Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Texas A&M University Law is seeking to hire two new admission department team members

Posted by William Byrnes on October 16, 2015

The two new positions and application procedures are:

1. https://jobpath.tamu.edu/postings/89638

2. https://jobpath.tamu.edu/postings/88388

Please pass on these positions to potential interested persons.

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New Lexis Advance® Tax Platform Now Available to Law School Faculty & Students; Highlights Include Cutting-Edge International Tax Titles

Posted by William Byrnes on October 15, 2015

On June 1, LexisNexis launched its new online tax research platform called Lexis Advance® Tax.

Already available to America’s law school faculty and students, it includes a rich, comprehensive package of nearly 1,400 sources, including tax news, primary law, journals and nearly 300 treatises, practice guides and forms products for both tax and estates lawyers.

Along with news, another strong area for L.A. Tax is its subpage devoted to International Tax. There, users will find a selection01701_11_1_cover of titles examining hot, cutting-edge issues like: Lexis Guide to FATCA Compliance, the Lexis global guide to anti-money laundering laws around the world, and the recently-revised Foreign Tax & Trade Briefs, 2nd Ed, which provides summaries of each country’s tax system and laws.

All of these titles are produced by a team of tax experts led by Professor William H. Byrnes, Associate Dean, International Financial Law, at Texas A&M University Law School, in Fort Worth, the newest law school in Texas. See https://law.tamu.edu/

Looking for Lexis Advance Tax?
Sign in to www.lexisadvance.com, look for the pull-down menu called “Lexis Advance Research” in the upper-left corner. Click the down arrow and select Lexis Advance Tax.

If you have questions or would like to schedule a short training, please contact your LexisNexis® Account Executive.

– See more at: http://www.lexisnexis.com/lextalk/legal-content-insider/f/21/t/2525.aspx?utm_content=2015-10-20+15:00:04#sthash.szct2yk6.dpuf

Posted in BEPS, book, FATCA, Money Laundering | Tagged: | Leave a Comment »

IRS Implementing FATCA Compliance, TIGTA Audit Concludes

Posted by William Byrnes on October 14, 2015

A TIGTA audit was initiated to assess the IRS’s progress in implementing the FATCA.  TIGTA found that the IRS has taken steps to provide information to affected stakeholders thatTigtalogo explains the FATCA requirements and expectations.

However, TIGTA identified improvements that are required to ensure compliance and to measure performance for foreign financial institutions.  TIGTA also identified some limitations with the processing of paper Forms 8938.  Specifically:

  • Transcribed data are not validated to ensure accuracy.
  • Data on Form 8938 continuation statements (used to report additional foreign accounts or other foreign assets) are not transcribed.
  • Losses reported by taxpayers cannot be input as negative amounts.

If these issues are not properly addressed, it could limit management’s ability to make informed decisions and achieve the IRS’s compliance objectives related to the FATCA.

TIGTA recommended that the IRS:

  1. update the compliance activities in the FATCA Compliance Roadmap for identifying noncompliance by foreign financial institutions;
  2. initiate a periodic quality review process for the processing of paper Forms 8938 to ensure the accuracy of the data being transcribed; and
  3. ensure that the transcription issues identified in this report are addressed.

The IRS agreed with the first two recommendations but disagreed with some programming changes related to the third recommendation due to budgetary constraints, limited resources, and competing priorities.  The accuracy of the data obtained from Forms 8938 is a critical component for the success of the IRS’s compliance activities with implementing the FATCA.  As such, TIGTA believes that the IRS should make these programming changes a priority.

Lexis Guide to FATCA Compliance – 2015 Edition 

1,200 pages of analysis of the compliance challenges, over 54 chapters by 70 FATCA contributing experts from over 30 countries.  Besides in-depth, practical analysis, the 2015 edition includes examples, charts, time lines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   The Lexis Guide to FATCA Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  No filler of forms and regs – it’s all beef !  See Lexis’ order site – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

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Dr. Chris Odionu joins Texas A&M Law

Posted by William Byrnes on October 13, 2015

Texas A&M University School of Law announces the hiring of Dr. Chris Odionu as the Director of Odionu
Distance Education Programs and adjunct professor teaching project management. His prior positions include director of the System-Wide Center for Distributed Learning at California State University, chief information officer and associate professor of technology at Alabama A&M University. He also served as chief information officer at a number of institutions including University of Detroit Mercy, St John’s University in Jamaica – Queens, New York, and the Minnesota Community College System at Normandale Community College.

“Chris’ multi-disciplinary reach of engineering, IT, project management and a doctorate in education is going to propel Texas A&M Law’s pedagogical approach to the frontier for career based law programs, said William Byrnes, Executive Professor and Associate Dean. “By example, Texas A&M’s Business Law focus is to mentor the Aggie to add value and generate revenue.  The process requires the Aggie to learn a business by studying its language, its industry, and commonalities among all business such as supply chain and project management.  Dr. Chris Odionu is a distinguishing hire by a law school because he brings these perspectives to the table.”

“I am excited joining the TAMU School of Law and working with Professor Byrnes to establish world-class graduate law programs,” replied Dr. Odionu. “It is interesting to see law schools finally using the strengths offered by technology to deliver courses and degree programs online.”

Chris is a fellow of the American Academy of Project Management (AAPM), and certified in the governance of enterprise information technology, and in risk and information systems control (CRISC). He received his bachelor’s degree in technology, MBA, and doctorate in educational technology and administration from the University of Houston. He served as an administrative fellow in a year-long academic program at Harvard University where he earned a certificate in administration.

“Chris’ hands-on understanding of big data and data warehouse techniques combined with his background as an associate professor of information systems is going to distinguish Texas A&M’s curriculum, particularly in tax and business,” added Andrew P. Morriss, Dean and Anthony G. Buzbee Dean’s Endowed Chair.  “His background will also immediately translate into a project management course for law students and lawyers, which is fast becoming a crucial skill for lawyers.  And he will be providing a unique exposure for our students to the best practices in tax risk management.”

Chris has two children – Janelle, a student at Cornell University, and Christian, Jr., who plays high school basketball.

Posted in Education Theory | Tagged: , , | 2 Comments »

EU Agrees on the Automatic Exchange of Tax Rulings – Transfer Pricing Audits Expected

Posted by William Byrnes on October 8, 2015

European Union (EU) Ministers for Economy and Finance met in Luxembourg EU Commissionfor an ECOFIN Council chaired by the Luxembourg Minister for Finance Pierre Gramegna. The Ministers expressed their political agreement on a proposed Directive on the automatic exchange of information (AEI) on tax rulings.

On the basis of a compromise agreement brokered by the Luxembourg Presidency, the Council expressed its political agreement on a proposed Directive designed to improve transparency in the context of advance cross-border tax rulings, by making their automatic exchange between tax administrations compulsory.

The proposed Directive [Download EU AEOI TP] is part of a series of measures presented in March 2015 which aim to prevent tax avoidance and aggressive tax planning by companies. It aims to modify Directive 2011/16/EU on administrative cooperation in the field of taxation, which defines the practical terms and conditions for exchanging information in order to include advance tax rulings.  The Directive requires Member States to proceed with AIE in the field of advance cross-border tax rulings, as well as advance pricing agreements. The Commission will implement a secure central directory, accessible to all Member States and the Commission, where the information exchanged will be stored.

Posted in BEPS, Transfer Pricing | Tagged: , | Leave a Comment »

The Best U.S. News Voter Swag: Texas A&M

Posted by William Byrnes on October 7, 2015

TaxProf Blog provides news, information and resources for tax professors.

Source: TaxProf Blog

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OECD BEPS Explanatory Video & PPT (90 minutes)

Posted by William Byrnes on October 6, 2015

Senior members from the OECD’s Centre for Tax Policy and Administration (CTPA) commented on the final outputs of the OECD/G20 Base Erosion and Project Shifting Project, including the next steps and the involvement of developing countries.  See yesterday’s post with the download link for each BEP report: OECD Releases All Final BEPS Reports – Links Herein

—> Download PPT “Beps-webcast-8-launch-2015-final-reports”.

