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

Posts Tagged ‘FATCA’

A Proposal to Leverage FATCA to Punish Black and Grey Hat Governments.

Posted by William Byrnes on February 16, 2017


please download my proposal https://ssrn.com/abstract=2916444

Abstract: Professor William Byrnes examines whether it is prudent for taxpayers to trust the governments of the 117 countries that scored a fifty or below on Transparency International’s Irs_logocorruption index. The complete information system invoked by the Foreign Account Tax Compliance Act (FATCA) encourages, even prolongs, the bad behavior of black hat governments by providing fuel (financial information) to feed the fire of corruption and suppression of rivals. Professor Byrnes recommends that the United States leverage a “carrot-stick” policy tool to incentivize bad actors to adopt best tax administration practices.  Article download at https://ssrn.com/abstract=2916444

Keywords: FATCA, Common Reporting Standards, OECD, Exchange of Information, Taxpayer Rights, IGA, corruption

Professor William Byrnes is the primary author of Lexis’ Guide to FATCA and Common Reporting Standard Compliance – 2017.  He designed then wrote the initial 2012 edition and has grown it to the #1 FATCA resource for advisors and institutions.  Now in its fifth edition for 2017!

Over 1,800 pages of analysis of the FATCA and CRS compliance challenges,  79 chapters by FATCA and CRS contributing experts from over 50 countries. Besides in-depth, practical analysis, the 2017 edition includes examples, charts, timelines, links to source documents, and compliance analysis pursuant to the IGA, CRS agreement, and local regulations for many financial centers.   This fifth edition will provide the financial enterprise’s FATCA and CRS compliance officer the tools for developing and maintaining a best practices compliance strategy.  No filler of forms and regs – it’s all beef !  See Lexis’ order site and request a copy of the forthcoming 2017 edition – http://www.lexisnexis.com/store/catalog/booktemplate/productdetail.jsp?pageName=relatedProducts&prodId=prod19190327

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Analysis of the 2016 Final W-8BEN-E and its Accompanying Instructions

Posted by William Byrnes on June 16, 2016


IRS Releases Revised 2016 W-8BEN-E and Accompanying Instructions

William Byrnes and Haydon Perryman

This month we turn our attention to the recently revised 2016 W-8BEN-E form which has book cover30 parts over eight pages that can be catalogued into four sections. The IRS released its previous substantial update of the W-8BEN-E in February 2014 and in April 2016 its most recent revisionary updated form with accompanying updated instructions.  The 2016 revision more represents a technical correction release for the evolution of FATCA and its IGAs since 2014 than substantive changes.   The 2014 W-8 series update, on the other hand, was a major departure from the previous series, exemplified by the former W-8BEN in use since 2006 had just four parts.   The 2014 Forms may continue to be used by institutions until October 2016 when it becomes mandatory to switch to the new 2016 W-8BEN-E.  For a detailed FATCA evolution from pre-2010 through 2016, download my 118 page article.

Most Important Updates

This new 2016 W-8BEN-E includes three primary amendments.

Inclusion of Limitation of Benefits Categories

Firstly, the new W-8BEN-E contains 10 new potential items for selection to comply with a “Limitation of Benefits” (LOB) article of a double tax agreement to receive the advantages of the agreements reduced withholding provision. These new LOB boxes reside within Part III – Claim of Tax Treaty Benefits, Line 14.  The items include the nine main tests that can be met to satisfy an LOB provision, and then includes a tenth “Other” catch-all category that requires the filer cite to the treaty article and paragraph number test not covered within the nine categories.

Moreover, line 15 requires further explanation be provided of how additional conditions are met to qualify for any further exceptional reduction of withholding.  Line 15 must be used only if claiming treaty benefits that require that meeting conditions not already covered by the representations of line 14 (or other certifications on the form).

This line is generally not applicable to claiming treaty benefits under an interest or dividends (other than dividends subject to a preferential rate based on ownership) article of a treaty or other income article, unless such article requires additional representations. For example, certain treaties allow for a zero rate on dividends for certain qualified residents provided that additional requirements are met, such as ownership percentage, ownership period, and that the resident meet a combination of tests under an applicable LOB article.

New FATCA Category for Non-Financial Accounts

Secondly, a new checkbox has been added to the chapter 4 statuses in line 5 for payments made to payees for accounts they hold that are not financial accounts under the FATCA regulations [section 1.1471-5(b)(2)]. See Chapter 7A of the Guide to FATCA Compliance for a detailed analysis of this topic.

Coordination with IGAs

Finally, the new W-8BEN-E instructions are amended to coordinate qualification for the status of a nonreporting FFI under the IGA with a deemed-compliant FFI status under the chapter 4 regulations. An FFI that meets the requirements of both a nonreporting IGA FFI under the IGA and under the regulations should certify as a nonreporting IGA FFI, unless such entity meets the requirements for owner-documented FFI status for payments associated with this form, in which case it should certify to that status under the regulations only by completing Part X of the form.

The W-8BEN-E Structure

The filer’s primary focus will be on Part I.

Identifying Information and Choice of Classification part: All filers of the W-8BEN-E must complete Parts I (Identifying Information and FATCA Classification). Part I of the W-8BEN-E requires general information, the QI status, and the FATCA classification of the filer. Question 4 of Part I requests the QI status. If the filer is a disregarded entity, partnership, simple trust, or grantor trust, and also is claiming benefits under a U.S. tax treaty, then the filer must complete Part III. Part I, Question 5 requests the FATCA classification of the filer, of which the form list 31 choices. The classification indicated determines which one of the parts IV through XXVIII must be completed.

General Certification part: All filers must complete Part XXX (General Certification). Part XXX requires certification, under penalty of perjury, by the payee or a person authorized to sign on the payee’s behalf. This part of the final form also requires the signatory agree that she will submit a new form within 30 days if any certification made on this form becomes incorrect.

The signatory is certifying, subject to perjury:

The entity identified on line 1 of this form is the beneficial owner of all the income to which this form relates, is using this form to certify its status for chapter 4 purposes, … 

  • The entity identified on line 1 of this form is not a U.S. person, 
  • The income to which this form relates is: (a) not effectively connected with the conduct of a trade or business in the United States, (b) effectively connected but is not subject to tax under an income tax treaty, or (c) the partner’s share of a partnership’s effectively connected income, and 
  • For broker transactions or barter exchanges, the beneficial owner is an exempt foreign person as defined in the instructions.

Moreover, Line XXIX for identification of substantial U.S. owners is subject to the same perjury statement and other certifications made in Part XXX.

Specific Certification of FATCA Classification part: Completion of the other parts of the form W-8BEN-E will depend upon the Part I, Question 5 FATCA classification of the filer.

Substantial U.S. Owner part: The information required to answer this line may be attached to the form in a separate statement, which remains subject to the same perjury statement and other certifications made in part XXX.  A filer that is a passive NFFE and thus completes part XXVI must also complete as well as part XXIX if it has substantial U.S. owners.

For a Passive NFFE, a specified U.S. person is a substantial U.S. owner if the person has more than a 10 percent beneficial interest in the entity.  But if an applicable IGA instead employs the standard of “controlling U.S. persons”, then the filer must look to the definition of a controlling person within the IGA of the jurisdiction of the financial institution to which the W-8BEN-E is provided.

Who Must Provide the W-8BEN-E?

A foreign entity must submit a Form W-8BEN-E to the withholding agent if it will receive a FATCA withholdable payment, receive a payment subject to chapter 3 withholding, or if it maintains an account with an FFI.

