on how to answer questions and navigate through the online system. Short “how-to” videos for the Registration system are also available on the FATCA Registration Resources Page.The IRS anticipates adding more items in the near future to aid those registering through the FATCA Registration Website. |
| Q3. |
What help will be available for the FATCA Registration System? |
The FATCA Registration Resources Pagecontains information to get you started, including the FATCA Registration Online User Guide, short “how-to” videos for the Registration system, and other resources.If help is needed prior to logging onto the FATCA registration system, the Registration User Guide will provide information about logging in and navigating through the system. There is also a link “Forgot FATCA ID or Access Code?” on the login page with information on how to obtain assistance with login issues.Once logged on, the FATCA registration system contains help icons (question marks) throughout the registration with information on particular questions or fields. At the top of each page of the FATCA registration system there is a navigation bar with a “get help” option that will provide additional resources and contact information.
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| |
| General System Questions |
| Q4. |
What languages will the registration system be available in? |
The registration system will be in English only; however only certain special characters will be accepted (~ ! @ # % ^ * ( ) ? , . ). |
| Q5. |
Will there be a test environment or a beta version of the FATCA registration system? |
No, there will not be a test environment or a beta version of the registration system. The registration system is currently open. The FI’s can input their data. On or after January 1, 2014, the FI will need to submit their registration. |
| Q6. |
Will the system have certain mandatory fields or will they all be mandatory? |
Not all fields in the online registration form are mandatory. Fields that are mandatory are marked with an asterisk at the end of the question. Also, depending on how you answer a question, the system will automatically skip some questions as appropriate. |
| Q7. |
Will there be an automatic check of legal names against a database to prevent misspellings or to provide consistent formatting? |
The system will validate that the legal name contains only valid characters, but will not check the legal name against any database for spelling or format issues. Valid characters include lower and upper case letters (a-z, A-Z), numbers (0-9), and the following special characters: blank space, ampersand (&), hyphen (-), forward slash (/), period (.), comma (,), apostrophe (‘), pound sign (#), and percent sign (%). The legal name cannot start with a special character. |
| Q8. |
What is the maximum number of characters allowed for name fields? |
Most name fields allow for up to 40 characters to be input. You will not be able to input more characters than allowed in a particular field. There are specific error messages to guide you when you click on the “Next” or “Save” button in the registration system if there is a problem with the input you provided. |
| Q9. |
How should an FI enter the FI legal name in question 2 or the member FI legal name in question 12 (for lead FIs) if the FI legal name is longer than what the system allows, or has characters that the system does not allow? |
At this time, the FATCA registration system can only capture 40 characters (spaces between names will count toward the character limit). Further, only upper and lower case letters (a-z, A-Z), numbers (0–9) and the following special characters are accepted: blank space, ampersand (&), hyphen (-), forward slash (/), period (.), comma (,), apostrophe (‘), pound sign (#), and percent sign (%). Parentheses and brackets are not accepted at this time. The legal name cannot start with a special character.To the extent that the full legal name can be entered, please do so. If however, the full legal name does not fit, please note the following:
- At least the first 10 characters must match the FI’s legal name.
- Any legal and numerical designations must be included in the remaining 30 characters.
- No abbreviations in the first 10 characters, but otherwise it is okay to abbreviate.
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| Q10. |
How can a Financial Institution register an entity in a newly created country? |
The FATCA registration system includes countries on the ISO 3166 listing, and as new countries are added, the system will be updated to include them. There is also an option to select “other” for the country if the system has not yet added a country to the drop down lists. |
| Q11. |
Does the system have the capability to show the questions and responses before the registration is submitted? Can the questions and responses be printed or saved? |
The registration is separated into four parts. In the online registration system, how each part displays depends upon how the questions are answered; accordingly, the Financial Institution (FI) will only see the parts of the form that are applicable to it. At the end of parts 1 through 3, there is an edit / review function which will display the questions and responses provided. The FI can use the print functionality from its browser to print each of these parts. Once the registration is submitted, there are options on the home page to review each of the applicable parts of the registration. There is also an option for the FI to print, view, and save (in pdf format) the agreement (part 4) of the form.An FI (except Sponsoring Entities) can view or save (in pdf format) its branch table information from the home page.A Lead FI can view or save (in pdf format) its member FI table from the home page.