Posted in BEPS, OECD | Tagged: , | Leave a Comment »

OECD Releases All Final BEPS Reports – Links Herein

Posted by William Byrnes on October 5, 2015

The OECD presented today the final package of measures for a comprehensive, coherent and co- OECDordinated reform of the international tax rules to be discussed by G20 Finance Ministers at their meeting on 8 October, in Lima, Peru.  The OECD/G20 Base Erosion and Profit Shifting (BEPS) Project provides governments with solutions for closing the gaps in existing international rules that allow corporate profits to « disappear » or be artificially shifted to low/no tax environments, where little or no economic activity takes place.


Arrow actions 13 2015 Explanatory Statement 2015 (EN / FR / ES / DEU)
Arrow Action 1 Action 1: Addressing the Tax Challenges of the Digital Economy
Arrow Action 2 Action 2: Neutralising the Effects of Hybrid Mismatch Arrangements
Arrow Action 3 2015 Action 3: Designing Effective Controlled Foreign Company Rules
Arrow Action 4 2015 Action 4: Limiting Base Erosion Involving Interest Deductions and Other Financial Payments
Arrow Action 5 Action 5: Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance
Arrow Action 6 Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances
Arrow action 7 2015 Action 7: Preventing the Artificial Avoidance of Permanent Establishment Status
Arrow Action 8 Actions 8-10: Guidance on Transfer Pricing Aspects of Intangibles
Arrow actions 11 2015 Action 11: Measuring and Monitoring BEPS
Arrow actions 12 2015 Action 12: Mandatory Disclosure Rules
Arrow Action 13 Action 13: Guidance on Transfer Pricing Documentation and Country-by-Country Reporting
Arrow actions 14 2015 Action 14: Making Dispute Resolution Mechanisms More Effective
Arrow Action 15 Action 15: Developing a Multilateral Instrument to Modify Bilateral Tax Treaties

Revenue losses from BEPS are conservatively estimated at USD 100-240 billion annually, or anywhere from 4-10% of global corporate income tax (CIT) revenues. Given developing countries’ greater reliance on CIT revenues as a percentage of tax revenue, the impact of BEPS on these countries is particularly significant.

“Base erosion and profit shifting affects all countries, not only economically, but also as a matter of trust,” said OECD Secretary-General Angel Gurría. “BEPS is depriving countries of precious resources to jump-start growth, tackle the effects of the global economic crisis and create more and better opportunities for all. But beyond this, BEPS has been also eroding the trust of citizens in the fairness of tax systems worldwide. The measures we are presenting today represent the most fundamental changes to international tax rules in almost a century: they will put an end to double non-taxation, facilitate a better alignment of taxation with economic activity and value creation, and when fully implemented, these measures will render BEPS-inspired tax planning structures ineffective,” Mr Gurría said.

Undertaken at the request of the G20 Leaders, the work to address BEPS is based on the 2013 G20/OECD BEPS Action Plan, which identified 15 actions to put an end to international tax avoidance. The plan was structured around three fundamental pillars: introducing coherence in the domestic rules that affect cross-border activities; reinforcing substance requirements in the existing international standards, to ensure alignment of taxation with the location of economic activity and value creation; and improving transparency, as well as certainty for businesses and governments.

The OECD will present the BEPS measures to G20 Finance Ministers during the meeting hosted by Turkey’s Deputy Prime Minister Cevdet Yilmaz on 8 October, in Lima, Peru.

Following delivery of the BEPS measures to G20 Leaders during their annual summit on 15-16 November in Antalya, Turkey, the focus will shift to designing and putting in place an inclusive framework for monitoring BEPS and supporting implementation of the measures, with all interested countries and jurisdictions invited to participate on an equal footing.

The final package of BEPS measures includes new minimum standards on: country-by-country reporting, which for the first time will give tax administrations a global picture of the operations of multinational enterprises; treaty shopping, to put an end to the use of conduit companies to channel investments; curbing harmful tax practices, in particular in the area of intellectual property and through automatic exchange of tax rulings; and effective mutual agreement procedures, to ensure that the fight against double non-taxation does not result in double taxation.

The BEPS package also revises the guidance on the application of transfer pricing rules to prevent taxpayers from using so-called “cash box” entities to shelter profits in low or no-tax jurisdictions, and redefines the key concept of Permanent Establishment, to curb arrangements which avoid the creation of a taxable presence in a country by reliance on an outdated definition.

The BEPS package offers governments a series of new measures to be implemented through domestic law changes, including strengthened rules on Controlled Foreign Corporations, a common approach to limiting base erosion through interest deductibility and new rules to prevent hybrid mismatch arrangements from making profits disappear for tax purposes through the use of complex financial instruments.

Nearly 90 countries are working together on the development of a multilateral instrument capable of incorporating the tax treaty-related BEPS measures into the existing network of bilateral treaties. The instrument will be open for signature by all interested countries in 2016.

The BEPS measures were agreed after a transparent and intensive two-year consultation process between OECD, G20 and developing countries and stakeholders from business, labour, academia and civil society organisations.

“Everyone has a stake in reversing base erosion and profit shifting,” Mr Gurria said. “The BEPS Project has shown that all stakeholders can come together to bring about change. Swift implementation by governments will ensure a more certain and more sustainable international tax environment for the benefit of all, not just a few.”

Examples of BEPS schemes to be eliminated



Previous webcasts

» Webcast 7: An update on the project (8 June 2015)

» Webcast 6: Update on 2015 Deliverables (12 February 2015)

» Webcast 5: Update on 2014 Deliverables (15 December 2014)

» Webcast 4: Update on 2014 Deliverables (16 September 2014)

» Webcast 3: Update on BEPS Project (26 May 2014)

» Webcast 2: Update on BEPS Project (2 April 2014)

» Webcast 1: Update on 2014 Deliverables (23 January 2014)

FATCA Update

Download FATCA chapter 1 from SSRN here.  4th edition FATCA and CRS Updates will be posted on SSRN in December 2015.

Posted in BEPS, OECD | Tagged: , | Comments Off on OECD Releases All Final BEPS Reports – Links Herein

U.S. Begins Reciprocal Automatic Exchange of FATCA Information With Foreign Governments

Posted by William Byrnes on October 2, 2015

The Internal Revenue Service today announced the reciprocal exchange of financial account information with FATCA_rollcertain foreign tax administrations, meeting a key Sept. 30 milestone related to FATCA, the Foreign Account Tax Compliance Act.

Read the full post at International Financial Law Prof Blog

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Court Clears Path for Medicaid-Compliant Short-Term Annuities

Posted by William Byrnes on October 1, 2015

Medicaid compliant annuities can play a powerful role in a client’s long-term care plan if used carefully ThinkAdvisorso that the client does not run afoul of the strict Medicaid resource rules. Clients have often purchased these annuities only to find themselves challenged on the grounds that the annuities represent available resources that can prevent Medicaid eligibility.

In recent weeks, however, a Third Circuit appeals court has taken an important step toward ensuring that long-term care expenses can be met using annuities—even if the annuity in question is a short-term annuity purchased specifically to cover expenses incurred during periods when the client is ineligible for Medicaid coverage.

Read the full analysis at Think Advisor

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Non-Participating FFI

Posted by William Byrnes on September 30, 2015

Source: Non-Participating FFI

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FATCA YouTube Webinar – Video Now Available

Posted by William Byrnes on September 28, 2015

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Why are Financial Institution Legal Entity Identifiers (LEIs)? twice that of FATCA GIINs? 