Disregarded Entity

A disregarded entity with a U.S. owner or a disregarded entity with a foreign owner that is not otherwise able to fill out Part II (i.e., because it is in the same country as its single owner and does not have a GIIN) may provide this form to an FFI solely for purposes of documenting itself for chapter 4 purposes. In such a case, the disregarded entity should complete Part I as if it were a beneficial owner and should not complete line 3.

Beneficial Owners

Form W-8 BEN-E must be provided by each of the entities that are beneficial owners of a payment, or of another entity that is a beneficial owner. If the income or account is jointly owned by more than one person, then the income or account will be treated by the withholding agent as owned by a foreign beneficial owner only if Forms W-8BEN or W-8BEN-E are provided by each owner of the account.

Treatment as a U.S. Account

If the withholding agent or financial institution receives a Form W-9 from any of the joint owners, then the payment must be treated as made to a U.S. person and the account treated as a U.S. account. An account will be treated as a U.S. account for FATCA by an FFI if any of the account holders is a specified U.S. person or a U.S.-owned foreign entity, unless the account is otherwise excepted from U.S. account status for FATCA purposes.

Expiration of Form W-8 BEN-E

Generally, a Form W-8BEN-E will remain valid for purposes of both chapters 3 and 4 for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2014 remains valid through December 31, 2017. However, under certain conditions, a Form W-8BEN-E will remain in effect indefinitely until a change of circumstances occurs.

Change in Circumstances

If a change in circumstances makes any information on the Form W-8 BEN-E incorrect for purposes of either chapter 3 or chapter 4, then the submitting person must notify the withholding agent or financial institution maintaining the account within 30 days of the change in circumstances and must file a new Form W-8 BEN-E (or other appropriate form as applicable).

The new 2016 instructions point out that if the submitter has relied upon an IGA to respond to the form, and the country is thereafter removed from the U.S. Treasury list of current IGAs, then from the date of removal a ‘change of circumstances’ has occurred.  The W-8BEN-E will no longer be ‘fit for purpose’ after the expiration of the change of circumstance time frame. 

Which of the 30 Parts of the W-8BEN-E to Complete?

The 2014 and 2016 W-8BEN-E form has thirty parts presented over eight pages, whereas the former 2006 dual-purpose W8BEN had just four parts.  The 2016 Form W-8BEN-E, and did the 2014 version, includes both the QI (U.S. IRC Title III) and the FATCA (U.S. IRC Title IV) entity classification reporting requirements.

All filers of the W-8BEN-E must complete Parts I and XXX. The FATCA classification indicated determines which one of the Parts IV through XXVIII must be completed, and whether substantial U.S. owners must be identified under part XXIX. 

Part I – Identification of Beneficial Owner

Part I of the W-8BEN-E requires general information, the QI status, and the FATCA classification of the filer. 

Line 1. A disregarded entity or branch enters the legal name of the entity that owns the disregarded entity (looking through multiple disregarded entities if applicable) or maintains the branch. 

Line 2. A corporation must enter its country of incorporation.  Any other type of entity must instead enter the country under whose laws it is created, organized, or governed. 

Line 3. A disregarded entity receiving a payment should only enter its name on line 3 if it is receiving a withholdable payment or hold an account with an FFI and

  1. has registered with the IRS and been assigned a GIIN associated with the legal name of the disregarded entity;
  2. is a reporting Model 1 FFI or reporting Model 2 FFI; and
  3. is not a hybrid entity using this form to claim treaty benefits.

If not required to provide the legal name, then a disregarded entity receiving a payment or maintaining an account may instead enter its name on line 3.

Line 4 firstly requests the Chapter 3 status of the recipient for purposes of U.S. withholding on U.S. source income.  Question 4 formerly presented 11 entity types from which the filer may select one. The 2016 W-8BEN-E includes a new entity type, the “International Organization” and thus 12 choices.

Secondly, if the filer is a disregarded entity, partnership, simple trust, or grantor trust, then the filer must tick in the affirmative and complete Part III if the entity is claiming benefits under a U.S. tax treaty.

Line 5 requests the FATCA classification of the entity.  The W-8BEN-E currently lists 32 FATCA classifications of which the entity should check only one box, whereas the previous list contained 31 classification choices.  The previous 2014 instructions also stated that only one box should be chosen but with a caveat “unless otherwise indicated”.  The 2016 W-8BEN-E instructions have been updated to state: “Check the one box that applies to your chapter 4 status.”

Several of the 32 classifications have had internal language updates to better align with the regulations or deadlines that have passed since 2014.  By example, the classification choice of “Sponsored FFI” no longer has the reference “that has not obtained GIIN”.  These modifications will be analyzed in depth in the Guide to FATCA Compliance.

Account That is Not a Financial Account

However, noteworthy is the newly added thirty-second classification because it is causing some confusion among compliance officers.  It reads “Account That is Not a Financial Account”.  The line 5 instruction states that if the filer is merely providing this form to document an account held with a financial institution that is not a financial account under Regulations section 1.1471-5(b)(2), then check the “Account that is not a financial account” box on line 5.

Why is this category necessary?  Because the regulations limit the scope of what types of financial institution accounts are included for the FATCA definition of financial account.  By example, the regulations exclude certain escrow accounts established for commercial transactions from treatment as financial accounts. The regulations also exclude negotiable debt instruments that are traded on a regulated market or over-the-counter market and distributed through financial institutions.  The regulations limit the scope of a depository account to an account for the placing of money (as opposed to the holding of property) in the custody of an entity engaged in a banking or similar business.

The regulations also exclude certain accounts of insurance companies.  By example, the regulations provide that a depository account includes an amount that an insurance company holds under a guaranteed investment contract or under a similar agreement to pay or credit interest thereon. The regulations also provide that a depository account does not include an advance premium or premium deposit received by an insurance company, provided the prepayment or deposit relates to an insurance contract for which the premium is payable annually and the amount of the prepayment or deposit does not exceed the annual premium for the contract. Such amounts are also excluded from cash value for purposes of determining whether a contract is a cash value insurance contract.

Comments On Completion of Part I, Line 5

Where one of the following FATCA classifications is selected, then the entity’s GIIN must be obtained (in Part 1 Line 9a) and verified against the IRS GIIN list. An incomplete or truncated TIN or GIIN may not be relied upon. It is acceptable for a limited time period that instead of providing a GIIN in Part 1 Line 9a to state “Applied for.”  However, the W8-BEN-E becomes invalid if the GIIN is not provided and verified against the IRS GIIN list within 90 days.

(a) Participating FFI;

(b) Reporting Model 1 FFI;

(c) Reporting Model 2 FFI;

(d) Registered deemed-compliant FFI (other than a reporting Model 1 FFI or sponsored FFI that has not obtained a GIIN);

(e) Nonreporting IGA FFI (including an FFI treated as a registered deemed-compliant FFI under an applicable Model 2 IGA);

(f) Direct reporting NFFE; or

(g) Sponsored direct reporting NFFE;

If the country entered in Part 1 Line 2 is an IGA country then the option of “Nonparticipating FFI (including a limited FFI or an FFI related to a Reporting IGA FFI other than a registered deemed-compliant FFI or participating FFI)” is not acceptable.

If the organization is a Financial Institution in the United States maintaining its customer’s account in the U.S., then it should collect its customer’s Foreign TIN in Part 1, Line 9b. In that scenario, the lack of a Foreign TIN makes the W8-BEN-E invalid.
It is the W8-BEN-E that will identify most of the Passive NFFEs. The identification of Passive NFFE is a key concept which runs consistently not only through the U.S. Treasury version of FATCA, but also the IGAs, the latest FINCEN proposal (RIN 1506-AB25 issued July 30, 2014) and the CRS.