An FI can edit its registration by selecting the “Registration-Edit/Complete/Submit” option on its home page.
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| |
| FATCA Account Creation and Access |
| Q12. |
What is the maximum number of users that can access a FATCA account at one time? |
Each Financial Institution (FI) will have its own FATCA Account, with a unique FATCA ID. Although the login credentials (FATCA ID and access code) can be shared between the Responsible Officer and up to five (5) points of contact designated on the registration form, only one person can access the account at a time.For Expanded Affiliated Groups, each member FI has its own FATCA ID and access code, so members can log into the system independent of other members of the group. The Lead FI has access to all of the member FI accounts from their home page, and if the Lead FI is accessing a member account, that member will not be able to log in. If a member FI is logged in, the Lead FI will not be able to access that member account until the member logs out; however it will be able to access its own lead account. |
| Q13. |
What are the password requirements for FATCA Accounts? |
When creating a FATCA account, a Single, Lead or Sponsoring Entity Type Financial Institution will create an access code (like a password) to be used with the systemically assigned FATCA ID for all future logins to the account. The access code must be between 8 and 20 characters and include at least one uppercase letter, one lowercase letter, one number, and one of the following special characters ~ ! @ # % ^ * ( ) ? , .For Member type FI’s, the registration system will generate a unique FATCA ID and a temporary access code for each member when the Lead FI creates the member accounts. The Lead FI will provide the login information to each of its member FIs. When each member FI logs into their FATCA account, they will be prompted to select a new access code, following the criteria described in the above paragraph. |
| Q14. |
What are challenge questions used for? |
Each Financial Institution (FI) will select two challenge questions from a list of predefined questions and provide an answer to each. For all FIs except Member Type FIs, this will be done as part of the account creation process. Lead FIs will create all member FI accounts, and the first time the Member FI logs into their FATCA account, they will be prompted to select and answer their challenge questions. Each FATCA account will have two challenge questions and answers provided by the FI.Challenge questions will be used by each FI to reset their own access code if they forget it. Challenge questions and answers can be reviewed and updated at any time by the FI when logged into their account. From the home page, the FI can select the “Challenge Questions – Edit/Review” option and review and make changes as necessary. |
| Q15. |
Can a member of an Expanded Affiliated Group (EAG) create their own FATCA account? |
A Member Financial Institution (FI) cannot create its own FATCA account. The Lead FI will create all their member accounts and provide each member FI with its login credentials. The member will then log into its account and complete its registration. |
| Q16. |
What is the time lapse between the creation of the FATCA ID for the Lead FFI and the FATCA IDs for the Member FFIs? |
Once the Lead FI creates its own FATCA account, and has completed Part 1 of the registration, it will create the FATCA accounts for each member by adding the members in Part 2, question 12 of the online registration. As soon as a member’s information is completed, and the “add another” button is clicked, that member FI will appear in the table below the question with its FATCA ID and temporary access code. |
| |
| Registration Status and Account Notifications |
| Q17. |
What type of notifications will the FATCA Registration system provide? |
The FATCA Registration system will generate automatic e-mail notifications to the Responsible Officer (RO) to check the FATCA account when a financial institution (FI) registration changes between some statuses. There will also be messages posted on the FI’s message board, which it can access on the home page of its FATCA account. |
| Q18. |
How can a Financial Institution check the status of its registration? |
A Financial Institution (FI) can check the status of its FATCA registration by logging into its FATCA account and checking the account status displayed on its home page. The system will also generate automatic e-mail notifications to the Responsible Officer (RO) to check the FATCA account when a Financial Institution (FI) registration changes between some statuses. A list of statuses and their definitions can be found in the appendix of the FATCA Registration Online User Guide. |
| Q19. |
Can the Responsible Officer (RO) list more than one e-mail address on the registration system? |
The RO can only list one e-mail address in question 10 of the registration. |
| Q20. |
Can the change of status e-mail notifications go to the Responsible Officer (RO) and the Points of Contact (POCs)? |