Posted by William Byrnes on September 25, 2015

The LEI was established by the G-20 through the Financial Stability Board (FSB), the 2009 successor of the Financial Stability Forum (FSF).  Regulators globally recognized the lack of transparency to identify parties to transactions across markets, products, and regions. G-20 authorities, through the FSB, working with the private sector, developed the framework of a Global LEI System (GLEIS) that, through the issuance of unique LEIs, unambiguously identify entities engaged in financial transactions.  Why are so many LEIs issued and so few GIINs – same institutions, just not seeking a FATCA GIIN?

read about the LEI v GIIN issue on Kluwer’s Tax Blog: http://www.kluwertaxlawblog.com/blog/2015/09/25/fatca-giins-versus-legal-entity-identifiers-leis/ 

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Switzerland Changes Money Laundering Crime To Include Tax Crimes, Will SARs be Filed on Clients?

Posted by William Byrnes on September 24, 2015

See the Full Story on : International Financial Law Prof Blog

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Texas A&M University School of Law Hires 12 New Faculty & Expands Programs

Posted by William Byrnes on September 23, 2015

Texas A&M University School of Law is quickly distinguishing itself as an institution to watch.

At a time when most schools are cutting back, Texas A&M University has made an unparalleled investment in the future of legal education for Texas, the nation and beyond by attracting an unprecedented 12 new faculty members for its School of Law located inFort Worth.

TAMU-Law-lockup-whiteFive of the new faculty focus on intellectual property issues, adding strength to the school’s Center for Law and Intellectual Property and building on A&M’s strong reputation in engineering and life sciences. These hires cover all aspects of intellectual property, including patents, copyrights, trademarks, and trade secrets. Together with two existing scholars in the field, A&M Law is now in contention to have one of the country’s top intellectual property law programs.

“This extensive concentration of intellectual property faculty offers students comprehensive coverage, allowing them to develop specialized training based on their individual interests and career paths,” said intellectual property expert and incoming professorPeter Yu. “Our newly expanded program offers an unparalleled focus and makes A&M Law immediately stand out in the intellectual property field.”

Among A&M Law’s seven additional hires are thought leaders with strong backgrounds in legal ethics, commercial law, legal writing, law and economics, tax and international law. They include the newly appointed President of Texas A&M University, Michael K. Young, whose two decades as a legal scholar and dean at Columbia Law included the development of internationally recognized programs in Japanese and Korean legal studies and authorship of numerous briefs, articles and books on U.S. trade law and policy.  Given his leadership, including presidency at two leading universities and service, it is fitting that he will hold tenure in both Texas A&M’s School of Law and the George H. W. Bush School of Government & Public Service.

“I’m pleased to be joining Texas A&M University at this exciting time of my career and their history,” offered Young. “It is a wonderful bonus, to also join my colleagues in the transformation of this law school, legal education nationally and our contributions as scholars to the continued dynamic vitality of Texas.”

“As not only a top tier, public research university, but also a land grant institution, we have a special obligation to bring the academy to the public, and these folks are going to help us expand our efforts to do that,” Dean Andy Morriss said. “We’re particularly excited to have long time bar leaders like legal ethicist Susan Fortney, former Uniform Law Commission Executive Director Bill Henning, and former American Society of International Law Executive Director Charlotte Ku joining us.”

These incoming faculty join the existing academic team, now 55 members strong and punctuated by an ethos of market-disruptive thinking and scholarship. In 2015 alone, A&M Law faculty members have gained national attention for policy papers and commentary on topics including the intersection of water and energy law, developments in intellectual property, law reform in the Middle East, and the changing face of the death penalty.

And in an era when many law schools are cutting staff and faculty as enrollments fall nationally, A&M Law has only enhanced its commitment to lead by expanding curricular options, improving student services, attracting the very best talent and aligning to Texas A&M University’s mission tenet of service to the state, nation and beyond.

One such example is a $370,000 grant awarded to the School of Law from the Access Group. With the grant, A&M Law’s Milan Markovic will serve as principal investigator of the Texas Lawyers Study, examining professional satisfaction and income levels of nearly 88,000 members of the State Bar of Texas. This study will generate an extraordinary amount of data on the economics of the legal profession and the working lives of lawyers that can inform the decision-making of prospective law students and lawyers.

“We’re proud of our work to date, and are inviting all to see how far we’ve come and to take a look at where we are heading,” Morriss said. “By attracting new talent to compliment our strong foundation of scholars, A&M Law is leading by example.”


Posted in Courses | Tagged: , , , | 2 Comments »

Costa Rica’s ‘Wet Noodle’ Regulations Perpetuate Call Center Scams

Posted by William Byrnes on September 22, 2015

“Stamping out call center boiler room scams has been described like a continuous game of Whack-A-Mole. Costa Rica’s weak regulation and lack of resources is making it a hot spot for such scams.”

Read Journalist  expose and interview of Professor William Byrnes about Costa Rica’s Call Center industry at her Nearshore Article

Source: International Financial Law Prof Blog

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FATCA Deadlines Postponed Again – Notice 2015-66 Released

Posted by William Byrnes on September 21, 2015

This notice announces that the Department of the Treasury (Treasury) FATCA_rolland the Internal Revenue Service (IRS) intend to amend the regulations under chapter 4 (sections 1471-1474) to extend the period of time that certain transitional rules will apply. Specifically, the amendments will extend:

(1) the date for when withholding on gross proceeds and foreign passthru payments will begin;

(2) the use of limited branches and limited foreign financial institutions (limited FFIs); and

(3) the deadline for a sponsoring entity to register its sponsored entities and redocument such entities with withholding agents.

In addition, in order to reduce compliance burdens on withholding agents that hold collateral as a secured party, this notice announces that Treasury and the IRS intend to amend the regulations under chapter 4 to modify the rules for grandfathered obligations with respect to collateral.

Finally, this notice also provides information on the exchange of information by Model 1 IGA jurisdictions with respect to 2014.

Full analysis and impact of each deadline extension at International Financial Law Prof Blog

Posted in Uncategorized | 1 Comment »

HMRC Guidance notes on the CRS

Posted by William Byrnes on September 17, 2015

FATCA & CRS Training. Advice. Consultancy.


The guidance covers the Common Reporting Standard (CRS) and the incorporation of the CRS into EU law by the European Union Directive on Administrative Cooperation (2011/16/EU, as amended by 2014/107/EU). Once finalised is intended to incorporate amended and updated versions of the existing guidance on FATCA and the CDOT arrangements. The guidance is directed at HM Revenue and Customs (HMRC) staff, but will be publicly available and is intended to be of use to financial institutions and their agents. This draft has been developed in close working with UK financial institutions and representative bodies as well as tax advisors.

There is already extensive external guidance available in the Commentary to the CRS on how the UK will implement the OECD Common Reporting Standard under the Directive.

This guidance does not replace or override the CRS Commentary, but brings together the key concepts and provides additional…

View original post 73 more words

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Spotlight Special: Professor William Byrnes on FATCA & Our Webinar | TaxLinked.net

Posted by William Byrnes on September 10, 2015

Professor William Byrnes, Associate Dean at Texas A&M University’s School of Law, discusses his career in tax, FATCA and his many publications!

Source: Spotlight Special: Professor William Byrnes on FATCA & Our Webinar | TaxLinked.net

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FATCA webinar – complementary – all Q&A from the audience

Posted by William Byrnes on September 9, 2015

TaxLinked announces a FATCA webinar on September 16 at 14:00 EDT or 19:00 BST.

latest blog post covers the range of questions to be discussed and introduces you to our esteemed panel of experts.

If you have any questions for them, make sure to submit them by September 11 on the forum HERE.

Please visit its Registration Page to sign up for what’s shaping up to be a great event.

Taxlinked announces the fourth in its series of webinars. This episode will cover the US’s ForeignFATCA_rollAccount Tax Compliance Act (FATCA), a regulation that requires US persons to report on an annual basis their non-US financial accounts, as well as non-US financial institutions to report US persons’ assets and identities in their records to the US Treasury.

