Global Tax & Compliance – FATCA: Progress Report

When Tax-News last wrote a feature on the United States Foreign Account Tax Compliance Act (FATCA) over two years ago, there were many who doubted that the US Treasury could really make this extra-territorial piece of tax legislation work.
However, as the July 1 start-date looms ever closer, FATCA is now a fact of life for financial institutions and US investors the world over, although its implementation hasn’t been without its problems. Recent FATCA developments and issues are summarised here.


FATCA: The Legislation

Signed by President Obama in March 2010 as a revenue provision to the Hiring Incentives to Restore Employment Act, FATCA is designed to tackle the non-disclosure by US citizens of taxable income and assets held in foreign accounts. Therefore, FATCA is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients, including account ownership, balances and amounts moving in and out of the accounts, will result in a requirement on US financial institutions to withhold 30 percent tax on US-source income.

Intergovernmental Agreements

To address situations where foreign law would prevent an FFI from complying with the terms of an FFI agreement, the United States Treasury Department has developed three model intergovernmental agreements (IGAs).

The Model 1 IGA requires FFIs in the foreign jurisdiction to report tax information about US account holders directly to its government, which will in turn relay that information to the US Internal Revenue Service (IRS).

The Model 1A IGA is essentially the same, except that the IRS will reciprocate with similar information about account holders from the signatory country with the partner government.

The Model 2 IGA requires FFIs to report specified information about their US accounts directly to the IRS, to the extent that the account holder consents or such reporting is otherwise legally permitted, and such direct reporting is supplemented by information exchange between governments with respect to non-consenting accounts. FFIs also report to the IRS aggregate information with respect to holders of pre-existing accounts who do not consent to have their account information reported, on the basis of which the IRS may make a “group request” to the partner jurisdiction for more specific information.

The IRS released the final text of the agreement to be entered into by FFIs to comply with FATCA in Revenue Procedure 2014-10 on December 26, 2013.

On April 2, 2014, the Treasury and the IRS announced that foreign jurisdictions that have reached agreement on the terms of IGAs under FATCA can be treated as having such agreements in effect until the end of 2014.This treatment will be available to jurisdictions that have reached agreements in substance prior to July 1, 2014, and that consent to having the status of their agreements disclosed. After December 31, 2014, only signed IGAs will be considered to be in effect.

As an increasing number of jurisdictions reach agreements in substance, the announcement provides FFIs located in these jurisdictions with the guidance they need prior to the upcoming registration deadlines.

As of June 12, 2014, 30 Model 1 and five Model 2 IGAs had been signed by the US Treasury. In addition, 34 Model 1 and 2 Model 2 IGAs had been reached in substance. The latest list can be viewed on the US Treasury website.


Of note was the IGA reached between the US Treasury and Canada. FATCA has raised a number of concerns in Canada – among both dual Canada-US citizens and Canadian financial institutions. One key concern was that the reporting obligations in respect of accounts in Canada would compel Canadian financial institutions to report information on account holders who are US residents and US citizens (including US citizens who are residents or citizens of Canada) directly to the IRS, thus potentially violating Canadian privacy laws.

However, under the IGA, while financial institutions in Canada will not report any information directly to the IRS, significant exemptions and relief have also been obtained. For example, certain accounts are exempt from FATCA and will not be reportable – including Registered Retirement Savings Plans, Registered Retirement Income Funds, Registered Disability Savings Plans, and Tax-Free Savings Accounts.

Kerry-Lynne D. Findlay, Minister of National Revenue, insisted that the IGA “is strictly a tax information-sharing agreement. This agreement will not impose any US taxes or penalties on US citizens or US residents holding accounts in Canada.”

The Investment Funds Institute of Canada (IFIC) released a statement on February 5, 2014 commending the federal government for the exemptions and relief it has secured on behalf of Canadian investors.


In June 2014, the Swiss Federal Council decided to bring the FATCA Act, together with the ordinance on disclosure obligations, into force on June 30, 2014, to ease Swiss financial institutions’ implementation of the new disclosure rules.

The Swiss parliament approved the FATCA-implementing Act in September 2013, at the same time as it approved the FATCA intergovernmental agreement between Switzerland and the US, which came into force on June 2, 2014, through an exchange of notes.