The registration system will send an e-mail only to the Responsible Officer when the registration changes between some statuses. Therefore, the FI should carefully consider which email address is provided in question 10 of the registration. |
| |
| Expanded Affiliated Groups (EAG) |
| Q21. |
If a lead Foreign Financial Institution (FFI) of an Expanded Affiliated Group (EAG) registers and lists each Member on Part 2 of the registration, then would each member of the EAG still need to separately register? |
Each member financial institution of the EAG will need to complete a registration, once the Lead has created its account. In part 2 of the Lead FI’s registration, the lead FI will add basic identifying information for each member, and the system will create the member FATCA accounts. Each member will then need to log into the system and complete its registration. |
| Q22. |
Once the lead Financial Institution (FI) has its FATCA ID, will it be possible for each of the member Expanded Affiliated Group (EAG) entities to log on at the same time to register? |
Once the Lead adds a member under part 2 of the Lead’s registration, the system will generate a FATCA ID and temporary access code for the member (thus establishing the member’s account). The Lead will give that account information to the member and it can log into its member account. Each FI has its own account, so the Lead and member(s) can all be logged in at the same time to their own accounts. Because the Lead FI has access to member accounts, only one (either the Lead or Member FI) can access the member account at a time. |
| Q23. |
How does the lead Financial Institution (FI) access its member FI accounts? |
Once a lead FI creates its member accounts, it can access the member FI accounts by clicking on the “view member information link” from its homepage, and clicking on the name of the member FI in the table. The Lead FI can access each of its member accounts under its own lead FI account login – it does not need to log into each of the member accounts separately. However, since only one person can access the account at a time, the lead FI will get an error message if it tries to access the member account when the member FI is logged in, and the member FI will not be able to log into its account if the lead FI is accessing it. |
| |
| Registration Updates |
| Q24. |
Where does a Financial Institution (FI) send information to have updates made on its registration? |
Updates cannot be made on paper. Once an account is established, (whether on the paper form 8957 or online), the FI will manage any updates to its registration form and account online. An FI that chooses to initially register on paper will have its logon information sent to it in the mail. The FI will log into the FATCA Registration System, and select the” Registration – Edit/Complete/Submit” option from its home page to edit the registration form data, or choose from other available account options. |
| Q25. |
How can the access code for the FATCA account be changed? |
The financial institution (FI) can change the access code by logging into the FATCA account, and selecting the “Access Code – Change” option from its home page.The FI can also reset its own access code if it forgets it by clicking on the “Forgot FATCA ID or Access Code?” link from the login page, and following the instructions to answer the challenge questions provided during registration.Member financial institutions will also be required to change their initial temporary access code provided by their Lead FI the first time they log into the system.
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| Q26. |
How can the Responsible Officer (RO) or Points of Contact (POCs) be changed? |
An FI can edit its registration by logging into its FATCA account and selecting the “Registration – Edit/Complete/Submit” option from its home page. To change the RO or POCs, the FI would edit Question 10 or 11 of the registration as appropriate, and resubmit the registration.Because the RO and POCs share the login credentials for the FATCA Account, the FI may want to change its access code when its personnel changes. The access code can be changed from the home page by selecting the “Access Code – Change” option. |
| Q27. |
Can a Financial Institution (FI) that is limited change to a Participating FFI? |
Yes, an FI can edit their registration by logging into its FATCA account and selecting the “Registration – Edit/Complete/Submit” option from its home page. The FI would change its classification in question 4, and resubmit its registration. |
| Q28. |
How do I get my registration out of registration submitted status? |
Notice 2013-43 stated that after January 1, 2014 the FI will need to submit a final registration. If an FI submitted a registration prior to this date, it can be changed by the FI. To change the status of your registration from registration submitted, go to your home page. Under Available Account Options: Select “Registration – Edit/complete/Submit.” You will be asked if you want to change your status to “initiated.” Select yes. After January 1, 2014, you may submit your registration as final. |
| Q29. |