William Blum, Partner at Solomon Blum Heymann LLC in New York, has served as counsel to the Governor of the United States Virgin Islands, and is the leading expert on the territory’s status as a tax haven for non-U.S. persons.

Haydon Perryman is a London FATCA, CRS, DAC2 and CDOT Consultant with five years of practical hands-on experience of lead compliance for FATCA and CRS systems for tier 1 financial institutions. Haydon has a detailed understanding of FATCA regulations and the practical strategies involved in ensuring and evidencing FATCA compliance.

Robert Ladislaw is an attorney and certified public accountant with Solomon Blum Heymann LLC in New York serving clients for over 20 years for federal and state income and estate tax examinations and offshore tax compliance matters.

William Byrnes, Professor and Associate Dean at Texas A&M School of Law  is the primary author of the 1,200 page analysis: LexisNexis® Guide to FATCA Compliance (download Chapter 1:).


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Meet us at IFA in Basel next week?

Posted by William Byrnes on August 26, 2015

Dr. Andrew Morriss (Dean, Texas A&M & international tax economist) and I look forward toLogo_IFA_Basel_2015meeting other academics and professionals at international tax 69th IFA Congress held in the city of Basel  from Sunday, August 30 to Thursday, September 3.

Email me so that we can link up at the Congress.

The International Fiscal Association (IFA) was established in 1938 with its headquarters in the Netherlands. It is the only non-governmental and non-sectoral international organisation dealing with fiscal matters.   12,000+ government officials, MNE counsel, senior partners, and academics from 111 countries.

Its objects are the study and advancement of international and comparative law in regard to public finance, specifically international and comparative fiscal law and the financial and economic aspects of taxation.















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Aggie Law’s orientation week wraps up

Posted by William Byrnes on August 25, 2015

12th Man SIgned Tshirt

Aggie Law’s orientation week just wrapped up – and mine as well as one of the 11 new Texas A&M law faculty.  The Dean, Andy Morriss, hosted an incoming Aggie BBQ – and Texas BBQ is good BBQ.

139 new Texas Aggies hailing from more than 60 universities, already greeting me in the ‘Howdy’ tradition at every turn.  Friendliest folk – not a whippersnapper among them.

I’m looking forward to engaging with Aggie diversity – one-fifth the first member of the family to graduate from college, quarter ethnically diverse, and majority female.

Just watched the Aggie incoming student interviews.  Quotes like “Aggie land is home”, “I feel like I could walk up to anyone and start a conversation with them” and “It’s like a big family here” – think I am going to fit in.

Especially after my first Aggie football game – against the Arkansas Razorbacks – Sept 26th.

Howdy Aggie 1Ls and GigEm!

Posted in Courses | Tagged: | 2 Comments »

IRS Isn’t Confident FATCA Will Work?

Posted by William Byrnes on August 24, 2015

Dr. Jack Manhire gets a tip of the hat for pointing out the following blog post on Federal Tax Crimes

  • The IRS might use a summons (presumably John Doe Summons) to obtain offshore creditIrs_logocard information to track and identify U.S. offshore account depositors through correspondent banks.
  • The IRS may reinstitute a broker initiative to issues summons to brokers to identify U.S. beneficial owners of foreign corporations with U.S. brokerage accounts.

What this information indicates to  me?

(1) The IRS is not so certain that FATCA reporting will be effective to catch the non-compliant taxpayers.

(2) The IRS estimates that many Americans with foreign accounts are noncompliant.

Given that the IRS has forced billions in spending in four years to bring about FATCA compliance, I find it disturbing that it may not think it is working.  Worse is that this tool was always at the IRS disposal, just like the credit card John Doe Summons, and it is a good tool.  So why not ask for funding to use it back in 2009 instead of FATCA?

It appears that the strategy for bringing non-compliant taxpayers into compliance is hodge podge, without thought to the ramifications of each, as a whole, and without addressing underlying problems, like taxpayer education and easy to file FBAR.  At least Treasury modified the FBAR date to coincide with the 1040 filing date.  But the forms are still uncoordinated with different questions, different filing procedures, different penalties.  Just not good administration techniques.

See Treasury’s Taxpayer Advocate discloses FATCA Imposes Unnecessary Burdens, Will Not Improve Compliance

Posted in FATCA | Tagged: | 3 Comments »

Update on Voluntary Disclosure Programmes: A Pathway to Tax Compliance

Posted by William Byrnes on August 18, 2015

OECDThis second edition reflects the wealth of practical experience gained by 47 countries gained in relation to voluntary disclosure programmes. In addition, the guidance on the design and implementation of the programmes has been updated, particularly taking into account the views of private client advisers.

 When the OECD published the first edition its report on Voluntary Disclosure Programmes in 2010, it was just 18 months after the G20 Leaders had declared the end of the era of banking secrecy and called upon countries to implement the standard on exchange of information on request. In that very short time, considerable progress in the global fight against offshore evasion had been made, with more than 500 tax information exchange agreements having been put in place that comply with the standard.

 The work of the Global Forum on Transparency and Exchange of information for Tax Purposes was reorganised to deliver a robust programme of peer reviews to ensure that agreed standards were being effectively implemented. At the same time, the OECD has always recognised the importance of offering taxpayers the opportunity to become compliant and has encouraged governments to enable people who want to regularise their tax affairs to declare the income and wealth they have concealed in the past. Voluntary disclosure programmes offer such taxpayers a way to do this and for governments a way to secure payment of missing revenue, using relatively limited administrative resources.

 Since 2010, a very substantial amount of further progress has been made in the area of international exchange of information and transparency in tax matters. The Global Forum now has more than 125 members and an impressive body of results from the ongoing programme of peer reviews.

Another major milestone in tax transparency was reached in 2014 with the adoption of the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters. Most financial centres have publicly committed to implementation and are working on a specific and ambitious timetable leading to the first automatic information exchanges in 2017 or 2018.

 With the implementation of the Standard being underway and providing the basis for a new level of transparency in tax matters, the time is right to update the guidance on voluntary disclosure programmes published in 2010.

 This updated report reflects the wealth of practical experience gained by 47 countries gained in relation to voluntary disclosure programmes. In addition, the guidance on the design and implementation of the programmes has been updated, particularly taking into account the views of private client advisers.

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Retirement: Pros, cons, commissions and costs of fixed-index annuities

Posted by William Byrnes on August 17, 2015

Fixed index annuities are the current flavor and will remain so while consumers perceive the market indexes potentially rising,” says William Byrnes, an associate dean at Texas A&M University School of Law in Fort Worth.

Sales of FIAs rose 14% to $38.7 billion in 2013 and another 24% to $48 billion in 2014, or about 21% of all annuity sales …

read the USA Today analysis of Fixed Index Annuities at USA Today and whether these are a good fit for a retirement plan.

Posted in Retirement Planning | Tagged: , | 3 Comments »

IRS 2015 APA for Transfer Pricing Final Rev Proc 13 Key Differences from 2013 Version

Posted by William Byrnes on August 13, 2015

This morning the US Treasury released the long awaited Advanced Pricing Agreement Procedures.IRS_logo

The 13 principal differences between these final revenue procedures and the proposed version of Notice 2013-79 are:

1. The final revenue procedure clarifies that if APMA requires, as a condition of continuing with the APA process, that the taxpayer expand the proposed scope of its APA request to cover interrelated matters (interrelated issues in the same years, covered issues or interrelated issues in other years, and covered issues or interrelated issues in the same or other years as applied to other countries), APMA will do so with due regard to considerations of principled, effective, and efficient tax administration and only after considering the views of the taxpayer and the applicable foreign competent authority. Further, APMA will communicate to the taxpayer any concerns about interrelated matters and possible scope expansion as early as possible.

