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

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

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

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: …”

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

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.

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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.

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

SSRN Tax Professor Rankings Released – William Byrnes ranks in top 20

Posted by William Byrnes on June 25, 2015


Paul Caron, publisher of the Law Professor Blog Network, and editor of TaxProf Blog, released the SSRN rankings of 3,000 law professors for the area of taxation for total downloads and for the year ending June, 2015.

Professor William Byrnes (Texas A&M University Law) ranked #15 among tax professors.

previous TaxProf article about William Byrnes joining Texas A&M University Law.

Posted in Uncategorized | 1 Comment »

international financial law professor headlines

Posted by William Byrnes on June 25, 2015


OECD v. EU blacklists. Has the EU Blacklist made the OECD’s irrelevant?

Is the Commission acting beyond the expressions of the member states? Or are the member states establishing a form of double standard, one that applies to the internal market and another that applies to non-members?

Five Days Left! File FBAR Report (Foreign Bank and Financial Accounts) to FinCEN by June 30 or Pay Large Fines
Swiss release national report on money laundering and terrorist financing risks

The Swiss Federal Department of Finance released its first report on the national assessment of the money laundering and terrorist financing risks in Switzerland.

OECD releases Implementation Package for BEPS country-by-country reporting

Pushing forward efforts to boost transparency in international tax matters, the OECD today released a package of measures for the implementation of a new Country-by-Country Reporting plan developed under the OECD/G20 BEPS Project. The Country-by-Country Reporting Implementation Package will facilitate…

Is Exit Charge a Tax or a Regulatory Fee? Billionaire Space Tourist Mark Shuttleworth Case Final Decision!

A BEPS Commentary by Dr. Andrew Morriss

The rapidly shifting world of international financial and tax regulation – from the OECD’s BEPS to FATCA – is reshaping the world.

Does Treasury Have Authority to Impose OECD BEPS on US Companies?

Senate Finance Committee Chair Orrin Hatch and House Ways and Means Committee Chair Paul Ryan sent a letter to Treasury Secretary Jack Lew on 9 June expressing their general concern about BEPS, as well as singling out several specific BEPS proposals.

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ABA task force’s reform of legal education !

Posted by William Byrnes on June 22, 2015


see the reforms at International Financial Law Prof Blog

 

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

TaxProf Blog: William Byrnes Leaves Thomas Jefferson For Texas A&M

Posted by William Byrnes on June 18, 2015


TaxProf Blog: William Byrnes Leaves Thomas Jefferson For Texas A&M.

Posted in Courses | 1 Comment »

U.S. Persons Foreign Assets and Entities Reporting for the FATCA, FBAR and BE-10 Forms Due in June (Part II) | Kluwer International Tax Blog

Posted by William Byrnes on June 17, 2015


http://www.kluwertaxlawblog.com/blog/2015/06/17/u-s-persons-foreign-assets-and-entities-reporting-for-the-fatca-fbar-and-be-10-forms-due-in-june-part-ii/

Posted in Uncategorized | 1 Comment »

U.S. Persons Foreign Assets and Entities Reporting for the FATCA, FBAR and BE-10 Forms Due in June

Posted by William Byrnes on June 15, 2015


full article on Kluwer International Tax Blog By , Texas A&M University Law

Three significant filing deadlines fall in June, one today and two more on the last day of the month.

(1) The 15 June FATCA Form 8938 filing deadline (with the income tax return) with the IRS for a U.S. person who lives abroad and has specified foreign assets of at least $50,000 on the last day of the tax year or at least $75,000 at any time during the tax year.

(2) The 30 June FBAR filing deadline with FINCEN for a U.S. person that has a financial interest in, or signature authority over, a foreign financial account whereby the aggregate value of all the persons foreign financial accounts exceeds $10,000 during the calendar year.

(3) The 30 June BE-10 form filing deadline with the Department of Commerce, Bureau of Economic Analysis, for a U.S. person who is a first time BE-10 filer and had a direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise at any time during the U.S. person’s 2014 fiscal year.

read the discussion at Kluwer International Tax Blog

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Texas A&M School of Law Adds 12 New Faculty, Expands IP Program

Posted by William Byrnes on June 12, 2015


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Several FIFA Executives Plead Guilty to Accepting Bribes, Many More Charged

Posted by William Byrnes on May 27, 2015


http://lawprofessors.typepad.com/intfinlaw/2015/05/fifa-officials-arrested-in-100-million-world-cup-bribery.html

excerpt – The Defendants Include Two Current FIFA Vice Presidents and the Current and Former Presidents of the Confederation of North, Central American and Caribbean Association Football (CONCACAF); Seven Defendants Arrested Overseas; Guilty Pleas for Four Individual Defendants and Two Corporate Defendants Also Unsealed …

read full story at http://lawprofessors.typepad.com/intfinlaw/2015/05/fifa-officials-arrested-in-100-million-world-cup-bribery.html

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

Fulbright Awards and Fellowships for Law – Deadline August 3

Posted by William Byrnes on May 26, 2015


With over 80 Fulbright awards  available in countries around the globe for U.S. law professors, researchers and professionals, now is the time to refresh your thinking, and learn about law in a context other than that of the United States.  International Financial Law Prof Blog.