Passive NFFEs identify themselves as such in Part 1 Line 5 of the W-8 BEN-E. Where an entity declares itself a Passive NFFE in Part 1 Line 5 of the W-8 BEN-E, it has to complete part XXVI. Passive NFFEs are unique in that they have to declare either their U.S. beneficial owners or controlling persons on the W-8 BEN-E for the declaration to be valid. For the avoidance of doubt, the 2016 W-8BEN-E specifically includes mention of the possibility of a applicable IGA: “If providing the form to an FFI treated as a reporting Model 1 FFI or reporting Model 2 FFI, an NFFE may also use this Part for reporting its controlling U.S. persons under an applicable IGA”.

In most IGA Model 1 countries the concept of beneficial ownership is replaced by the pre-existing KYC/AML in that particular jurisdiction. In general, the concept of beneficial ownership is replaced in IGA Model 1 countries by the concept of “controlling persons” who own or control 25 percent of the entity. More accurately, in an IGA Model 1 country the U.S. beneficial ownership concept is replaced by whatever the rules are under that jurisdiction’s KYC/AML. Generally, but not always, this will be the controlling persons of at least 25 percent.

Moreover, the CRS looks to the controlling person. The latest FinCEN proposal that establishes regulations for U.S. financial institutions to apply FATCA in the U.S. includes both the “controlling person” and the “beneficial owner” concepts (see my Kluwer International Tax article of May 9, 2016: The Brave New World of AML and Tax Compliance Overlap for Tax Status Certification for FATCA, CRS and the EU. Why are so many compliance officers getting it wrong?).

32 categories to choose one from

  1. Nonparticipating FFI (including a limited FFI or an FFI related to a Reporting IGA FFI other than a deemed-compliant FFI, participating FFI, or exempt beneficial owner).
  2. Participating FFI.
  3. Reporting Model 1 FFI.
  4. Reporting Model 2 FFI.
  5. Registered deemed-compliant FFI (other than a reporting Model 1 FFI, sponsored FFI, or nonreporting IGA FFI covered in Part XII). See instructions.
  6. Sponsored FFI. Complete Part IV.
  7. Certified deemed-compliant nonregistering local bank. Complete Part V.
  8. Certified deemed-compliant FFI with only low-value accounts. Complete Part VI.
  9. Certified deemed-compliant sponsored, closely held investment vehicle. Complete Part VII.
  10. Certified deemed-compliant limited life debt investment entity. Complete Part VIII.
  11. Certified deemed-compliant investment advisors and investment managers. Complete Part IX.
  12. Owner-documented FFI. Complete Part X.
  13. Restricted distributor. Complete Part XI.
  14. Nonreporting IGA FFI. Complete Part XII.
  15. Foreign government, government of a U.S. possession, or foreign central bank of issue. Complete Part XIII.
  16. International organization. Complete Part XIV.
  17. Exempt retirement plans. Complete Part XV.
  18. Entity wholly owned by exempt beneficial owners. Complete Part XVI.
  19. Territory financial institution. Complete Part XVII.
  20. Nonfinancial group entity. Complete Part XVIII.
  21. Excepted nonfinancial start-up company. Complete Part XIX.
  22. Excepted nonfinancial entity in liquidation or bankruptcy. Complete Part XX.
  23. 501(c) organization. Complete Part XXI.
  24. Nonprofit organization. Complete Part XXII.
  25. Publicly traded NFFE or NFFE affiliate of a publicly traded corporation. Complete Part XXIII.
  26. Excepted territory NFFE. Complete Part XXIV.
  27. Active NFFE. Complete Part XXV.
  28. Passive NFFE. Complete Part XXVI.
  29. Excepted inter-affiliate FFI. Complete Part XXVII.
  30. Direct reporting NFFE.
  31. Sponsored direct reporting NFFE. Complete Part XXVIII.
  32. Account that is not a financial account.

FFIs Covered by an IGA and Related Entities

A reporting IGA FFI resident in, or established under the laws of, a jurisdiction covered by a Model 1 IGA should check “Reporting Model 1 FFI.” A reporting FFI resident in, or established under the laws of, a jurisdiction covered by a Model 2 IGA should check “Reporting Model 2 FFI.”

If the FFI is treated as a registered deemed-compliant FFI under an applicable IGA, it should check “Nonreporting IGA FFI” rather than “registered deemed-compliant FFI” and provide its GIIN in Part XII, line 26.

An FFI that is related to a reporting IGA FFI and that is treated as a nonparticipating FFI in its country of residence should check the box for nonparticipating FFI in line 5. An FFI that is related to a reporting IGA FFI and that is a participating FFI, deemed-compliant FFI, or exempt beneficial owner under the U.S. Treasury regulations or an applicable IGA should check the appropriate box for its chapter 4 status. 

Requirement to Provide a GIIN

If the entity is in the process of registering with the IRS as a participating FFI, registered deemed-compliant FFI, reporting Model 1 FFI, reporting Model 2 FFI, direct reporting NFFE, or sponsored direct reporting NFFE, but has not received a GIIN, it may complete this line by writing “applied for.” However, the person requesting this form must receive and verify the GIIN within 90 days.

For payments made prior to January 1, 2015, a Form W-8BEN-E provided by a reporting Model 1 FFI need not contain a GIIN. For payments made prior to January 1, 2016, a sponsored direct reporting NFFE or sponsored FFI that has not obtained a GIIN must provide the GIIN of its sponsoring entity in line 16. 

501(c) Organization

Only foreign entities that are tax-exempt under section 501 should check the 501(c) organization “Tax-exempt organization” box. Such organizations should use Form W-8BEN-E only if they are claiming a reduced rate of withholding under an income tax treaty or a code exception other than section 501. If claiming an exemption from withholding under code section 501, then it must submit Form W-8EXP to document the exemption and chapter 4 status. 

Non-Profit Organizations Covered by an IGA

A non-profit entity that is established and maintained in a jurisdiction that is treated as having in effect a Model 1 IGA or Model 2 IGA, and that meets the definition of Active NFFE under Annex I of the applicable IGA, should not check a box for its status on line 5. 

Completion of Parts IV through XXVIII

An entity should complete only one part of Parts IV through XXVIII certifying to the chapter 4 status. But an entity that selects nonparticipating FFI, participating FFI, registered deemed-compliant FFI, reporting Model 1 FFI, reporting Model 2 FFI, or direct reporting NFFE (other than a sponsored direct reporting NFFE) is not required to complete any of the certifications in Parts IV through XXVIII.

Part IV Sponsored FFI
Part V Certified Deemed-Compliant Nonregistering Local Bank
Part VI Certified Deemed-Compliant FFI with Only Low-Value Accounts
Part VII Certified Deemed-Compliant Sponsored, Closely Held Investment Vehicle
Part VIII Certified Deemed-Compliant Limited Life Debt Investment Entity
Part IX Certified Deemed-Compliant Investment Advisors and Investment Managers
Part X Owner-Documented FFI
Part XI Restricted Distributor
Part XII Nonreporting IGA FFI
Part XIII Foreign Government, Government of a U.S. Possession, or Foreign Central Bank of Issue
Part XIV International Organization
Part XV Exempt Retirement Plans
Part XVI Entity Wholly Owned by Exempt Beneficial Owners
Part XVII Territory Financial Institution
Part XVIII Excepted Nonfinancial Group Entity
Part XIX Excepted Nonfinancial Start-Up Company
Part XX Excepted Nonfinancial Entity in Liquidation or Bankruptcy
Part XXI 501(c) Organization
Part XXII Non-Profit Organization
Part XXIII Publicly Traded NFFE or NFFE Affiliate of a Publicly Traded Corporation
Part XXIV Excepted Territory NFFE
Part XXV Active NFFE
Part XXVI Passive NFFE
Part XXVII Excepted Inter-Affiliate FFI
Part XXVIII Sponsored Direct Reporting NFFE
Part XXIX Substantial U.S. Owners of Passive NFFE
Part XXX Certification 

Part X – Owner-Documented FFI 

Line 24a. An owner-documented FFI must check the box to certify that it meets all of the requirements for this status and is providing this form to a U.S. financial institution, participating FFI, reporting Model 1 FFI, or reporting Model 2 FFI that agrees to act as a designated withholding agent with respect to the FFI identified on line 1. Then select either 24b or 24c. 