2. In the interest of efficient tax administration, rollback years may be formally covered within an APA. A rollback will be included in an APA when a rollback is either requested by the taxpayer and approved after coordination and collaboration between APMA and other offices within the IRS or, in some cases, is required by APMA, after coordination and collaboration with other offices within the IRS, as a condition of beginning or continuing the APA process.

3 The final revenue procedure provides expanded guidance as to when an APA request will be considered complete.

4. The required contents of APA requests that were specified in the Appendix of the proposed revenue procedure have generally been retained.

5. Taxpayers are required to execute consent agreements to extend the period of limitations for assessment of tax for each year of the proposed APA term, and the required consent could be either general or restricted.

6. User fees are increased for APA requests but provides that total user fees may be reduced for multiple APA requests filed by the same controlled group within a sixty-day period. Also, user fee for requests for discretionary LOB relief are increased.

7. The final revenue procedure limits the scope of requests to which mandatory -pre-filing procedures apply to requests involving taxpayer-initiated positions.

8. To ensure that taxpayers have broad access to the U.S. competent authority to resolve disputes under U.S. tax treaties, taxpayers will not be required under the final revenue procedure to expand the scope of a competent authority request to include interrelated issues as a condition of receiving competent authority assistance. Taxpayers may still be required to provide information that will allow the U.S. competent authority to evaluate the appropriateness of the relief sought under the applicable U.S. tax treaty in light of the taxpayer’s positions on interrelated issues.

9. The final revenue procedure clarifies that the U.S. competent authority may consult with taxpayers with respect to certain additional issues that may arise in connection with competent authority requests, such as issues relevant to the determination of foreign tax credits and repatriation payments.

10. The final revenue procedure provides additional guidance on requesting discretionary determinations under the limitation on benefits articles of U.S. tax treaties, including time frames for taxpayers to provide notification of material changes in fact or law and the introduction of a triennial statement procedure to maintain a favorable grant of discretionary benefits.

11. Consistent with the objective of providing taxpayers with broad access to the U.S. competent authority to resolve disputes under U.S. tax treaties, the U.S. competent authority will not condition assistance on the taxpayer’s notification of the U.S. competent authority, or on obtaining its concurrence, with respect to signing a standard Form 870 with IRS Examination.

Similarly, a taxpayer will not be required to obtain the U.S. competent authority’s agreement prior to entering into a closing agreement or similar agreement with IRS Examination, but in these cases the assistance provided by the U.S. competent authority will be limited to seeking correlative relief from the foreign competent authority, thus potentially not eliminating double taxation.

12. The final revenue procedure provides additional information about the process followed by the U.S. competent authority in conducting its review under the simultaneous appeals procedure.

13. The final revenue procedure clarifies and refines the bases on which the U.S. competent authority may decline to accept a competent authority request or may cease providing assistance, consistent with U.S. tax treaty policy that taxpayers should have broad access to the U.S. competent authority to resolve instances of taxation not in accordance with the applicable U.S. tax treaty.

Procedures for Advance Pricing Agreements  Download APA New Procedures Rev Proc 15-40

Procedures for Requesting Competent Authority Assistance under Tax Treaties  Download APA New MAP Procedures Rev Proc 15-41

William Byrnes is the primary author of Lexis’ Practical Guide to US Transfer Pricing which provides 3,000 pages of in-depth analysis and practical examples for the corporate transfer pricing counsel and risk manager.

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New IRS Procedures to Ensure Effectiveness of Civil FBAR Penalties

Posted by William Byrnes on August 12, 2015

The purpose of the IRS interim guidance is to implement procedures to improve the administration of the Service’s FBAR compliance program.

When asserting an FBAR penalty, the burden is on the IRS to show that an FBAR violation occurred Irs_logoand, for willful violations, that the violation was in fact willful. The FBAR penalty provision of Title 31 establishes only maximum penalty amounts, leaving the IRS to determine the appropriate FBAR penalty amount based on the facts and circumstances of each case.

Read the May 13, 2015 IRS FBAR Guidance

Prof Jack Townsend, on his federal tax crimes blog, discusses the recent Moore v United States (W.D. WA 2015) in which the Court “admonishes the IRS and imposes a cost for misleading the taxpayer” about a FBAR assessment.

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OECD Releases 3 New Reports to Combat Offshore Tax Evasion

Posted by William Byrnes on August 8, 2015

The OECD today releases three new reports to help jurisdictions and financial institutionsOECDimplement the global Standard for automatic exchange of financial account information.

  • Common Reporting Standard Implementation Handbook (the CRS Handbook): this first edition provides practical guidance to assist government officials and financial institutions in the implementation of the Standard. It sets out the necessary steps for implementation and will help financial institutions and governments implement the Standard more efficiently by promoting the consistent use of optional provisions, identifying areas for alignment with FATCA and addressing the operational and transitional challenges resulting from the staggered implementation of the Standard. It also contains answers to frequently asked questions (FAQs) received from business and governments, with a view to furthering the effective implementation of the Standard. The Handbook is intended to be a “living” document and will be updated on a regular basis.

  • Offshore Voluntary Disclosure Programmes: this second edition contains a wealth of practical experience from 47 countries in relation to their voluntary disclosure programmes. The guidance on the design and implementation of such programmes has been updated, particularly taking into account the views of private client advisers. The limited time left until the automatic exchange of information under the Standard becomes a reality will in many instances be the last window of opportunity for non-compliant taxpayers to voluntarily disclose. This is therefore a crucial moment to update the publication and reflects OECD policy of encouraging countries to examine voluntary compliance strategies that enable non-compliant taxpayers to come forward.

The Standard calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. Over 90 jurisdictions have committed to implement the Standard, with the first exchanges starting in 2017/2018, subject to the completion of necessary legislative procedures.

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Four More Go Down But One Receives Get Out Of Jail for Free Card

Posted by William Byrnes on August 6, 2015

A couple days ago Bank EKI Genossenschaft (Bank EKI) entered into a non prosecution agreement Justice logowith the US Department of Justice, admitting it assisted US taxpayer with tax evasion.  Privatbank Reichmuth & Co., Banque Cantonale du Jura SA and Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA then today announced their non-prosecution agreements. One bank will pay no penalty, while the other three will pay penalties $400,000, $2.6 million, and $970,000 respectively, and turn over client records.

The banks started with 201 clients among them in 2008, but one bank closed its non-compliant accounts and thus has been received a “get out of jail” free.

read about each bank’s nefarious activities and resolution thereof on International Financial Law Prof Blog

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Global Forum releases new compliance ratings on tax transparency

Posted by William Byrnes on August 6, 2015

The Global Forum on Transparency and Exchange of Information for Tax Purposes published new peer review reports today for 12 countries or jurisdictions, moving further OECDahead with its goal to implement global standards on transparency and exchange of information for tax purposes.

Phase 1 reports on AlbaniaBurkina FasoCameroonDominican Republic,LesothoPakistan and Uganda assessed their legal and regulatory frameworks for transparency and exchange of information on request. These countries were assessed to have legal frameworks in place to enable them to move to the next stage of the review process, which will assess exchange of information practices.

The Global Forum also reviewed exchange of information practices through Phase 2 peer review reports in Lithuania and Sint Maarten. Both were given a rating for compliance with the individual elements of the international standard and an overall rating with Lithuania receiving an overall rating of “Compliant” and Sint Maarten an overall rating of “Partially Compliant.”

Jurisdictions continue to request supplementary reviews that assess steps taken to address recommendations of the Global Forum to address gaps in their legal frameworks and exchange of information practices identified in previous reviews. This included the Marshall Islands, which had been blocked from moving to Phase 2 of its review process due to significant gaps in its legal framework. A supplementary review concluded that key changes to its legislation now enable the Marshall Islands to move to Phase 2.