Posted in Courses, Education Theory | Leave a Comment »

Hiring Distance Education Director

Posted by William Byrnes on May 14, 2015


Texas A&M is seeking to hire a distance education full time position to execute upon and manage such programs.  Please refe Texas r any potentially interested distance education persons to the Texas A&M link:   https://jobpath.tamu.edu/postings/83039

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FinCEN releases new FBAR filing procedure !!!

Posted by William Byrnes on May 12, 2015


See the complete post at http://lawprofessors.typepad.com/intfinlaw/2015/05/fincen-provides-additional-e-filing-method-for-fbar-individual-filers.html

Posted in Uncategorized | Leave a Comment »

New Policy Restricts Use of Asset Forfeiture in Structuring Offenses

Posted by William Byrnes on May 7, 2015


justice logo

Under the new policy, in the absence of criminal charges, judicially authorized warrants to seize bank accounts involved in structuring can only be obtained if the prosecutor first develops probable cause of additional federal criminal activity and that determination is approved by a supervisor.  Otherwise, a prosecutor may ask a judge to issue a seizure warrant only if either the U.S. Attorney or the Chief of the Criminal Division’s Asset Forfeiture and Money Laundering Section personally determines that seizure would serve a compelling law enforcement interest.

In addition, the new policy imposes important protections after a seizure has taken place.  Read the full Attorney General’s Memorandum and the Structuring Policy Directive and story

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

How Do Tax Rates Effect Innovation and Inventors ? Empirical evidence provides an answer!

Posted by William Byrnes on May 4, 2015


http://lawprofessors.typepad.com/intfinlaw/2015/05/how-do-tax-rates-affect-where-the-worlds-top-inventors-choose-to-live.html

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TJSL Ranks #13 in the Nation for Top Graduate Program | Thomas Jefferson School of Law

Posted by William Byrnes on May 1, 2015


TJSL Ranks #13 in the Nation for Top Graduate Program | Thomas Jefferson School of Law.

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OECD Releases BEPS Proposed Action 8 on Cost Contribution Arrangements & Transfer Pricing

Posted by William Byrnes on May 1, 2015


Logooecd_enPublic comments are invited on a discussion draft which deals with work in relation to Action 8 of the Action Plan on Base Erosion and Profit Shifting (BEPS).

Action 8 (“Assure that transfer pricing outcomes are in line with value creation: Intangibles”) requires the development of “rules to prevent BEPS by moving intangibles among group members” and involves updating the guidance on cost contribution arrangements. The discussion draft sets out a proposed revision to Chapter VIII of the Transfer Pricing Guidelines and is intended to align the guidance in that chapter with the other elements of Action 8 already addressed in the Guidance on Transfer Pricing Aspects of Intangibles released in September 2014.

Interested parties are invited to submit written comments by 29 May 2015 (no extension will be granted) and should be sent by email to TransferPricing@oecd.org in both PDF and Word format. They should be addressed to Andrew Hickman, Head of Transfer Pricing Unit, Centre for Tax Policy and Administration.

Check out William Byrnes’ Lexis’ Practical Guide to U.S. Transfer Pricing, available within LexisNexis, which is updated Book Coverannually to help multinationals cope with the U.S. transfer pricing rules and procedures, taking into account the international norms established by the Organisation for Economic Co-operation and Development (OECD). It is also designed for use by tax administrators and tax professionals, corporate executives, and their non-tax advisors, both American and foreign.  Fifty co-authors contribute subject matter expertise on technical issues faced by tax and risk management counsel. Chapter 13 covers Cost Sharing Arrangements.

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

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.

Posted in FATCA | Tagged: | Leave a Comment »

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…

Posted in Uncategorized | 1 Comment »

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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Public Disclosure of All Beneficial Owners of BVI and Cayman Corporations?

Posted by William Byrnes on March 31, 2015


read about this development at International Financial Law Prof Blog.