Line 24b. Check this box to certify that the documentation set forth in the certifications has been provided (or will be provided), including the owner reporting statement described in this line 24b, or 

Line 24c. Check this box to certify that the auditor’s letter has been provided (or will be provided).

Entities Providing Certifications Under an Applicable IGA

In lieu of the certifications contained in Parts IV through XXVIII of Form W-8BEN-E, a reporting Model 1 FFI or reporting Model 2 FFI in certain cases may request alternate certifications to document its account holders pursuant to an applicable IGA or it may otherwise provide an alternate certification to a withholding agent.

A withholding agent that is an FFI may provide a chapter 4 status certification other than as shown in Parts IX through XXVIII in order to satisfy its due diligence requirements under an applicable IGA. In such a case, attach that alternative certification to this Form W-8BEN-E in lieu of completing a certification otherwise required in Parts IV through XXVIII provided that:

1) the certification accurately reflects the chapter 4 status or under an applicable IGA; and

2) the withholding agent provides a written statement that it has provided the certification to meet its due diligence requirements as a participating FFI or registered deemed-compliant FFI under an applicable IGA.

An applicable IGA certification may be provided with the W-8BEN-E if determining chapter 4 status under the definitions provided in an applicable IGA and that certification identifies the jurisdiction that is treated as having an IGA in effect and describes the status as an NFFE or FFI in accordance with the applicable IGA.

However, if under an applicable IGA the entity’s status is determined to be an NFFE, it must still determine if it is an excepted NFFE under the FATCA Regulations. Additionally, the entity must comply with the conditions of its status under the law of the IGA jurisdiction.

For more indepth analysis than we can provide within this month’s article, along with 50 contributors, we analyzed the FATCA and the CRS compliance challenges.  Besides in-depth, practical analysis, we include examples, charts, time lines, links to source documents, and compliance protocols pursuant to IGAs and local regulations.  download my 118 page introductory analysis here

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EU & US Sign “Umbrella” agreement to protect personal data transferred by law-enforcement authorities for detecting criminal offences, like tax evasion, & terrorism

Posted by William Byrnes on June 9, 2016


The EU-U.S. Ministerial Meeting on Justice and Home Affairs, hosted by the Netherlands Presidency of the Council of the European Union, took place in Amsterdam.  This meeting is EU Commission

Signing of the “Umbrella” agreement represented a major step forward in EU-U.S. relations.  The agreement sets high standards for the protection of personal data transferred by law-enforcement authorities.  It also strengthens legal certainty and enhances the rights of citizens which in turn will facilitate EU-U.S. cooperation to combat crime, including terrorism.  The EU and the U.S. are committed to work together in the implementation of this agreement to ensure that it benefits both citizens and law enforcement cooperation.  The next step will be to seek approval by the European Parliament.

During the ministerial meeting, the delegations focused on ways to address the migration crisis, on their respective visa policies, and on information sharing in the context of security, on counterterrorism policies and terrorist financing, on money laundering, data protection and on practical cooperation to tackle transnational organised crime.  The exchange of views covered issues including the protection of refugees, global resettlement efforts, effective border management and dismantling organised criminal migrant smuggling networks.

The EU and the U.S. first discussed ways to address global migration by developing safe, regular and orderly migration processes whilst ensuring international protection for those who need it.  The discussion focused on opportunities to mutually reinforce and coordinate their actions in this respect while also establishing high security standards.  They agreed that the current migration and refugee challenges require global solutions through increased international cooperation and regional action.  In this respect they reaffirmed their commitment to work together in the lead-up to the upcoming United Nations General Assembly high level meeting addressing large movements of refugees and migrants and to the U.S. hosted Leader-Level Refugee Summit, to be held in September 2016 in New York.

The EU and U.S. exchanged views on visa issues and the respective legal frameworks.  They agreed to maintain their constructive dialogue at all levels to achieve mutually beneficial solutions.

The EU and the U.S. discussed initiatives to improve counterterrorism efforts, including border security, screening of travellers and information sharing, as well as cooperation to better identify terrorist and foreign fighter travel.  They also agreed to reinforce their dialogue on chemical, biological, radioactive and nuclear material and on its possible use by terrorist networks.  They discussed legislative initiatives to improve information sharing, and to streamline efforts to combat terrorist financing and money laundering.

They also discussed a five year review of the 2010 EU-U.S. Mutual Legal Assistance Treaty, a key mechanism for transatlantic criminal justice cooperation.  The EU and the U.S. confirmed that the treaty is working effectively and identified areas for further practical improvement.  The U.S. and the EU committed to implementing those recommendations.  These recommendations include enhancing training and specialisation of practitioners, improving the way joint investigation teams work together, using technology to avoid delays, and making it easier to track criminal proceeds by identifying bank accounts.  Facilitating access to electronic evidence is a particular concern of the review, and the participants committed to improving their practices through which they obtain such evidence.

Following up to the commitment made at the EU–U.S. Summit in March 2014, the EU and the U.S. reiterated their desire to tackle jointly the issue of transnational child sex offenders, acknowledging the operational conclusions of an EU–U.S. expert meeting held in September 2015.  The EU and the U.S. recognized the importance of improving operational cooperation to protect children from transnational sex offenders.

Concluding the discussions, Europol and the U.S. jointly presented the results of a successful EU–U.S. operation that brought together law enforcement authorities from across Europe and the US to dismantle an important drug trafficking network and seize the proceeds of their crimes.

The EU and the U.S. committed to continuing their regular dialogue and to hold another ministerial meeting in the second half of 2016.

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Panama Papers Leading to 30 Country Interlinked Beneficial Ownership Registry for Company and Trusts

Posted by William Byrnes on April 25, 2016


Over 20 countries have joined the UK-led pilot to automatically share ownership information for companies. As such their tax and law enforcement agencies will now exchange data on company beneficial ownership registers and new registers of trusts enabling more effective investigation of financial wrongdoing and tax-dodging.  [See free SSRN download of Lexisnexis® Guide to FATCA Compliance 2016]

Statement by: UK, France, Germany, Italy, Spain, Netherlands, Romania, Sweden, Finland, Croatia, Belgium, Slovakia, Latvia, Lithuania, Ireland, Slovenia, Denmark, Malta, Cyprus, EU CommissionGibraltar, Isle of Man, Montserrat, Bulgaria, Estonia, Portugal, Greece, Czech Republic, Luxembourg, Austria and Hungary

As recent events have shown we need to take firm collective action on increasing beneficial ownership transparency, building on our actions to date. Criminals continue to find ways to exploit the cracks in the current system, setting up complex structures in various and often multiple locations to hide their activities, be it money laundering, tax evasion or illicit finance. As with tax evasion, this requires a global response.