Austria, which was rated “Partially Compliant” in July 2013, has since implemented a number of recommendations by the Global Forum, leading to an upgrade of its overall rating to “Largely Compliant” in its supplementary report. The supplementary report of the British Virgin Islands, which assesses progress made since its Phase 2 report in July 2013 also concluded that based on significant improvements having been made, its overall rating be upgraded from “Non-Compliant” to “Largely Compliant.”

The Global Forum is the world’s largest international tax group, with 127 members on an equal footing. The Forum has now completed 198 peer reviews and assignedcompliance ratings to 80 jurisdictions that have undergone Phase 2 reviews. Of these, 21 jurisdictions are rated “Compliant”, 46 are rated “Largely Compliant”, 10 are rated “Partially Compliant” and 3 jurisdictions are “Non-Compliant.” A further 11 jurisdictions are blocked from moving to a Phase 2 review due to insufficiencies in their legal and regulatory framework.

The Global Forum continues to ensure that the benefits of participation in the new tax transparent and cooperative environment are available to all. It has conducted a number of training seminars to help jurisdictions prepare for peer reviews, sensitize tax auditors in the use of the exchange of information infrastructure and equip governments to implement automatic exchange of information. Around 200 tax experts participated in seminars in Colombia, Cameroon, Ghana and Kenya. The Global Forum will also support a new pilot project on Automatic Exchange of Information announced jointly by Ghana and the UK on the sidelines of the 3rd Financing for Development Conference in Addis Ababa.

Global Forum members will meet at their annual plenary meeting on 29-30 October 2015 in Bridgetown, Barbados.

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Treasury Acknowledges More Favorable FATCA IGA Terms for BVI

Posted by William Byrnes on August 5, 2015

Based on the BVI IGA for FATCA, the United States considers the language in italics to be “more favorable Treasury-Dept.-Seal-of-the-IRSterms” in Annex I, except in those cases where the Agreement already includes such language: (excerpted below in relevant part) –

Annex I: G. Alternative Procedures for New Accounts Opened Prior to Entry Into Force of this Agreement. …

2. Alternative Procedures. 

a) Within one year after the date of entry into force of this Agreement, Reporting British Virgin Islands Financial Institutions must:

(i) with respect to a New Individual Account described in subparagraph G(1) of this section, request the self-certification specified in section III of this Annex I and confirm the reasonableness of such self-certification consistent with the procedures described in section III of this Annex I, and

(ii) with respect to a New Entity Account described in subparagraph G(1) of this section, perform the due diligence procedures specified in section V of this Annex I and request information as necessary to document the account, including any self-certification, required by section V of this Annex I. 

c) By the date that is one year after the date of entry into force of this Agreement, Reporting British Virgin Islands Financial Institutions must close any New Account described in subparagraph G(1) of this section for which it was unable to collect the required self-certification or other documentation pursuant to the procedures described in subparagraph G(2)(a) of this section.

In addition, by the date that is one year after the date of entry into force of this Agreement, Reporting British Virgin Islands Financial Institutions must: (i) with respect to such closed accounts that prior to such closure were New Individual Accounts (without regard to whether such accounts were High Value Accounts), perform the due diligence procedures specified in paragraph D of section II of this Annex I, or (ii) with respect to such closed accounts that prior to such closure were New Entity Accounts, perform the due diligence procedures specified in section IV of this Annex I. 

 Treasury’s Notices of More Favorable Terms:

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UAE Published Detailed FATCA Guidance

Posted by William Byrnes on August 5, 2015

The UAE published 173 pages of detailed FATCA guidance and implementation of the IGA with the
USA for its financial services industry.  Download FATCA UAE Guidance Notes

The FATCA Guidance initially provides a general introduction to the Foreign Account Tax Compliance UAE MOFAct and its application to entities regulated by the Central Bank, the Insurance Authority, the Securities and Commodities Authority, the Dubai International Financial Centre and Unregulated Entities.

 What is FATCA and how will it be applied in the United Arab Emirates?

 How will FATCA affect banking entities, insurance companies, financial services companies and asset managers?

 How will FATCA affect Unregulated Entities?

 What if an entity or account holder does not comply with the UAE IGA?

 Purpose and outline of these Guidance Notes.

CH 1 – General Introduction

CH 2 – Guidance Notes for Banking Sector 

CH 3 – Guidance Notes for Insurance Sector 

CH 4 – Guidance Notes for Financial Services Sector 


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Congress Matches FBAR Filing to Tax Return Dates, Allows Extension, Penalty Abatement

Posted by William Byrnes on August 5, 2015

BNA Reports – Practitioners are praising the new deadline for reporting foreign bank accounts tucked into newly signed legislation (Pub. L. No. 114-041) to extend the Highway Trust Fund.

The measure ensures that the due date for the Report of Foreign Bank and Financial Accounts Irs_logo(FBAR), formerly June 30, is now the same as the U.S. tax filing deadline of April 15—a change that practitioners said would help taxpayers who frequently didn’t know the deadlines were different.

Taxpayers can also now ask for the same six-month extension for FBARs that they can get for their tax returns—permitting them to file by Oct. 15. That option didn’t exist before.

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Attacking BEPS through the Profit Split Method

Posted by William Byrnes on August 5, 2015

Prof. Jeffery Kadet‘s explains – Why Expansion of the Profit Split Method is Required to Combat BEPS…

Recognizing the reality that multinational corporations are centrally managed and not groups ofJeffrey-M-Kadet-244x300entities that operate independently of one another, the OECD base erosion and profit-shifting project is considering expanded use of the profit-split method.

This article provides background on why expanded use of the profit-split method is sorely needed. In particular, resource-constrained tax authorities in many countries are unable to administer or intelligently analyze and contest transfer pricing results presented by multinational groups. Most importantly, this article suggests a simplified profit-split approach using set concrete and objective allocation keys for commonly used business models that should be welcomed by multinational groups and tax authorities alike.

Read Prof Jeffery Kadet’s full analysis on SSRN http://ssrn.com/abstract=2593548

Posted in BEPS, OECD, Transfer Pricing | Tagged: , , | Leave a Comment »

OFAC compliance v. FATCA compliance?  Can a SDN FFI Obtain a GIIN?

Posted by William Byrnes on August 4, 2015

The entity I represent is on the Office of Foreign Asset Control’s Specially Designated Nationals list.  Is the entity eligible to register and receive a GIIN?

Answer to be found International Financial Law Prof Blog


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UK Income From Its Offshore Disclosure Facilities | Kluwer International Tax Blog

Posted by William Byrnes on August 3, 2015

UK Income From Its Offshore Disclosure Facilities | Kluwer International Tax Blog.

In 2011, HMRC forecast that it would receive “billions” from the Swiss Disclosure Facility.  In 2012, HMRC stated that this number would be five billion sterling, and another three billion sterling from the Liechtenstein Disclosure Facility (LDF).  This implies that at least a couple hundred thousand United Kingdom tax residents are non tax compliant through not disclosing income and income-producing assets overseas, in offshore countries.  

So what have the results been?  What are the future results likely to be?  Read Byrnes and Perryman at UK Income From Its Offshore Disclosure Facilities | Kluwer International Tax Blog.

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EU Asset Management Careers and Compliance Expenditures Report   

Posted by William Byrnes on August 3, 2015

see it on International Financial Law Prof Blog.



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Please Vote for the International Financial Law Professor Blog

Posted by William Byrnes on July 31, 2015

— Vote for My Blog Please for 100 Best Annual Law Blogs —

The American Bar Association (ABA) is creating its annual list of the 100 best legal blogs, and wants your vote on which blogs it should include.

Go to > ABA Voting for Best Law Blogs < to tell the ABA about the International Financial Law Professor blog please [lawprofessors.typepad.com/intfinlaw]

The ABA may include some of the best comments in its Blawg 100 coverage. But keep the remarks short — a 500-character remarks limit.