Why did my registration status change toRegistration Incomplete and how do I submit the registration again? |
Notice 2013-43 stated that after January 1, 2014 the FI will need to submit a final registration. If an FI submitted a registration prior to this date, the registration status will be systemically updated to Registration Incomplete on December 31, 2013. The registration system will be unavailable during this time.Beginning on January 1, 2014, you can login to your FATCA account, and resubmit your registration by selecting “Registration – Edit/Complete/Submit” under the Available Account Options on your home page. You will be asked if you want to change your status to Initiated. Select yes, and review each page of the registration, making any necessary updates, and clicking the “next” button at the bottom of each page to continue. When you get to Part 4 of the registration, complete the information, and click on the Submit button. Your registration status will then be updated toRegistration Submitted. You can go back at any time to update information. |
| |
| Global Intermediary Identification Number (GIIN) – Overview |
| Q30. |
What is a GIIN? |
A GIIN Composition Document is available along with other Registration Resources and Support Information, on the FATCA Registration Resources Page. |
| Q31. |
Will Financial Institutions (FIs) and Branches that are limited be issued GIINs? |
No, FIs and branches that are limited will not be issued GIINs. |
| GIIN Format |
| Q32. |
What is the format of the GIIN? |
The GIIN is a 19-character identification string that is a composite of different identifiers, including the FATCA ID, Financial Institution type, category code and country identifier. For more information see the full description in the GIIN Composition Document. |
| Q33. |
Are the period (.) separators in the GIIN required? |
Yes. The period separators comprise three characters in the 19-character identification number. Please see the GIIN Composition Document for more information. |
| |
FATCA Compliance Program and Manual
Fifty contributing authors from the professional and financial industry provide expert analysis within the LexisNexis® Guide to FATCA Compliance (2nd Edition): many perspectives – one voice crafted by the primary author William Byrnes. The second edition has been expanded from 25 to 34 chapters, with 600 pages of regulatory and compliance analysis.
The LexisNexis® Guide to FATCA Compliance (2nd Edition) comprises 34 Chapters grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of FATCA’s application for certain trading partners of the U.S. (Chapters 17–34), including intergovernmental agreements as well as the OECD’s TRACE initiative for global automatic information exchange protocols and systems.
The 34 chapters include many practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. The chapters include in-depth analysis of such topics as the categorization of trusts pursuant to the Regulations and IGAs, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters.
See: http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327&ORIGINATION_CODE=00247
Posted in FATCA | Tagged: FAQ, FATCA, Foreign Account Tax Compliance Act, GIIN, Internal Revenue Service, IRS, January 1 2014, Legal name | Leave a Comment »
Posted by William Byrnes on January 6, 2014
For many clients today, post-retirement relocation has become the ultimate goal. Unfortunately, these clients have often failed to consider the state tax implications that may arise when they tap into retirement funds in a new state—a state in which the funds were not actually earned. This type of scenario could result in the client becoming subject to taxation in both the state in which the income was received and the state in which the income was earned—even though the client has relocated—especially in the case of funds received pursuant to a nonqualified deferred compensation plan.
With careful planning, however, the client may be able to use federal rules to avoid taxation…. read the analysis of Professor William Byrnes and Robert Bloink that may apply to your clients-at Think Advisor 1
Posted in Reporting | Tagged: Business, income tax, List of countries by tax rates, Nonqualified deferred compensation, Tax advisor, Taxation, United States | Leave a Comment »
Posted by William Byrnes on January 2, 2014
The IRS has finally given high-income taxpayers a break with the release of the final regulations governing the new 3.8% tax on net investment income.
These final rules mark a dramatic shift from the IRS’s previous position. By adding flexibility to the rules, the IRS’s unanticipated amendments ease the sting of the investment income tax.
Read Professor Robert Bloink and William Byrnes’ analysis of the shift in the IRS’ position at > Think Advisor <
tax planning case studies for individuals and small business available on Tax Facts online
Posted in Taxation, Wealth Management | Tagged: accounting, income tax, Internal Revenue Service, IRS, IRS tax forms, Patient Protection and Affordable Care Act, Taxation, United States | 3 Comments »
William Byrnes' Tax, Wealth, and Risk Intelligence 