The FATCA agreement simplifies matters for Swiss financial institutions in their compliance with the US FATCA, which covers deposits held on behalf of US persons. FATCA implementation in Switzerland will be facilitated by a Model Two Intergovernmental Agreement, which requires Swiss financial institutions to disclose account details directly to the US tax authority with the consent of the US clients concerned. The US will have to request data on any recalcitrant clients through the normal administrative assistance channels.


Also of note is the part that FATCA is playing in the diplomatic tensions between the United States and Russia over the situation in Ukraine.

On April 29, 2014, the Chairman of the United States Senate Permanent Subcommittee on Investigations, Carl Levin, (D – Michigan) and its Ranking Member, John McCain (R – Arizona), wrote to Treasury Secretary Jack Lew urging the United States Administration to refrain from restarting negotiations with Russia on compliance with FATCA.

“We should not be negotiating with the Russians to help them avoid FATCA’s sanctions at a time when Russian forces are threatening and continuing to destabilize Ukraine,” they wrote.

Levin and McCain concluded that “refraining from negotiations for Russian banks to avoid the 30 percent FATCA penalty would place financial pressure upon Russia, and help reinforce diplomatic efforts to avoid military action.”

Regulations, Timetable and Compliance “Transition”

Final regulations for the implementation of FATCA were issued by the US Treasury and IRS in January 1, 2013. From August 2013, FFIs have been permitted to use an on-line portal for FATCA registration. Under current timelines, FFIs must fulfil their due diligence and withholding requirements to comply with FATCA by July 2014 (a deadline extended by six months) ready for the first reports to reach the IRS by March 31, 2015, regarding accounts maintained during 2014.

A package of proposed and temporary regulations released on February 20, 2014, makes additions and clarifications to the previously-issued FATCA regulations, and also provides guidance to coordinate FATCA rules with pre-existing due diligence, reporting, and withholding requirements under other provisions of the US tax code. The new regulations contain over fifty amendments and clarifications to the FATCA regulations issued in January 2013, “regarding ways to further reduce burdens consistent with the compliance objectives of the statute.”

Guidance and key amendments provide for: a framework to allow certain entities to provide information on US account holders directly to the IRS, rather than through a withholding agent; the treatment of certain special-purpose debt securitization vehicles; the treatment of disregarded entities as branches of FFIs; the definition of an expanded affiliated group; and transitional rules for collateral arrangements prior to 2017.

However, in May 2014, the IRS announced that calendar years 2014 and 2015 will be regarded by the agency as an enforcement and administration “transitional period” with respect to the implementation and enforcement of FATCA.

It is still intended that FATCA will go into operation on July 1 this year, but, with regard to its reporting, due diligence and withholding provisions, and so as to “facilitate an orderly transition,” the IRS will refrain from rigorously enforcing many of its requirements this year and next, as long as FFIs are making a “good-faith” effort to achieve compliance.

The Notice states that “the IRS will take into account whether a withholding agent has made reasonable efforts during the transition period to modify its account opening practices and procedures to document the status of payees,” and the IRS “will consider the good faith efforts of a participating FFI, registered deemed-compliant FFI, or limited FFI to identify and facilitate the registration of each other member of its expanded affiliated group, as required for purposes of satisfying the expanded affiliated group requirement.”

However, it was also noted that “an entity that has not made good faith efforts to comply with the new requirements will not be given any relief from IRS enforcement during the transition period.

Compliance Systems (Convey) and Baker & McKenzie (B&M) have said that the May 2 Notice (2014-33) from the United States Treasury Department should be regarded as facilitating implementation of FATCA by FFIs over the transition period, and not as a delay to its effective dates.

Commenting on the Notice’s reception, Jeff Cronin, Convey’s vice president of product strategy, said: “Many financial institutions and other FATCA-impacted organizations are under the impression that FATCA is delayed for another year. However, this is not the case. FATCA reporting obligations are still in place for this year and penalties could be assessed for organizations that are unable to demonstrate positive progress on their FATCA reporting obligations.”

Around 77,000 banks and other FFIs have already registered with the United States and received a global intermediary identification number (GIIN), to comply with FATCA, as shown in the first list published by the IRS on June 2, 2014.