Deadline 11:59 p.m. CT on Friday, Aug. 16, 2015: American Bar Association voting link

Much obliged for your continued support and readership – Prof. William Byrnes (Texas A&M Law)

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

Dr. Jack Manhire Departs IRS & Treasury for Texas A&M Law School

Posted by William Byrnes on July 30, 2015

Dr. John T. (“Jack”) Manhire, Jr., former Chief of Legal Analysis for the IRS Office of Professional Treasury-Dept.-Seal-of-the-IRS
Responsibility and National Program Chair, Executive Education for the U.S. Treasury Executive Institute, has accepted a position as Director of Program Development at Texas A&M University School of Law.

Last month Texas A & M announced that William H. Byrnes, IV, (co-editor of our International Financial Law Prof Blog) left Thomas Jefferson Law School and joined the faculty of Texas A&M Law.

Including Dr. Manhire and the new University President, Dr. Michael Young, Texas A&M Law has hired 13 significant faculty hires for 2015, and two significant faculty visitors for Spring 2016 through the Texas A&M Institute of Advanced Studies.

For 2016, the law school is seeking to hire several more equally distinguished law professors.  See he previous post  Texas A&M University School of Law 2016-17 Faculty Recruitment Areas of Interest

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

What Regulatory Competition Can Teach About Tax Competition

Posted by William Byrnes on July 29, 2015

Tax competition is usually portrayed as a competition over rates.

Critics argue that such competition leads inevitably to a “race to the bottom,” with the result of OECDreducing tax rates and revenue everywhere. They also decry “secrecy” jurisdictions that allow owners of entities to conceal their identities, suggesting that the only reasons for confidentiality can be to cheat tax authorities somewhere out of their due.

But as anyone who has ever filled out a tax return knows, tax rates are just one facet of tax competition. Jurisdictions can compete over a wide range of tax system attributes – all the way from the complexity of the system to special provisions designed to advantage particular forms of investment to general depreciation rules.

Lower rates can attract taxpayers, but allowing more rapid depreciation of capital investment might trump lowering rates for capital-intensive industries, while an honest and efficient revenue agency may matter more than nominal rates for total revenue collections.

Read this article at Competing For Captives: What Regulatory Competition Can Teach About Tax Competition  by authors Dr. Andrew P. Morriss, Dean & Anthony G. Buzbee Dean’s Endowed Chairholder, Texas A&M University School of Law; and Drew Estes, a JD/MBA Candidate, Class of 2016, University of Alabama.

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Attacking BEPS Through ECI? Prof. Jeffery Kadet’s Approach

Posted by William Byrnes on July 29, 2015

Attacking Profit Shifting by Prof. Jeffery Kadet – In recent years the financial press has turned Jeffrey-M-Kadet-244x300increasing attention to MNCs that shift income to low taxed jurisdictions overseas in order to avoid US taxation. What’s generally missing from these discussions is any serious focus on possible IRS attacks on these companies, most of which are CFCs. There’s little apparent concern by anyone that the IRS will try to disallow the profit-shifting structures that have moved so much taxable income out of the US and other countries and into low-taxed foreign jurisdictions.

This is changing. Early this year Caterpillar Inc. in an SEC filing disclosed that the IRS had issued a Revenue Agent’s Report to currently tax certain income earned by one of its Swiss entities. Presumably this is income earned as a result of a certain restructuring conducted in the late 1990s and referred to as the Swiss Tax Strategy when examined in 2014 in hearings held by the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations (PSI).

The IRS basis for its RAR, as disclosed by Caterpillar, is application of the ‘substance-over-form’ or ‘assignment-of-income’ judicial doctrines. This, however, is not the only approach that the IRS might have chosen to impose taxation on the shifted profits.

Various Congressional hearing documents, the work of investigative journalists, and other sources (all publicly available) provide evidence that the businesses within some profit-shifting structures continue to be managed and substantially conducted from the U.S. and not from any business locations outside the U.S. Where this is the case, the IRS may have a strong case for imposing direct taxation on the effectively connected income (ECI) of these low-taxed foreign subsidiaries.

Just the threat of imposing direct taxation may cause many MNCs to consider scaling back their profit shifting and for them and their outside auditors to start worrying about exposure on prior years. If the IRS were to sustain such direct taxation, it would mean:

·      The regular up-to-35% corporate tax,
·      The ‘branch profits tax’ applied at a flat 30% rate (unless lower by treaty),
·      A loss of deductions and credits for any tax year if the foreign corporation has not filed Form 1120-F for that year, and
·      An open statute of limitations on IRS assessment of tax for any tax year if the foreign corporation has never filed a US tax return on Form 1120-F for that year.
The combined effect of the above is a 54.5% or higher effective tax rate (lower if tax treaty coverage reduces the 30% branch profits tax rate).

Considering these terribly high effective tax rate percentages, where the IRS chooses to examine for possible ECI and develops a credible case, they can use the high effective tax rate as strong leverage to secure agreement for reversal of profit shifting structures. Such agreements would presumably see MNCs agreeing to current taxation within U.S. group members of the shifted profits that had originally been booked in low-taxed foreign subsidiaries.

To demonstrate how significant ECI likely exists within many MNCs that have conducted profit-shifting planning, this article includes a number of realistic examples inspired by the above-mentioned publicly available information on MNC profit-shifting structures.

Recognizing that it can sometimes be a challenge to apply the very old existing regulations to current business models, the article strongly encourages Treasury to prioritize the issuance of modernized income sourcing and ECI regulations that reflect the business models and structures now commonly used and that are often found in profit-shifting structures.

read the full article on SSRN Attacking Profit Shifting by Prof. Jeffery Kadet

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Educational Teaching Methodologies to Reverse Declining Law School Enrollment

Posted by William Byrnes on July 28, 2015

read the CNN Report about the White Paper “Alternative Methods of Teaching and The Effectiveness of Distance Learning For Legal Education”.

The 26 page White Paper is available on SSRN

“legal education today has to be recalibrated so that it is innovative, cross-disciplinary, simultaneously accessible across global borders, and able to expand without millions of dollars for brick and mortar…”

“law schools are experiencing 40% less enrollment today than in years past and new standards are needed to reverse that decline. These new standards address the three missing elements in legal education today: …”

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Citigroup to Close Banamex for Money Laundering Violation, Pay $180 Million in Fines

Posted by William Byrnes on July 27, 2015

… In taking the action against Citigroup, the FDIC determined that the bank failed to implement an effective BSA/AML 640px-FdicLogoCompliance Program for Banamex over an extended period of time. The institution failed to retain a qualified and knowledgeable BSA officer and sufficient staff, maintain adequate internal controls reasonably designed to detect and report illicit financial transactions and other suspicious activities, provide sufficient BSA training, and conduct effective independent testing.

Read the complete story and links to orders here.

Posted in Uncategorized | Leave a Comment »

What Can Regulatory Competition Can Teach About Tax Competition?

Posted by William Byrnes on July 27, 2015

from International Financial Law Prof Blog

Critics argue that such competition leads inevitably to a “race to the bottom,” with the result ofOECDreducing tax rates and revenue everywhere. But Dr. Andrew Morriss, Texas A&M Law explains, that anyone who has ever filled out a tax return knows, tax rates are just one facet of tax competition. Jurisdictions can compete over a wide range of tax system attributes – all the way from the complexity of the system to special provisions designed to advantage particular forms of investment to general depreciation rules.

Read this article at Competing For Captives: What Regulatory Competition Can Teach About Tax Competition  by authors Dr. Andrew P. Morriss, Dean & Anthony G. Buzbee Dean’s Endowed Chairholder, Texas A&M University School of Law; and Drew Estes, a JD/MBA Candidate, Class of 2016, University of Alabama.

