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Archive for April, 2015

Fiscalidad Internacional: las obligaciones FATCA – Friday May 8 in Madrid

Posted by William Byrnes on April 30, 2015


CEF UDIMAFecha: Viernes 8 de mayo a las 19.00 horas
Date: Friday, May 8th at 19:00
LugarCEF.- Paseo General Martínez Campos, 5, Madrid
Ponentes: Professor William H. Byrnes. Author, Lexis Guide to FATCA Compliance 2015
RSVP Requiredhttp://acef.cef.es/FATCA

Programa:

  1. Summary of FATCA Obligations
  2. Determine Status of Foreign Entity
  3. Withholdable Payments
  4. Documentation and Due Diligence
  5. Withholding
  6. Reporting
  7. IGA Update and Global Information Exchange

Cuando el Congreso de EE UU promulgó la Ley Fatca, dijo que fue el resultado de la necesidad de ingresos adicionales William H. Byrnes Wide Banner 3para costear la ley de empleo.  La mayoría de la gente sabe que EE UU incurrió en déficit año por año, pero, en Derecho, técnicamente, hay un precepto conforme al cual todas las normas que implican un gasto deben tener una disposición correspondiente que genere el ingreso tributario para financiarlo. El Congreso manifestó, expresamente, que esta Ley FATCA aumentaría el recaudo tributario en 150 billones de dólares por año.

La norma era necesaria para financiar una ley de empleo, que incluía beneficios para afrontar el desempleo, problema que surgió como consecuencia de esa crisis financiera. Sin embargo, las cifras actuales de recaudo tributario adicional que se han producido después de la ley están entre 300 y 500 millones de dólares por año. Parece mucho dinero, pero, en realidad, solo es el 0,003 % de la previsión de 150 billones de dólares.

Además, la Ley FATCA va a significar el aumento del recaudo en un solo momento, porque si se tienen 100.000 evasores, cuando estos se vuelvan cumplidores de la ley tributaria, a raíz de la Fatca, se va a registrar un aumento del recaudo, pero no de ahí en adelante con relación a esas mismas personas. Estadísticamente, es un hecho que no hay muchos contribuyentes estadounidenses que estén evadiendo tributos mediante otros países. El número de evasores, aunque uno nunca puede estar totalmente seguro, está entre 100.000 y 150.000. Pero es más probable que sean 100.000. Sin embargo, solamente en el 2014, se entregaron 150 millones de declaraciones tributarias en EE UU por parte de individuos. O sea que no estamos hablando, ni siquiera, del 1%.

La evasión fiscal es mala, aunque también lo es el homicidio y nunca vamos a poder evitar todos los homicidios, ni toda la evasión tributaria. De manera que la pregunta de política pública que se debe formular es, desde la perspectiva del contribuyente, ¿cómo vamos a utilizar los recursos limitados para atacar o limitar al máximo la evasión tributaria? La peor forma de lograr el cumplimiento tributario y de la ley, en general, es la amenaza con la sanción. No se puede eliminar la sanción de la ley, pero la mejor forma de promover su cumplimiento es mediante incentivos acordes con lo que la sociedad acepta.

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Taxpayer Advocate Proposes Reduced FBAR Penalties, One FATCA Reporting Form

Posted by William Byrnes on April 24, 2015


Irs_logoFOREIGN ACCOUNT REPORTING: Legislative Recommendations to Reduce the Burden of Filing a Report of Foreign Bank and Financial Accounts (FBAR) and Improve the Civil Penalty Structure

excerpts below…

A U.S. citizen or resident with foreign accounts exceeding $10,000 can be subject to disproportionate civil penalties for failure to report the accounts on a Report of Foreign Bank and Financial Accounts (or FBAR) by June 30 of the following year.  Another penalty may apply if the accounts exceed $50,000 and the person does not report them on Form 8938, Statement of Specified Foreign Financial Assets, which is part of the tax return.

Even those who inadvertently failed to file an FBAR (i.e., “benign actors”) are afraid they could be hit with the elevated penalties applicable to willful violations because the government may rely on circum­stantial evidence of willfulness or willful blindness. Such fears have prompted some to enter the IRS’s offshore voluntary disclosure (OVD) programs and agree to pay penalties of such severity that they appear to have been designed for bad actors. The median penalty applied to taxpayers with the smallest ac­counts (i.e., those in the 10th percentile with accounts of $17,368 or less) under the 2011 OVD program, is more than eight times the unreported tax—over ten times the 75 percent penalty for civil tax fraud.