FATCA Prompts US Exodus?

Describing the recent jump in renunciations of US citizenship as an exodus might be stretching it somewhat. But the marked increase in the number of US passports being handed in has undeniably coincided with a rise in tax administration burdens on US taxpayers at home and abroad and an erosion of individual privacy.

In addition to FATCA, individuals are still required to file the Report of Foreign Bank and Financial Accounts if they have a financial interest in or signature authority over financial accounts, including bank, securities, or other types of accounts, in a foreign country, and if the aggregate value of the financial accounts exceeds USD10,000 at any time during the calendar year.

According to Treasury Department statistics published in the Federal Register, 1001 United States taxpayers gave up their passports or their green cards in the first quarter of 2014, an increase of 47.4 percent over the 679 individuals that did so in the first quarter of last year. This figure was only surpassed by the 1,130 passports given up in the third quarter of 2013.

The number of people renouncing US citizenship is expected to grow to a new record level this year, above the 2,999 level in 2013.

In his International Tax Blog, Andrew Mitchel, a tax lawyer from Centerbrook, Connecticut, put the rise in expatriations down to the US ‘worldwide’ tax code, which subjects all of an individual’s earnings to US taxation.

Nevertheless, more than three-quarters of American expats and green-card holders who have taken out a supplementary overseas pension contract reported in a recent poll that they are “satisfied” to remain a US citizen despite the incoming FATCA rules.

Nigel Green, founder and chief executive of DeVere Group, said: “The Treasury Department’s figures seem to highlight a clear correlation between the increase in expatriations and growing awareness among Americans of FATCA’s highly contentious, burdensome and expensive requirements.”

“The official statistics make for depressing reading. It is our experience that Americans, quite rightly, are loath to give up their US passports – they don’t want to sever these ties, but do so as they feel there’s no viable alternative.”

He continued: “Against this backdrop of soaring US passport relinquishments, it is extremely encouraging that the overwhelming majority of those we polled who have taken out an additional overseas pension contract… told us they were ‘satisfied with the action taken and that ‘they would no longer consider giving up US citizenship.'”

US Clients Shunned

Anecdotal evidence suggests that FFIs are attempting to reduce the administrative burden associated with FATCA by simply refusing to have anything to do with US clients. In the case of Russia’s VTB this definitely appears to be the case.

With Russia unlikely to be able to conclude a FATCA IGA with the United States in the foreseeable future, and subject to the country’s current law on tax information exchange, VTB has become the first Russian bank to disclose that it is reducing its services to American clients.

While Russian FFIs (except for those that are already the subject of US sanctions) have still been able to register with the Internal Revenue Service (IRS), it is also apparent that, unless there is a change in Russian legal provisions, they will not be able to share information directly with the IRS or to withhold tax.

In that situation, it has been disclosed by VTB, Russia’s second largest banking group with around 2,000 US clients, that, while it has registered with the IRS and is ready to comply with FATCA requirements, it has also ceased to deal with new, and will gradually wind down its operations with existing, American clients.

In June 2014, the Heritage Foundation issued a report to demonstrate how the FATCA is hurting Americans living abroad, and has recommended that it should be reformed. In particular, Heritage noted that FATCA is burdening Americans living overseas with “enormous financial and legal burdens” through increased compliance costs and denials of service from foreign banks that do not want to have to deal with the law.

Heritage pointed out that “FATCA granted the Internal Revenue Service a new level of intrusiveness into the lives of Americans. … Under the legislation, the IRS is granted enhanced regulatory power in determining, based on its judgment, whether Americans with these accounts have wrongfully evaded US taxes.”

“FATCA’s costly IRS reporting requirements and its significant legal and financial risks make it unprofitable and arduous for foreign financial companies to serve Americans,” Heritage confirmed, and many FFIs have “adopted another strategy for avoiding FATCA: simply denying service to American customers. Some institutions have already closed the pre-existing accounts of their American clients, (and) lack of access to financial services has made it extremely difficult for Americans living and working abroad.”