Posted in BEPS, OECD, Tax Policy | Tagged: , , | Leave a Comment »

FBME Bank (Cyprus) Permanently Denied Access to U.S. Financial System By FinCEN for Money Laundering

Posted by William Byrnes on July 24, 2015

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) yesterday issued a final rule, pursuant to Section 311 of the USA PATRIOT Act, which imposes “special FINCENmeasure five” against FBME Bank Ltd. (FBME), formerly known as the Federal Bank of the Middle East. Special measure five prohibits U.S. financial institutions from opening or maintaining correspondent accounts or payable through accounts for or on behalf of FBME.  FBME was established in 1982 in Cyprus as the Federal Bank of the Middle East, Ltd., owned by Ayoub-Farid M. Saab and Fadi M. Saab.

What money laundering activities are FBME accused of facilitating?

read the full story of the money laundering activities at FinCEN Cuts FBME Bank from Access to U.S. Financial System

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Texas A&M University School of Law Hiring Multiple New Faculty in 2016

Posted by William Byrnes on July 23, 2015

see full announcement at International Financial Law Prof Blog.

In 2015, Texas A&M University School of Law hired 11 new faculty members (12 if counting Texas A&M University’s new President, Dr. Michael Young, who is a member of the law faculty).  Below is Texas A&M Law’s announcement for faculty recruitment for the 2016-17 academic year.

TEXAS A&M UNIVERSITY SCHOOL OF LAW seeks to expand its academic program and its strong commitment to scholarship by hiring multiple exceptional faculty candidates:

1)    Candidates who are interested in building synergies with Texas A&M University’s Mays Business School, with an emphasis on scholars engaged in international business law who focus on cross-border transactions, trade, and economic law (finance, investments, dispute resolution, etc.);

2)    Candidates who are interested in building synergies with the broad mission of Texas A&M University’s College of Agricultural and Life Sciences, which include but are not limited to scholars engaged in agricultural law (including regulatory issues surrounding agriculture), rural law, community development law, food law, ecosystem sciences, and forensic evidence; and

3)    Visionary leaders in experiential education interested in guiding our existing Intellectual Property and Technology Law Clinic (with concentrations in both trademarks and patents), Entrepreneurship Law Clinic, Family Law and Benefits Clinic, Employment Mediation Clinic, Wills & Estates Clinic, Innocence Clinic, Externship Program, Equal Justice/Pro Bono Program, and Advocacy Program, with a particular emphasis on candidates who may have an interest in participating in our Intellectual Property and Technology Law Clinic or developing an Immigration Law Clinic.

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UK Amnesty Not Leading to Disclosure of Tax Evasion in Channels. Is It “Much To Do About Nothing” ?

Posted by William Byrnes on July 22, 2015

In 2011, HMRC forecast that it would receive “billions” from the Swiss Disclosure HM_Treasury_logo.svgFacility.  In 2012, HMRC stated that this number would be 5 billion sterling, and another 3 billion sterling from the LDF.  This implies that a couple hundred thousand United Kingdom tax residents are non tax compliant by not disclosing income and income-producing assets overseas, in offshore countries.  As of that report of data up to 2012, 50,000 taxpayers had come forward through all offshore disclosure facilities, generating one billion in tax, interest, and tax penalties, thus on average 20,000 sterling per disclosure.

My tables and figures are available at International Financial Law Prof Blog.

The offshore noncompliance problem in the context of all non-tax compliance, and all taxpayers, requires first asking how many individual taxpayers file in the UK? see International Financial Law Prof Blog.

Posted in Compliance, information exchange | Tagged: , , , , | Leave a Comment »

OECD Launches Tax Inspectors Without Borders

Posted by William Byrnes on July 20, 2015

The Tax Inspectors Without Borders (TIWB) initiative enables the transfer of tax auditOECDknowledge and skills to tax administrations in developing countries through a real time, “learning by doing” approach. Experts – currently serving or recently retired tax officials – are deployed to work directly with local tax officials on current audits and audit-related issues concerning international tax matters, and to share general audit practices.

read the post at International Financial Law Prof Blog.

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

UK HMRC Releases New Policy Documents to Tackle Offshore Evasion

Posted by William Byrnes on July 20, 2015

The government announced four consultations as part of its publication Tackling Evasion andHM_Treasury_logo.svgAvoidance.  These take forward HMRC’s strategy for tackling offshore evasion, No Safe Havens.

The four consultations are:  see International Financial Law Prof Blog.

Posted in Compliance, FATCA, Financial Crimes | Tagged: , , , | Leave a Comment »

Haydon Perryman & William Byrnes’ June FATCA GIIN Update

Posted by William Byrnes on July 1, 2015

The FFI GIIN List Update (Lists from June 1, 2014 through June 1, 2015)

On 1 June 2015 the IRS published its thirteenth FATCA GIIN list of “approved FFIs” (a list of theFATCA_rollfinancial firms that have registered on the IRS FATCA portal).

Total approved FFIs reached 165,461, and increase of only 2,851 during the month of May.  This FATCA registration trend since January has been described as lethargic, with April’s increase just 2,600 additional firms joining, 3,734 additional during March, and 2,479 in February.  But when compared to what was forecast by the IRS, by industry, and by the UK, it’s a troubling low figure.

In its FATCA FAQs, the IRS suggested a 500,000 potential FFI registration figure.  Many industry stakeholders suggested that 800,000 – 900,000 firms fall under the expansive definition of financial institution.

Given the broad definition of a financial institution that must register for a GIIN, the UK HMRC estimated that, even with its IGA and its accompanying local regulations, 75,000 UK entities probably are impacted.  Yet, only the UK GIIN population is only 23,256.

If the UK HMRC is correct that 75,000 entities are impacted in the UK, then extrapolated among other large and sophisticated financial service economies like Japan, China, India, and Germany, the IRS estimate of 500,000 may be low.

90 countries and dependencies have entered into a FATCA IGA with the U.S. based on Model 1A (reciprocal), or are awaiting local ratification, accounting for 100,190 of the registrations.  A further eight countries signed a Model 1B (non-reciprocal), accounting for a further 39,564 GIINs.  A final 14 countries signed a Model 2 version IGA, adding 18,458 FFI registrations covered by an IGA.  Thus in total, 158,212, representing 96% of FFI registrations, are from the 112 IGA states and their dependencies.

The 131 countries and dependencies without an IGA have only registered 6,295 FFIs to date, a surprising low number given that the initial implementation of the 30% withholding for non-compliance with FATCA began 1 July 2014.

The UK and its ten dependencies and overseas territories comprised 74,694 of the GIINs, representing 45% of the total, or without the UK included, 49,898 for 30.6%.  The 34 OECD members have produced 79,057 GIIN registrations.

Cayman remains the FFI registration global leader, with 30,868, throughout the entire FATCA registration process.  Ironic that the EU Commission just black listed it last week.

The major financial industries of the four BRIC countries have only led to 8,254 FFI registrations, which is seen as a worrying point for FATCA acceptance among non-OECD states.  BRIC registrations are now just dripping in, up from 8,186 in May, 8,060 in April and 7,962 in March.

OECD Common Reporting Standard signatories for the a multilateral competent authority agreement to automatically exchange information has reached 61.  But a notable holdout of a signatory that has not yet actually ratified the agreement is the U.S.  88 countries and dependencies are signatories to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, the latest being Mauritius which signed June 23.

FATCA IGA Scenarios GIINs Jurisdictions
Model 1A IGA  100,190  90
Model 1B IGA  39,564  8
Model 2 IGA  18,458  14
No IGA  6,295  131
US  886  1
US Territories  68  6
Total  165,461  250

Want to read more GIIN analysis and statistics?  See the International Financial Law Professor blog

I am beginning my new faculty position with Texas A&M University School of Law in a week.  With the resources of Texas A&M Law, my research colleague Haydon Perryman (who is now with UBS Investment Bank where he is responsible for global regulatory reporting of FATCA and the CRS) and I will be able to expand our FATCA and CRS research capacity.  Any readers that want to assist in such research, please contact us at Haydon Perryman or William Byrnes.  Please download my FATCA SSRN article here.

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