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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One of the 10 Largest Swiss Private Banks Enters Into Non-Prosecution Agreement with DOJ

Posted by William Byrnes on March 31, 2015


DOJ announced that BSI SA, one of the 10 largest private banks in Switzerland, is the first bank to reach a resolution under the Department of Justice’s Swiss Bank Program.  106 Swiss banks have sought non-prosecution agreements.  read the details at International Financial Law Prof Blog.

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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weekly financial planning strategies

Posted by William Byrnes on March 24, 2015


Deferred Income Annuities’ Flex Pay Appeals to Younger Investors

A flurry of regulatory activity has put deferred income annuities (DIAs) in the spotlight frequently in the past year, with many billing DIAs as the up-and-coming option for clients to ensure sufficient income even at an advanced age. Often overlooked,…

QLACs Change the Game in Social Security Timing

Qualified longevity annuity contracts (QLACs) have, in theory, existed for nearly three years, but it’s only in recent months that insurance carriers have begun to offer these products—finally making the QLAC a realistic planning option. While the purpose behind the…
5 Hot Retirement Planning Topics for 2015

Here are some of the top retirement planning trends that your clients need to be aware of in order to maximize their retirement account values in 2015 and beyond. 1: QLACs Become a Reality … 2) Split 401(k) Rollovers Maximize…

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

10 most tax-friendly states for retirees

Posted by William Byrnes on March 23, 2015


NU logoEvery client’s goals are different when it comes to choosing where to retire, but from a tax perspective, there are some clear winners that can allow a client to maximize the value of accumulated retirement savings.

While the client’s lifestyle choices — a desire for an expensive home vs. spending on consumer products, for example — greatly impact the tax system that will provide the most substantial benefits, below is a list of ten of the top states for retirees, from a tax perspective. read the analysis of Prof. William Byrnes and Robert Bloink in National Underwriter Life Health Pro

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FATCA Research Project – Help Us Find IGA Model 1 Reporting Deadlines !!!

Posted by William Byrnes on March 20, 2015


d27f6-6a00d8341bfae553ef01b7c6eb77bd970b-piHaydon Perryman has posted a list of Model 1 IGA Countries that have at least one FFI registered with the IRS. We already know the deadlines for Non IGA and Model 2 IGA countries. Please help us in this important research!

In most Model 1 Countries that deadline will be by the end of June 2015 (but not always). Thus, please post by comment any reporting dates you know by jurisdiction – on his blog (if you post here I will copy it over for you).

http://haydonperryman.com/fatca-reporting-deadline-by-jurisdicion/

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Haydon and Byrnes’ Analysis of FATCA Updates & GIIN List of March 2015

Posted by William Byrnes on March 20, 2015


GIIN list, IDES Update, 8938 Form Instruction Updates …. read on Wolters Kluwer.

GIIN Lists Analysis: June 2014 through March 2015

In the words of my English colleague Haydon Perryman, March was a “bit of a damp squib”.  Financial institution FATCA registrations have slowed to a trickle with only 2,479 additional ones seeking a GIIN, bringing the ultimate total to 156,276.

Of this total, … read on Wolters Kluwer

Form 8938 (Reporting of Specified Foreign Financial Assets) Instructions Updated

In the Final Regulations effective 12 December 2014, Form 8938 Reporting of Specified Foreign Financial Assets, the IRS International Financial Law Prof Blogaddressed such issues as dual residents, valuation challenges, foreign currency, virtual currency (left for another time), retirement accounts and insurance policies. The Final Regulations can be found on the FATCA – Regulations and Other Guidance page in the For Individual Taxpayers section. However, as of 10 March 2015, the IRS updated December’s changes to the Form 8938 reporting requirements, as well as including additional information not in the December instructions. A summary of important points follows.  Of this total, … read on Wolters Kluwer

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this week’s financial crimes headlines

Posted by William Byrnes on March 19, 2015


Banca Privada d’Andorra Money Laundering Billions for Corruption and Human Traffickers?

FinCEN’s action also describes the activity of a second high–level manager at BPA in Andorra who accepted exorbitant commissions to process transactions related to Venezuelan third–party money launderers. This activity involved the development of shell companies and complex financial products to siphon off funds from Venezuela’s public oil company Petroleos de Venezuela (PDVSA). BPA processed approximately $2 billion in transactions related to this money laundering scheme.
Former Managing Director of RBS Securities Admits To Multimillion Dollar Securities Fraud of RBS Customers

Katke was a registered broker-dealer and managing director at RBS Securities Inc. As part of the scheme, Katke and his co-conspirators made misrepresentations to induce buying customers to pay inflated prices and selling customers to accept deflated prices for CLO bonds, all to benefit RBS.Commerzbank Admits to Sanctions and Money Laundering Violations, Will Pay $1.45 Billion Penalties!