In June 2014, the IRS reduced the amount it requires certain benign actors to pay under its settlement programs. However, it did not allow those who have already signed closing agreements to receive the same, more reasonable program terms, in effect punishing them for addressing the problem quickly. Unexpected and disproportionate FBAR penalties may violate a taxpayer’s rights to be informed and to a fair and just tax system.  Because they cause some people to agree to excessive OVD settlements, they may also erode the rights to pay no more than the correct amount of tax, challenge the IRS’s position and be heard, and appeal an IRS decision in an independent forum, as discussed in prior reports.

For small accounts, the maximum penalty may be an even greater percentage. For example, someone with a total of $10,000 in five different foreign accounts ($2,000 in each) could be subject to a non-willful FBAR penalty of $300,000 (six years times five accounts times $10,000) or 30 times the account balance. If the IRS deems the violation willful, the penalty could rise to $3 million (six years times five accounts times $100,000) or 300 times the account balance.

Other information reporting penalties are more proportionate than FBAR penalties. For example, there is no penalty for failing to file a U.S. income tax return if there is no unpaid tax. The penalty for failure to file most information returns and payee statements is generally $100 per return, rising to 10 percent of the unreported amount for intentional violations. By contrast, the FBAR penalty may apply even if the FBAR is one day late and even if the taxpayer has no net underreported tax (e.g., because of foreign tax credits) as a result of underreporting income from the account.

RECOMMENDATIONS

To address the disproportionality of the civil FBAR penalty, the National Taxpayer Advocate recommends legislation to:

Cap the civil FBAR penalty at the lesser of

(a) Ten percent of the unreported account balance or five percent for non-willful violations (similar to the IRS’s mitigation guidelines), and

(b) Forty percent of the portion of any underpayment attributable to the improperly undis­closed accounts (similar to the penalty for undisclosed foreign financial assets (e.g., assets not reported on Form 8938) under IRC § 6662(j)).

Eliminate or waive the civil penalty for failure to report an account on an FBAR if there is no evidence the account was used in connection with a crime and:

a. The account information was already provided to the IRS, for example, on a Form 8938, Statement of Specified Foreign Financial Assets, or by a third party (e.g., a financial institution or government);

b. The amount of unreported income from the account does not create a substantial under­statement under IRC § 6662(d); or

c. The taxpayer resides in the same jurisdiction as the account.

One form would be better than two, if confidentiality concerns are addressed.

If it aligns the FBAR and Form 8938 thresholds and deadlines, Congress should also consider consolidat­ing the reporting requirements. Indeed, between 1970 and 1977, the Treasury Department only required taxpayers to report foreign accounts under the BSA on tax returns using Form 4683, U.S. Information Return on Foreign Bank, Securities & Other Financial Accounts.

In 1977, after taxpayer privacy laws were expanded under IRC § 6103, the IRS required people to report these accounts on a different form—not part of the return—so it could share the information with other federal agencies such as FinCEN.79 Therefore, if Congress requires the Treasury Department to combine these forms, it may also want to clarify that certain information on the combined form is not deemed part of the tax return and is not subject to IRC § 6103.

In connection with any such change, however, Congress should require the IRS to limit and prominently identify on the form, any information that may be disclosed to FinCEN.80 Without transparency and specificity, some taxpayers might withhold other information from the IRS based on a concern that it could be disclosed to other agencies. Foreign account information may be distinguished from other tax-related information because it is already required to be reported to FinCEN.

 

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International Financial Crimes News

Posted by William Byrnes on April 24, 2015


$4 billion in CFTC Fines for LIBOR and Euribor Manipulation: Deutsche Bank, Rabo, Citibank, RBS, JP Morgan, UBS, Barclays, HSBC

With this Order, the CFTC has now imposed penalties of nearly $2.7 billion on six financial institutions and two interdealer brokers for LIBOR, Euribor, and other interest rate benchmark abuses. In addition, for similar misconduct relating to foreign exchange benchmarks, the CFTC recently imposed $1.4 billion on five financial institutions, for a total of over $4.1 billion in penalties in the CFTC’s enforcement program focused on ensuring the integrity of global financial benchmarks. The fine imposed on Deutsche Bank represents the largest fine in the CFTC’s history.

Deutsche Bank’s Pleads Guilty, Pay $2.519 billion in Penalties & Disgorgement, for Manipulating LIBOR

Together with approximately $1.744 billion in regulatory penalties and disgorgement—$800 million as a result of a Commodity Futures Trading Commission (CFTC) action, $600 million as a result of a New York Department of Financial Services (DFS) action, and $344 million as a result of a U.K. Financial Conduct Authority (FCA) action—the Justice Department’s criminal penalties bring the total amount of penalties to approximately $2.519 billion.
FinCEN Issues Quarterly Update of SAR Stats

The Financial Crimes Enforcement Network (FinCEN) has issued the SAR Stats quarterly update, which provides information on Suspicious Activity Reports (SARs) filed through March 31, 2015. The updated statistics can be viewed at http://www.fincen.gov/news_room/rp/sar_by_number.html. Quarterly Update (April 2015) Depository Institutions…

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FATCA GIIN Registrations Update for April | Kluwer International Tax Blog

Posted by William Byrnes on April 23, 2015


FATCA GIIN Registrations Update for April | Kluwer International Tax Blog.