On beneficial ownership, it is essential to apply enhanced standards of transparency at European and international level. In this spirit, we have committed to establishing as soon as possible registers or other mechanisms requiring that beneficial owners of companies, trusts, foundations, shell companies and other relevant entities and arrangements are identified and available for tax administration and law enforcement authorities. We call on all other Member States, countries and jurisdictions to do so.

We also commit to the new pilot initiative for automatic exchange of information on beneficial ownership launched by the UK, France, Germany, Italy and Spain.  This will give our tax and other relevant authorities full knowledge on vast amounts of information and help them track the complex offshore trails used by criminals. The intention is that this will mirror the ground-breaking steps we have taken on tax evasion under the CRS. In this regard we also call on all jurisdictions to implement the CRS to the agreed timetable and for those not yet committed to do so rapidly.

Automatic exchange of beneficial ownership information will, as with the CRS, be subject to the usual data and confidentiality protections and to any appropriate exceptions. We will look to ensure that this information is in a fully searchable format and that it also contains information on entities and arrangements closed during the relevant year. To be effective this should be a global system and we call for the rapid establishment of a global standard.

We also call for the development of a system of interlinked registries containing full beneficial ownership information and for common international standards for these registries and their interlinking. We intend to start this project as soon as is practicable. In our view, this new initiative will take a significant step forward in improving the transparency of beneficial ownership information and in removing the veil of secrecy under which criminals operate.

[See free SSRN download of Lexisnexis® Guide to FATCA Compliance 2016]

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2016 Lexis Guide to FATCA Compliance SSRN download

Posted by William Byrnes on March 8, 2016


http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2742383

The LexisNexis® Guide to FATCA Compliance provides a framework for meaningful interactions among enterprise stakeholders, and between the FATCA Compliance Officer and theFATCA_rollFATCA advisors/vendors. Analysis of the complicated regulations, recognition of overlapping complex regime and intergovernmental agreement requirements (e.g. FATCA, Qualified Intermediary, source withholding, national and international information exchange, European Union tax information exchange, information confidentiality laws, money laundering prevention, risk management, and the application of an IGA) is balanced with substantive analysis and descriptive examples. The contributors hail from several countries and an offshore financial center and include attorneys, accountants, information technology engineers, and risk managers from large, medium and small firms and from large financial institutions. Thus, the challenges of the FATCA Compliance Officer are approached from several perspectives and contextual backgrounds.

Several new contributing authors joined the FATCA Expert Contributor team this fourth edition. This fourth edition has been expanded by 19 new chapters and from a total of 54 to 73 chapters, with over 500 new pages of regulatory and compliance analysis based upon industry feedback of internal challenges with systems implementation. The previous 54 chapters have been substantially updated and expanded, including many more practical examples to assist a compliance officer contextualize the regulations, IGA provisions, and national rules enacted pursuant to an IGA. The new chapters include by example an in-depth analysis of designing a FATCA internal policy that is compliant with the initial two year soft enforcement initiative, designing an equivalent form to the W-8, reporting accounts, reporting payments, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA and the IGAs within new BRIC and European country chapters, and a project management schedule for the compliance officer.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2742383

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OECD Common Reporting Self Certification Tax Forms Now Available

Posted by William Byrnes on February 10, 2016


hat tip: Prof. Haydon Perryman: OECD Self-certification forms

The Business and Industry Advisory Committee to the OECD (BIAC) has drafted the following self-certification forms –  

Financial institutions should consult their advisers to ensure their CRS-related operations, including the self-certification forms collected from accountholders, comply with all applicable national laws. 

Guide to FATCA Compliance (New 2016 Edition includes) over 1,500 pages of analysis of the FATCA and CRS compliance challenges,  73 chapters by FATCA and CRS contributingOECDexperts from over 30 countries.  Besides in-depth, practical analysis, the 2016 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.  The 19 newest chapters include by example an in-depth analysis of designing a FATCA internal policy that is compliant with the initial two-year soft enforcement initiative, designing an equivalent form to the W-8, reporting accounts, reporting payments, operational specificity of the mechanisms of information capture, management and exchange by firms and between countries, insights as to the application of FATCA, CRS, and the IGAs within BRIC, SEA and European country chapters.

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

Posted by William Byrnes on October 22, 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, FATCA, Financial Crimes, Money Laundering, Taxation, Transfer Pricing | Tagged: , , , | Leave a Comment »

International Tax News Headlines

Posted by William Byrnes on October 19, 2015


No Social Security Cost of Living Adjustment, 3rd Time Since 2009, But Medicare Premiums Surging for Some

James Green, Group Editorial Director, Investment Advisor Group analyzes the 2016 coming tragedy for a large segment of retirees – Medicare premiums will surge but the Social Security payment to pay it will not increase one cent. Read his analysis…

New OECD CRS web portal for automatic exchange of information opens

The OECD launched its new portal on Automatic Exchange of Information (AEOI). It provides a comprehensive overview of the work of the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes in the area of…

EU Commission Updates Black Listed Countries by Member States

EU Commission Updates Black Listed Countries by Member StatesPosted: 16 Oct 2015 01:26 AM PDT

Another UBS Banker Avoids Jail

Bloomberg reported that the former UBS Swiss banker Hansruedi Schumacher who plead guilty to assisting US clients evade taxes will not go to jail. Instead, he will pay a $150,000 fine and be sentenced to probation in reward for testifying…

OECD BEPS Video & PPT

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…

OECD Releases All Final BEPS Reports – Links Herein

The OECD presented today the final package of measures for a comprehensive, coherent and co- ordinated 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…

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

The Internal Revenue Service today announced the exchange of financial account information with certain foreign tax administrations, meeting a key Sept. 30 milestone related to FATCA, the Foreign Account Tax Compliance Act. To achieve this, the IRS successfully and timely…OECD launches report on greater co-operation and information sharing between government agencies to counter financial crimes

Vast amounts are lost to illicit financial flows, including tax evasion, money laundering, bribery and corruption. These crimes threaten the strategic, political and economic interests of both developed and developing countries. In a world of limited resources and increasing complexity,…

FATCA Deadlines Postponed Again – Notice 2015-66 Released

Extension of FATCA Transitional Rules for Gross Proceeds, Foreign Passthru Payments, Limited Branches and Limited FFIs, and Sponsored Entities; Reporting of 2014 Information under a Model 1 IGA; and Modification to Grandfathered Obligation Rule with Respect to Collateral Notice 2015-66…

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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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FATCA YouTube Webinar – Video Now Available

Posted by William Byrnes on September 28, 2015


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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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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

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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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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 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.

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

Posted by William Byrnes on April 30, 2015


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

Programa:

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

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

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

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

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

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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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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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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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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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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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OECD Releases 9 Country Evaluations On Implementation of Exchange of Tax Information To Combat Tax Evasion   

Posted by William Byrnes on March 17, 2015


The Global Forum on Transparency and Exchange of Information for Tax Purposes released 9 peer review reports, including a Phase 1 Supplementary Report for Switzerland, demonstrating continuing progress toward implementation of the international standard for exchange of information on request.  read them at International Financial Law Prof Blog.

 

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Byrnes and Perryman’s Analysis of the FATCA GIIN Lists June 2014 – February 2015 | Kluwer International Tax Blog

Posted by William Byrnes on February 25, 2015


Byrnes and Perryman’s Analysis of the FATCA GIIN Lists June 2014 – February 2015 | Kluwer International Tax Blog.