“If for whatever reason CB New York inquires why our turnover has increase[d] so dramatically, under no circumstances may anyone mention that there is a connection to the clearing of Iranian banks!!!!!!!!!!!!!.”

HSBC’s Whistleblower Leaked Client Information Via Internet

Business Insider reports that “Hervé Falciani, the French-Italian whistleblower who handed over information on 100,000 HSBC client accounts to French authorities in 2009, has published a detailed account on how the transfer of the data actually took place. Also see…
Three Defendants Charged with One of the Largest Reported Data Breaches in U.S. History

Vu was arrested by Dutch law enforcement in Deventer, Netherlands, in 2012 and extradited to the United States in March 2014.

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EU Commission Releases Proposals To Repeal Tax Savings Directive, Instead Impose FATCA Automatic Tax Exchange & Disclosure of All Tax Rulings Within 3 Months of Issuance

Posted by William Byrnes on March 18, 2015


EU CommissionThe European Commission presented a package of tax transparency measures as part of its ambitious agenda to tackle corporate tax avoidance and harmful tax competition in the EU.

A key element of this Tax Transparency Package is a proposal to introduce the automatic exchange of information between Member States on their tax rulings.

Corporate tax avoidance is thought to deprive EU Member States’ public budgets of billions of euros a year. It also undermines fair burden-sharing among tax-payers and fair competition between businesses. Companies rely on the complexity of tax rules and the lack of cooperation between Member States to shift profits and minimise their taxes. Therefore, boosting transparency and cooperation is vital in the battle against aggressive tax planning and abusive tax practices.

The Tax Transparency Package aims to ensure that Member States are equipped with the information they need to protect their tax bases and effectively target companies that try to escape paying their fair share of taxes.

Transparency on Tax Rulings

The central component of the Transparency Package is a legislative proposal to improve cooperation between Member States in terms on their cross-border tax rulings and it aims to mark the start of a new era of transparency.

Currently, Member States share very little information with one another about their tax rulings. It is at the discretion of the Member State to decide whether a tax ruling might be relevant to another EU country. As a result, Member States are often unaware of cross-border tax rulings issued elsewhere in the EU which may impact their own tax bases. The lack of transparency on tax rulings is being exploited by certain companies in order to artificially reduce their tax contribution.

To redress this situation, the Commission proposes to remove this margin for discretion and interpretation. Member States will now be required to automatically exchange information on their tax rulings. The Commission proposes to set a strict timeline: every three months, national tax authorities will have to send a short report to all other Member States on all cross-border tax rulings that they have issued. Member States will then be able to ask for more detailed information on a particular ruling.

The automatic exchange of information on tax rulings will enable Member States to detect certain abusive tax practices by companies and take the necessary action in response. Moreover, it should also encourage healthier tax competition, as tax authorities will be less likely to offer selective tax treatment to companies once this is open to scrutiny by their peers.

Other Tax Transparency initiatives                                                        

The Package also contains a communication outlining a number of other initiatives to advance the tax transparency agenda in the EU. These are:

  • Assessing possible new transparency requirements for multinationals

The Commission will examine the feasibility of new transparency requirements for companies, such as the public disclosure of certain tax information by multinationals. The objectives, benefits and risks of any such initiative need to be carefully considered. Therefore, the Commission will assess the impact of possible additional transparency requirements to help inform a decision at a later stage.

  • Reviewing the Code of Conduct on Business Taxation

The Code of Conduct on Business Taxation is one of the EU’s main tools for ensuring fair corporate tax competition. It sets out the criteria that determine whether a tax regime is harmful or not and it requires Member States to abolish any harmful tax measures that go against the Code. Member States meet regularly to assess their compliance with the Code. But over the past years, the Code has become less effective in addressing harmful tax regimes as its criteria do not take into account more sophisticated corporate tax avoidance schemes. The Commission will therefore work with Member States to review the Code of Conduct as well as the mandate of the Code of Conduct Group in order to make it more effective in ensuring fair and transparent tax competition within the EU.

  • Quantifying the scale of tax evasion and avoidance

The Commission, along with Eurostat, will work with Member States to see how a reliable estimate of the level of tax evasion and avoidance can be reached. There is growing evidence that evasion and avoidance are pervasive and cause significant revenue losses. However, a precise quantification of the scale and impact of these problems has not been determined up to now. Reliable statistics of the scale and impact of these problems would help to better target policy measures against them.