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Deutsche Bank’s Pleads Guilty, Pay $2.519 billion in Penalties & Disgorgement, for Manipulating LIBOR

Posted by William Byrnes on April 23, 2015


read the full story on International Financial Law Prof Blog.

A wholly owned subsidiary of Deutsche Bank AG (Deutsche Bank) has agreed to plead guilty to wire fraud for its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark interest rate used in financial products and transactions around the world.  In addition, Deutsche Bank entered into a deferred prosecution agreement to resolve wire fraud and antitrust charges in connection with its role in both manipulating U.S. Dollar LIBOR and engaging in a price-fixing conspiracy to rig Yen LIBOR.  Deutsche Bank and its subsidiary will pay $775 million in criminal penalties to the Justice Department.  Together with approximately $1.744 billion in regulatory penalties and disgorgement—$800 million as a result of a Commodity Futures Trading Commission (CFTC) action, $600 million as a result of a New York Department of Financial Services (DFS) action, and $344 million as a result of a U.K. Financial Conduct Authority (FCA) action—the Justice Department’s criminal penalties bring the total amount of penalties to approximately $2.519 billion.

download the documents at International Financial Law Prof Blog

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Financial Law Headlines

Posted by William Byrnes on April 16, 2015


Former New York Assembly Speaker Sheldon Silver’s Headaches Mount as Son-in-Law Indicted in Ponzi Scheme

Marcello Trebitsch, son-in-law of former New York Assembly speaker Sheldon Silver, was arrested on wire fraud and securities charges stemming from his alleged scheme to defraud multiple investors of approximately $7 million through a fraudulent investment scheme that he allegedly perpetrated for at least five years.
The Lehman Brothers Bankruptcy B: Risk Limits and Stress Tests

Investment banks are in the business of taking calculated risks. Risk management infrastructure facilitates the safe pursuit of profits and the balancing of associated risks.

Will You Buy Fannie Mae’s Non-Performing Mortgages?

Fannie Mae Wednesday began marketing its first bulk-sale of non-performing loans (NPLs). The pool of approximately 3,200 loans totaling $786 million in unpaid principal balance is available for purchase by qualified bidders. This sale of NPLs is being marketed in…
The Prudent Investor Rule and Market Risk: An Empirical Analysis

The prudent investor rule, enacted in every state over the last 30 years, is the centerpiece of fiduciary investment law. Repudiating the prior law‘s emphasis on avoiding risk, the rule reorients fiduciary investment toward risk management in accordance with modern…
HSBC faces French criminal tax probe

HSBC says it has been placed under formal criminal investigation by French magistrates over alleged past tax-related offences at its Swiss private bank.

Brazilian Fraud is Bigger? Brazilian Ministry of Finance‘s Tax Fraud for Bribes Or Petrobras’ Contract Skims?

The answer is – it’s a close call. Both will probably, at the current very weak exchange rate, come in around US$6 billion (20 billion reais). Reuters reports that the tax fraud at the Ministry of Finance may be worth…
Organized Cybercrime Ring Member Sentenced to 150 Months in Prison for Selling Stolen and Counterfeit Credit Cards

Jermaine Smith, aka “SirCharlie57,” aka “Fairbusinessman,”, of the identity theft and credit card fraud ring known as “Carder.su” was sentenced today to 150 months in federal prison for selling stolen and counterfeit credit cards over the Internet. He was further ordered to pay $50.8 million in restitution.
Texas A&M Hires Nine Highly Published Law Faculty

Texas A&M announced the addition of nine new faculty beginning in the fall of 2015. “Hiring these new faculty is part of our effort to reduce our student-faculty ratio, which will improve the quality of your classroom experience. ” states…

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Lehman Brothers case study of strong then weak risk management. Why did its risk management protocols change?

Posted by William Byrnes on April 15, 2015


http://lawprofessors.typepad.com/intfinlaw/2015/04/the-lehman-brothers-bankruptcy-b-risk-limits-and-stress-tests.html

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These are the 10 least tax-friendly states for retirees | LifeHealthPro

Posted by William Byrnes on April 13, 2015


http://www.lifehealthpro.com/2015/04/08/these-are-the-10-least-tax-friendly-states-for-ret

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Texas A&M hires 9 new law faculty

Posted by William Byrnes on April 13, 2015


http://lawprofessors.typepad.com/intfinlaw/2015/04/texas-am-hires-nine-highly-published-law-faculty.html

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Bitcoin – Survey of Regulation By State and Federal

Posted by William Byrnes on April 10, 2015


http://lawprofessors.typepad.com/intfinlaw/2015/04/the-block-is-hot-a-survey-of-the-state-of-bitcoin-regulation-and-suggestions-for-the-future.html #bitcoin

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Distance Learning Faculty Enrichment Discussion at University of Arizona College of Law Tomorrow

Posted by William Byrnes on April 8, 2015


University of Arizona James E. Rogers College of Law will host a faculty enrichment presentation tomorrow April 9 from 12 noon (room 237) (PPT –> Arizona WGDE 4-9-15 Final).