Since the publication of the U.S. Treasury’s original GIIN list 1 June 2014, HaydonPerryman (FATCA systems designer for several tier 1 financial institutions) and I (primary author, Lexis Guide to FATCA Compliance) have been analyzing on a monthly basis the list that the USA provides of “approved FFIs” (foreign financial institutions). On 1 February, the IRS published its second 2015 FATCA GIIN list of “approved FFIs” (a list of the financial firms that have registered on the IRS FATCA portal). Global FFI Registration has reached 153,797.

  • But from what countries are these registrations?
  • Are these DCFFI registrations or PFFIs?
  • Which countries are leading in the registration compliance and which are lagging?
  • Has FFI registration growth by country and region been measured over the past eight months?

Wolters Kluwer has published our complete analysis on the International Tax Law blog.

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What’s WIth the Offshore Voluntary Disclosure Program’s “Non-Willful” Narratives?

Posted by William Byrnes on January 26, 2015


International Financial Law Prof Blog

the IRS’s 2015 versions of the two streamlined procedures OVDP forms (Form 14653 and Form 14654) require taxpayers to “provide a “narrative statement of facts” explaining their failure to disclose their offshore assets, or the agency …. read about it on International Financial Law Prof Blog

 

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Welcome this week from University of Amsterdam Centre for Tax Law

Posted by William Byrnes on January 19, 2015


Logo_uva1 Welcome from Amsterdam !  Each year the Amsterdam Centre for Tax Law (of the University of Amsterdam Law Faculty) organizes its Winter Course on International Tax Law.

This year theme is “Tax treaty application“.  The Winter Course on International Tax Law focuses on the practical problems of tax treaty application. It aims at bringing the participants’ knowledge up-to-date with recent OECD developments, major issues on tax treaty interpretation, as well as relevant case-law on tax treaties around the world.

Prof. Dennis Weber, Director of the ACTL,  has assembled a leading program faculty including Prof. Peter Watel(UvA) (who lectured me at a UvA tax student 23 year ago); Prof. Hein Vermeulen (UvA/PwC);  Prof. Stef van Weeghel (UvA/PwC); Prof. Bruno De Silva (UvA); Prof. Otto Marres (UvA/KPMG); Prof. Joanna Wheeler(IBFD/UvA); Jasper Arendse (Directorate of International Affairs Dutch Ministry of Finance); Melinda Brown (OECD); and myself, Prof. William Byrnes.

My topic examines the protocols, mechanisms and expanding scope of information exchange via bilateral and multilateral agreements.  FATCA, OECD CRS and Global Initiatives, EU Expanded Savings Directive EOI, TIEAs fall within this topic, as well as tax certification forms and validation, data collection, discernment and distribution.

The Amsterdam Centre for Tax Law (ACTL) is the tax law research centre of the University of Amsterdam. ACTL members conduct research into various subjects of tax law, with a strong emphasis on Corporate Taxation, International Tax Law and European Tax Law.

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Comparison of NAFTA, BRIC, EU and Caribbean of the 8 FATCA GIIN Lists (June 2014 -> January 2015)

Posted by William Byrnes on January 12, 2015


see the full analysis at International Financial Law Prof Blog excerpted below.

Caribbean and Atlantic Financial Centers Registrations

The Cayman Islands remain the global FATCA compliance registration leader with 27,011 FFIs, almost 7,000 more compliant FFIs than the UK.  The June GIIN list included 1,837 BVI FFI registrations, now at 4,653.  Bahamas has increased from 610 to 882, Bermuda 1,242 to 1,824 and Panama 450 to 773.  …

By the way, the 3rd edition of my Lexis Guide to FATCA Compliance will be out soon with substantial more analysis – 1,200 pages over 54 chapters.  Over 50 FATCA compliance experts from tier 1 institutions, former government officials, and professional firms have contributed to create this detailed and robust guide, filled with numerous practical examples and several chapters written specifically for the non-legal, compliance operations officer.  No filler pages of publicly available documents and regurgitated regulations – it’s all beef.  See the Lexis website to order a copy of this 3rd edition.

 

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112 Intergovernmental Agreements and counting …. only 123 countries left out in the FATCA cold

Posted by William Byrnes on January 9, 2015


read the post at International Financial Law Prof Blog.

http://lawprofessors.typepad.com/intfinlaw/2015/01/112-intergovernmental-agreements-and-counting-only-123-countries-left-out-in-the-fatca-cold.html

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Lexis FATCA expert Haydon Perryman explains FATCA’s Impact for 2015

Posted by William Byrnes on January 8, 2015


Lexis Guide to FATCA Compliance – 2015 Edition Out Soon

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

free download of 2014 Edition chapter at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

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US Automatic Exchange of Bank Information to 86 Foreign Countries in 2015

Posted by William Byrnes on January 7, 2015


See full post at International Financial Law Prof Blog.

This revenue procedure lists the countries with which the Treasury Department and the IRS have determined that it is appropriate to have an automatic exchange relationship requiring the reporting of certain deposit interest paid to nonresident alien individuals on or after January 1, 2013. Section 1.6049-4(b)(5) provides that in the case of interest aggregating $10 or more paid to a nonresident alien individual the payor is required to make an information return on Form 1042-S for the calendar year in which the interest is paid.   See the list at International Financial Law Prof Blog.

 

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FATCA GIIN January 2015 FFI Registration Analysis … by the numbers

Posted by William Byrnes on January 5, 2015


d27f6-6a00d8341bfae553ef01b7c6eb77bd970b-piThe IRS published its first FATCA GIIN list of 2015 (on New Years Day!) a list of “approved FFIs” i.e. a list of those who have registered on the IRS FATCA portal by December 23, 2014.  FATCA’s 30% withholding regime on “withholdable payments” for non-IGA countries has applied since July 1, 2014.  But since New Years Day this FATCA (Chapter 4) withholding also applies to IGA countries’ FFIs that do not supply a GIIN upon the proper W8 (or ‘equivalent’) certification documentation.

read the full analysis of the numbers at International Financial Law Prof Blog:

http://lawprofessors.typepad.com/intfinlaw/2015/01/fatca-giin-january-2015-ffi-registration-analysis-by-the-numbers-.html

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IRS Provides Last Minute FATCA Extension for QIs, WPs and WTs

Posted by William Byrnes on December 30, 2014


Qualified Intermediary (QI) Agreement, Withholding Foreign Partnership (WP) Agreement, and Withholding Foreign Trust (WT) Agreement

Treasury-Dept.-Seal-of-the-IRSExtension of Time for QIs, WPs, and WTs to Apply Certain Requirements of the Joint Account Option under the QI Agreement, the WP Agreement, or the WT Agreement.This email applies to certain entities that apply to enter into or have entered into the Qualified Intermediary (QI) Agreement published in Revenue Procedure 2014-39, 2014-29 I.R.B. 151, and certain entities that apply to enter into or have entered into the Withholding Foreign Partnership Agreement or Withholding Foreign Trust Agreement, published in Revenue Procedure 2014-47, 2014-35 I.R.B. 393.

Section 4.05 of the QI Agreement provides the requirements for a QI that applies the joint account option to a partnership or trust.  Section 9.01 of the WP Agreement and WT Agreement provides the requirements for a WP or WT that applies the joint account option to a partnership or trust.