  • Repealing the Savings Tax Directive

The Commission is proposing to repeal the Savings Tax Directive, as this text has since been overtaken by more ambitious EU legislation, which requires the widest scope of automatic information exchange on financial accounts, including savings related income (IP/13/530). Repealing the Saving Tax Directive will create a streamlined framework for the automatic exchange of financial information and will prevent any legal uncertainty or extra administration for tax authorities and businesses.

Next Steps

The two legislative proposals of this package will be submitted to the European Parliament for consultation and to the Council for adoption. Member States should agree on the Tax Rulings proposal by the end of 2015, so that it can enter into force on 1 January 2016. Given that the European Council in December 2014 called on the Commission to make this proposal, full political commitment on reaching a timely agreement should be expected.

The next milestone will be an Action Plan on Corporate Taxation which will be presented before the summer. This second Action Plan will focus on measures to make corporate taxation fairer and more efficient within the Single Market, including a re-launch of the Common Consolidated Corporate Tax Base (CCCTB) and ideas for integrating new OECD/G20 actions to combat base erosion and profit shifting (BEPS) at EU level.

More information

The Communication

The Proposal on automatic exchange of information

Memo/15/4609

Website

book coverLexis 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 and request a copy of the forthcoming 2015 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

A free download of the first chapter of the 2nd edition is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

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Tax Time Guide: Still Time to Contribute to an IRA for 2014

Posted by William Byrnes on March 18, 2015


IRS logo“Taxpayers still have time to contribute to an IRA for 2014 and, in many cases, qualify for a deduction or even a tax credit”, stated the IRS in this week’s newswire (50-IR-2015). (see 7 Tax Facts for Making IRA Contributions)

Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and self-employed people to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

see 5 Tax Facts for Year End IRA

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for 2014, contributions must be made by April 15, 2015. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they fill out their 2014 returns.

see Can an individual roll over or convert a traditional IRA or other eligible retirement plan into a Roth IRA?

Eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2014, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at least age 70½ at the end of 2014 is barred from making contributions to a traditional IRA for 2014 and subsequent years.

The deduction for contributions to a traditional IRA is generally phased out for taxpayers covered by a workplace retirement plan whose incomes are above certain levels. For someone covered by a workplace plan during any part of 2014, the deduction is phased out if the taxpayer’s modified adjusted gross income (MAGI) for that year is between $60,000 and $70,000 for singles and heads of household and between $0 and $10,000 for married persons filing separately. For married couples filing a joint return where the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range for the deduction is $96,000 to $116,000. Where the IRA contributor is not covered by a workplace retirement plan but is married to someone who is covered, the MAGI phase-out range is $181,000 to $191,000.

see When Are IRA Funds Taxed?

The deduction for contributions to a traditional IRA is claimed on Form 1040 Line 32 or Form 1040A Line 17. Any nondeductible contributions to a traditional IRA must be reported on Form 8606.

Even though contributions to Roth IRAs are not deductible, the maximum permitted amount of these contributions is phased out for taxpayers whose incomes are above certain levels. The MAGI phase-out range is $181,000 to $191,000 for married couples filing a joint return, $114,000 to $129,000 for singles and heads of household and $0 to $10,000 for married persons filing separately. For detailed information on contributing to either Roth or traditional IRAs, including worksheets for determining contribution and deduction amounts, see Publication 590-A, available on IRS.gov.

see Recharacterizing Roth IRAs Smartly: Use Multiple Roths

Also known as the retirement savings contributions credit, the saver’s credit is often available to IRA contributors whose adjusted gross income falls below certain levels. For 2014, the income limit is $30,000 for singles and married persons filing separate returns, $45,000 for heads of household and $60,000 for married couples filing jointly.

Eligible taxpayers get the credit even if they qualify for other retirement-related tax benefits. Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. The amount of the credit is based on a number of factors, including the amount contributed to either a Roth or traditional IRA and other qualifying retirement programs. Form 8880 is used to claim the saver’s credit, and its instructions have details on figuring the credit correctly.

see High-income clients able to fund Roth IRAs?

Tax Facts on Individuals & Small Business

2014_tf_on_individuals_small_businesses-m_1Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor.  Financial advisors are continually looking for competitive information to help them provide the best answers for their clients and to obtain new clients.  National Underwriter’s Tax Facts series is the only resource written specifically for the financial advisor and producer providing fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts has been famous over 50 years.

Anyone interested can try Tax Facts Online risk-free for 30 days, with a 100% guarantee of complete satisfaction.  Call 1-800-543-0874.

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