“I will introduce the topic with various empirical studies of distance learning pedagogy and outcomes, before turning teaching phototo the findings of the Work Group of Distance Learning for Legal Education’s Best Practice Recommendations for Distance Learning for Legal Education 2.0,” stated William Byrnes.  “The Work Group is an evolving project of faculty and administrators participating from approximately 83 ABA law schools, representative of the four tiers, and its Recommendations are collaboratively developed and authored over a four year period.”

“In 2014 the American Bar Association revised Standard 306 “Distance Education”, expanding opportunities and flexibility for institutions to leverage technological advances within the JD academic curriculum.” explained Byrnes. “The ABA initially acquiesced to an online LL.M. in 1998.  Yet, it is since the initial inception of the Work Group in 2010 that most of the 48 LL.M.s offered online by 30 ABA full approved law schools have been founded.” Byrnes exclaimed, “One ABA law school, William Mitchell, even received a variance to offer a hybrid, partially residential / partially online, JD.  It matriculated 85 candidates in its pioneer class, at its normal LSAT range.”

“As of 2015, nearly all ABA law schools offer the opportunity for an academic experience at a distance for J.D. students,” concluded Byrnes. “But many are still not leveraging communication technologies to enhance that experience and to assist with producing better learning outcomes”.

previous remarks available at Alternative Methods of Teaching and the Effectiveness of Distance Learning for Legal Education

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Fair Approaches for Taxing Previously Untaxed Foreign Income

Posted by William Byrnes on April 6, 2015


In connection with any transition to a new USA international tax system, we need an approach that effectively deals with the trillions of dollars of previously untaxed foreign income held by CFCs. There is logic and fairness in applying a rate on those earnings that is less than the 35 percent home country rate because the rules of the game are being changed significantly.  Guest Financial Law Prof Blogger Jeffery Kadet has written a three part series on the fair approaches for taxing previously untaxed foreign income that will be posted this week on Monday, Tuesday and Wednesday, available on International Financial Law Prof Blog.

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subscribe to the headlines of International Financial Law – from the Law Professors Blog Network 

Posted by William Byrnes on April 3, 2015


International Financial Law Prof Blog

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Holding Financial Institutions Accountable for Fraud

Posted by William Byrnes on April 3, 2015


International Financial Law Prof Blog

Two recent cases show fraudsters have become more sophisticated.  It used to be that fraud schemes depended on the willingness of unwitting consumers to hand over their hard-earned savings in person or through the mail.  Today, the interconnectedness of our electronic banking system means a crook just needs to find a way to acquire one piece of information—a bank account number.  Once he has it, and a means to access the banking system, a bank account—and transfer its money— into his hands.   read about these cases on International Financial Law Prof Blog

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Swiss Asset Manager Peter Amrein Pleads Guilty To Conspiring With U.S. Taxpayers To Evade Tax

Posted by William Byrnes on April 2, 2015


International Financial Law Prof Blog

Peter Amrein worked as a client advisor at a Swiss bank and, later, as an asset manager at a Swiss asset management firm. In those roles, between 1998 and 2012, Peter Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes. Peter Amrein, among other things, worked with an attorney based in Zurich, Switzerland, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Peter Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names. read the entire case at International Financial Law Prof Blog

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Is HSBC Complying With its Non Prosecution Agreement? Outside Monitor Report is Critical!

Posted by William Byrnes on April 1, 2015


Is HSBC Complying With its Non Prosecution Agreement?  There is much reference within news articles to the 1,000 page report of the outside monitor, former New York prosecutor Michael Cherkasky, and summary letter by Justice.  Read on at International Financial Law Prof Blog.

HSBC’s April 1st DOJ Court Filing About AML Non-Prosecution Available Here

image from www.lexisnexis.comThe International Financial Law Professor Blogger William Byrnes is the author of Money Laundering, Asset Forfeiture and Recovery, and Compliance- A Global Guide is an eBook designed to provide the compliance officer, BSA counsel, and government agent 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.  Special topic chapters will assist the compliance officer design and maintain effective risk management programs.  Over 100 country and topic experts from financial institutions, government agencies, law, audit and risk management firms have contributed analysis to develop this practical compliance guide.

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