The IRS provided Notice that Section 4.05 of the QI Agreement and Section 9.01 of the WP Agreement and WT Agreement are modified to include the following with respect to a QI’s, WP’s, or WT’s application of the joint account option:

• For the period beginning on the effective date of the QI Agreement, and ending June 30, 2015, a QI that has entered into an agreement under section 4A.01 of the former QI Agreement (see Revenue Procedure 2003-64, 2003-2 C.B. 306, adding section 4A to the former QI agreement (published in Revenue Procedure 2000-12, 2000-1 C.B. 387), as amended by Revenue Procedure 2004-21, 2004-1 C.B. 702) with a partnership or trust to apply the joint account option before June 30, 2014, may continue to document the account consistent with section 4A.01 of the former QI Agreement.

• For the period beginning on the effective date of the WP Agreement or WT Agreement, and ending June 30, 2015, a WP or WT that has entered into an agreement under section 10.01 of the former WP Agreement or WT Agreement (published in Revenue Procedure 2003-64 (as amended by Revenue Procedure 2004-21)) with a partnership or trust to apply the joint account option before June 30, 2014, may continue to document the account consistent with section 10.01 of the former WP Agreement or WT Agreement.

• Notwithstanding the prior statements, a QI, WP, or WT is required to withhold under chapter 4 with respect to a partnership or trust to which it has applied the joint account option to the extent required under the QI, WP, or WT Agreement (for example, a QI, WP, or WT must withhold if it has actual knowledge that the partnership or trust is a nonparticipating FFI).,

—>> Free download for Lexis Guide to FATCA Compliance   <<—-

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IRS Releases FATCA Q&A for IGA FFIs Registration

Posted by William Byrnes on December 24, 2014


d27f6-6a00d8341bfae553ef01b7c6eb77bd970b-piIGA Question 8: Announcement 2014-38 provides that a jurisdiction that is treated as if it has an IGA in effect, but that has not yet signed an IGA, retains such status beyond December 31, 2014, provided that the jurisdiction continues to demonstrate firm resolve to sign the IGA that was agreed in substance.  Given this additional time to sign the IGA, does a reporting Model 1 FFI in such a jurisdiction need to register and obtain a GIIN before January 1, 2015?

Announcement 2014-38 does not change the requirement in the chapter 4 regulations that for payments made on or after January 1, 2015, in order for withholding not to apply, a withholding agent may treat a reporting Model 1 FFI as a registered deemed-compliant FFI only if the withholding agent has a withholding certificate identifying the payee as a registered deemed-compliant FFI and the withholding certificate contains a GIIN for the payee that is verified in the manner described in those regulations.  Thus, to avoid withholding on certain payments made on or after January 1, 2015, a reporting Model 1 FFI should register and obtain a GIIN to properly certify its status to a withholding agent required to document the FFI for chapter 4 purposes.   A reporting Model 1 FFI that has registered but not yet obtained a GIIN should indicate to its withholding agent that its GIIN is “applied for,” and in such case, the withholding agent will have 90 days from the date it receives the Form W-8 to obtain a GIIN and to verify the accuracy of the GIIN against the published IRS FII list before it has reason to know that the payee is not a registered deemed-compliant FFI.

Announcement 2014-38 similarly does not change the timing of any other due diligence and reporting requirements in the chapter 4 regulations.

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Brasil e FATCA – troca de informações fiscais entre Brasil e Estados Unidos

Posted by William Byrnes on December 18, 2014


A Academia Tributária promove nesta sexta (19), às 10 horas, na OAB/SC, o curso Brasil e FATCA: troca de informações fiscais entre Brasil e Estados Unidos. O curso será nas dependências da Escola Superior da Advocacia.

O palestrante será do professor William Byrnes, dos Estados Unidos, autor de mais de 1.000 artigos publicados na área tributária.

See OAB/SC

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IRS Revises FATCA Form 8966 Instructions and IDES for Tax Information Sharing Guide

Posted by William Byrnes on December 18, 2014


1. IRS Posts Update to the Instructions for Form 8966 For 2014

9dc30-6a00d8341bfae553ef01bb07b43355970d-piThe IRS has posted an Update to the Instructions for Form 8966 for 2014 to the FATCA web page:

This update supplements the Instructions for Form 8966 to correct and clarify certain references to the reporting requirements of participating FFIs for the 2014 year, including to reflect a correcting amendment to section 1.1471-4(d)(7)(iv)(B) of the temporary chapter 4 regulations (TD 9657).

http://www.irs.gov/Businesses/Corporations/Update-to-the-Instructions-for-Form-8966-For-2014

2. New! IDES User Guide (Draft Version)

A draft version of the International Data Exchange Services (“IDES”) User Guide is now available. The current draft discusses data preparation procedures and reporting for FIs and for foreign governments to transmit the tax information necessary to comply with FATCA.

In the upcoming weeks, IDES will post frequent updates and a final version of the IDES User Guide will be available in early January 2015.

http://www.irs.gov/pub/fatca/P%205190_IDES%20User%20Guide_v1_DRAFT_%20.pdf

Lexis Guide to FATCA Compliance – 2015 Edition Out Soon

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.  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

free download of 2014 Edition chapter at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

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FATCA’s impact on Brazil-USA cross border activities (live seminar in Florianopolis)

Posted by William Byrnes on December 17, 2014


Brasil FATCA LectureThis Friday, December 19 at the OAB in Florianapolis – FATCA’s impact on Brazil-USA cross border activities, and the OECD’s Common Reporting Standards (“GATCA”), see link to come join the discussion.

Com o apoio da OAB/SC, Comissão de Direito Tributário, ESA, CRC e IBET-SC, lá vamos nós fechar o ano com chave de OURO!!! Tradução simultânea na palestra com o Prof. William Byrnes, bestselling author of 30 books for LexisNexis and Wolters Kluwer; Associate Dean, Graduate & Distance Education, International Tax & Financial Services; Fellowship, International Bureau of Fiscal Documentation; LL.M. Universiteit van Amsterdam. Vagas limitadíssimas para os primeiros 40 VIP guests. Corre: http://www.academiatributaria.com.br/?opcao=ver_curso&id=8

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Highlights of Final FATCA Regulations for Reporting of Specified Foreign Financial Assets

Posted by William Byrnes on December 16, 2014


IRS has today notified the posting of the final regulations, effective December 12, 2014, TD 9706, Reporting of Specified Foreign Financial Assets, and removing the temporary regulations. The regulations can be found on the FATCA – Regulations and Other Guidance page in the For Individual Taxpayers section.

The IRS addressed such issues as dual residents, valuation challenges, foreign currency, virtual currency (left for another time), retirement accounts and insurance policies.  Below are the highlights of the changes for my readers.

Dual Resident Taxpayers

A comment recommended an exemption from the section 6038D reporting requirements be included for an individual who is a dual resident taxpayer and who, pursuant to a provision of a treaty that provides for resolution of conflicting claims of residence by the United States and the treaty partner, claims to be treated as a resident of the treaty partner.  In such a case, a dual resident taxpayer may claim a treaty benefit as a resident of the treaty partner and will be taxed as a nonresident for U.S. tax purposes for the taxable year (or portion of the taxable year) that the individual is treated as a nonresident.

The final rule adopts this recommendation for a dual resident taxpayer who determines his or her U.S. tax liability as if he or she were a nonresident alien and claims a treaty benefit as a nonresident of the United States as provided in § 301.7701(b)–7 by timely filing a Form 1040NR, ‘‘Nonresident Alien Income Tax Return,’’ (or such other appropriate form under that section) and attaching a Form 8833, ‘‘Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b).’’ The Treasury Department and the IRS have concluded that reporting under section 6038D is closely associated with the determination of an individual’s income tax liability.

Because the taxpayer’s filing of a Form 8833 with his or her Form 1040NR (or other appropriate form) will permit the IRS to identify individuals in this category and take follow-up tax enforcement actions when considered appropriate, reporting on Form 8938, “Statement of Specified Foreign Financial Assets,’’ is not essential to effective IRS tax enforcement efforts relating to this category of U.S. residents.

Individuals Resident in the United States Under Non-Immigrant Visas

A number of comments requested an exemption from the section 6038D reporting requirements for foreign executives and employees resident in the United States under non-immigrant H, L, or E visas. The final rule does not adopt this recommendation. Because all U.S. residents are taxable on worldwide income, excluding categories of residents from the scope of section 6038D reporting is not consistent with the purposes for which the provision was enacted.

Persons That Do Not Owe U.S. Tax for the Taxable Year

The final rule does not adopt any change.  If the law requires the filing of a tax return, however, information reported on a Form 8938 concerning the taxpayer’s specified foreign financial assets is an important component of that return, even if no tax liability is shown. Requiring this filing will aid the IRS in devising effective enforcement programs with respect to such returns.

Assets Held by a Disregarded Entity

A number of comments requested clarification of the section 6038D reporting requirements with respect to specified foreign financial assets held by an entity disregarded as an entity separate from its owner under § 301.7701–2 of this chapter (a disregarded entity). In response to these requests, and consistent with instructions to Form 8938, the final rule provides in § 1.6038D–2(b)(4)(iii) that a specified person that owns a foreign or domestic entity that is a disregarded entity is treated as having an interest in any specified foreign financial assets held by the disregarded entity.

As a result, a specified person that owns a disregarded entity (whether domestic or foreign) that, in turn, owns specified foreign financial assets must include the value of those assets in determining whether the specified person meets the reporting thresholds in § 1.6038D–2(a) and, if so, must report such assets on Form 8938.

Jointly Owned Assets (§ 1.6038D–2(c))

A number of comments requested clarification of aspects of the rules in § 1.6038D–2(c) and (d) relating to joint owners of a specified foreign financial asset. These comments have been adopted.

Specifically, the final rule clarifies that each of the joint owners of a specified foreign financial asset who are not married to each other must include the full value of the asset (rather than only the value of the specified person’s interest in the asset) in determining whether the aggregate value of such specified individual’s specified foreign financial assets exceeds the applicable reporting thresholds, and each joint owner must report the full value of the asset on his or her Form 8938.

In addition, the final rule clarifies that, in the case of joint owners who are married to each other and file separate returns, each joint owner of a specified foreign financial asset must report the full value of the asset (rather than only the value of the specified person’s interest in the asset) on the individual’s Form 8938, even if both spouses are specified individuals and only one-half of the value of the asset is considered in determining the applicable reporting thresholds under § 1.6038D–2(c)(3)(i).

Retirement and Pension Accounts and Certain Non-Retirement Savings Accounts

These final regulations modify the definition of a financial account for purposes of section 6038D in order to require consistent reporting under section 6038D with respect to retirement and pension accounts and certain non- retirement savings accounts regardless of whether the account is maintained in a jurisdiction treated as having in effect a Model 1 IGA or Model 2 IGA. For financial accounts that are maintained by a foreign financial institution that is not located in a jurisdiction treated as having in effect a Model 1 IGA or Model 2 IGA, the definition of a financial account in the final rule continues to include the retirement and pension accounts and non-retirement savings accounts described in § 1.1471–5(b)(2)(i), consistent with the section 6038D coordination rule in that section.

Reporting on Both FinCEN Form 114 and Form 8938

A number of comments recommended that a foreign account reported on FinCEN Form 114, ‘‘Report of Foreign Bank and Financial Accounts,’’ (formerly Form TD F 90–22.1, ‘‘Report of Foreign Bank and Financial Accounts’’) (an FBAR), should not be required to be reported on Form 8938.  he final rule does not adopt this recommendation.

Lexis Guide to FATCA Compliance – 2015 Edition Out Soon

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.  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

free download of 2014 Edition chapter at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671

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Analysis of the 2014 FATCA GIIN Registration Lists

Posted by William Byrnes on December 2, 2014


International Financial Law Prof Blog

FATCA_rollHaydon Perryman and I have sifted through the GIIN lists of June through December.  I present Part 1 initial analysis below.  Part 2 on Thursday.

By the way, the 3rd edition of my Lexis Guide to FATCA Compliance will be out soon with substantial more analysis – 1,200 pages over 54 chapters.  Over 50 FATCA compliance experts from tier 1 institutions, former government officials, and professional firms have contributed to create this detailed and robust guide, filled with numerous practical examples and several chapters written specifically for the non-legal, compliance operations officer.  No filler pages of publicly available documents and regurgitated regulations – it’s all beef.  See the Lexis website to order a copy of this 3rd edition.

…. The November 2014 list saw a jump in registration, led by the United Kingdom, achieving a total of 116,104 FFIs and branch registrations.[6]  43 percent of all registered GIIN are from the UK and her Crown Dependencies and Overseas Territories. The final GIIN list released before submission for publication, December’s, grew by only six thousand registrations, to 122,881, of which only 6,094 were from non-IGA countries.  Such a stunted growth in FFI registration is foreboding of the remaining, significant compliance challenges. …. read the entire story at International Financial Law Prof Blog

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IRS extends FATCA IGA Signatory Deadlines Beyond January 1

Posted by William Byrnes on December 1, 2014


Announcement 2014-38  provides guidance with respect to jurisdictions that are treated as if they had a FATCA intergovernmental agreement (IGA) in effect pursuant to Announcement 2014-17, 2014-18 I.R.B. 1001, but that do not sign the IGA before December 31, 2014.

Announcement 2014-38 provides that a jurisdiction that is treated as if it had an IGA in effect, but that has not yet signed an IGA, retains such status beyond December 31, 2014, provided that the jurisdiction demonstrates firm resolve to sign the IGA as soon as possible.

After December 31, 2014, Treasury will review the list of jurisdictions having an agreement in substance on a monthly basis to assess whether it continues to be appropriate to treat such a jurisdiction as if it had an IGA in effect or whether a jurisdiction should be removed from the list.

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FATCA: An Introduction for Americans to the “Worst Law Nobody Has Ever Heard Of”: Part I #GATCA

Posted by William Byrnes on November 7, 2014


FATCA: An Introduction for Americans to the “Worst Law Nobody Has Ever Heard Of”: Part I #GATCA.

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Analysis of FATCA GIIN List (of November 1st)

Posted by William Byrnes on November 7, 2014


Hello Lexis FATCA / International Tax Subscribers,
I am just one weekend away from completing the 3rd edition of Lexis’ Guide to FATCA Compliance.  Deep into my analysis of these challenging issues, editing, cross-referencing, and amalgamation ofd27f6-6a00d8341bfae553ef01b7c6eb77bd970b-pi over 70 expert contributors analysis and perspectives (including Haydon Perryman).  All the FATCA activity this year has spawned 54 chapters of over 1,000 of legal, operational and compliance analysis.  I hope that I have been as pedantic as the previous years with catching every typo, cross reference link, footnote citation, and consistent style / grammar / punctuation.

Last month, the GIIN list included 104,344, a jump from the September list of 5,000 from 99,861 FFIs (mind you that a substantial number of these registrations are not unique, but instead represent affiliates within EAGs) – see our previous analysis links below.  It is now November.  The UK self-imposed (yet ignored) deadline to GIIN register passed October 25th.

So what happened?  read on at http://lawprofessors.typepad.com/intfinlaw/2014/11/novembers-published-fatca-giin-list-analysis.html

remember to download for free –> LexisNexis® Guide to FATCA Compliance

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