Opposition To FATCA and Legal Issues

The winter meeting of the United States Republican Party’s National Committee (RNC) in Washington approved a resolution calling for the repeal of FATCA. It was a move applauded by the Center for Freedom and Prosperity, which has argued that “FATCA will fail to achieve its stated goal of significantly reducing tax evasion, is straining foreign relations thanks to the extralegal burdens placed on foreign financial institutions, is severely impacting law-abiding Americans living and working overseas, will harm the US economy by driving investment to more hospitable jurisdictions.”

Last year, the website,, publicised a letter from Bill Posey (R – Florida), a member of the House of Representatives Financial Services Committee, to the Treasury Secretary Jack Lew warning that the United States Congress is extremely unlikely to approve the reciprocal tax information exchange contemplated within FATCA.

Posey’s letter reminds Lew that his department would need new statutory authority enacted by Congress to fulfill its side of the IGAs, and confirms his introduction of a bill into the House of Representatives to prevent the Treasury Secretary from expanding US bank reporting requirements with respect to interest on deposits paid to nonresident aliens.

Without this new authority, Treasury cannot deliver on the IGAs’ promises of equivalent levels of reciprocal automatic exchange, which, apart from data privacy concerns, Posey considers, in the letter, would also “impose costly compliance costs” on US financial institutions, and “discourage investment in the US.”

“It is clear,” Posey concludes in the letter, “that FATCA must be either substantially amended or repealed, and replaced with a cooperative scheme that replaces actual tax evasion without harming the innocent. … I believe a moratorium on FATCA enforcement and negotiation of additional IGAs is in order.”

A bill has already been introduced into the Senate by Rand Paul (R – Kentucky) to repeal the majority of FATCA. On introducing the bill, Paul had noted that “any law enforcement benefits have been vastly outweighed by the deleterious effects of FATCA on economic growth and the financial privacy of Americans,” and that “the implementation of FATCA has allowed the Treasury to make independent decisions with respect to the privacy of US citizens.”

However, while the Democrats continue to control the Senate, and while President Obama remains in the White House, any legislative attempts to overturn FATCA are likely to fail.

– See source link: FATCA: A Progress Report

new Offshore Voluntary Disclosure Program (OVDP) announced with potential 50% penalty

new Offshore Voluntary Disclosure Program (OVDP) announced with potential 50% penalty.


The crucial implications of FATCA for U.S. Citizens in Hong Kong & Globally including US Air Space!

Cathay to withhold US pilots’ wages for taxes. 

Airline says new laws are forcing it to hand over 30 per cent of salaries to American authorities
Cathay Pacific Airways is to start withholding about 30 per cent of its American pilots’ salary every month and pass the money to the US tax authorities together with the pilots’ personal information this year.

“The US Internal Revenue Service is actively seeking airlines flying into the US to ensure they are fully compliant with all US income tax requirements,” Cathay said. “As an international airline flying into the US, we are working with the IRS on this compliance.”

Yip, an expert on FATCA, said that if Cathay did not comply, the US tax authorities would withhold 30 per cent of its US-source income.

Cathay will start withholding tax from the second quarter of the year.

Cathay will start withholding tax from the second quarter of the year.

A recently signed tax information sharing agreement between the Hong Kong and U.S. governments is an important first step towards a formal, comprehensive intergovernmental agreement (IGA) under the U.S. Foreign Account Tax Compliance Act ( FATCA), said lawyers.

FATCA requires U.S. persons, including those living overseas, to report details of their financial accounts held in other jurisdictions to U.S. tax authorities.
Additionally, foreign financial institutions (FFIs) must report the financial information of their U.S. clients to the Internal Revenue Service (IRS) or face steep penalties.

Last July, the Hong Kong Legislative Council moved to enable Hong Kong to enter into stand-alone Tax Information Exchange Agreements and, more importantly for U.S. persons who have financial accounts there, to sign an “intergovernmental agreement” (IGA) with the U.S. for implementation of the Foreign Account Tax Compliance Act (FATCA).


FATCA reaches U.S. citizens or residents and entities, such as a corporation or a partnership, in which a U.S. person owns more than a 10% interest.

Beyond the obvious, the reportable accounts include those held in trusts, insurance policies, retirement and stock option plans, and other related foreign structures.

The implications of FATCA, and in particular its withholding and reporting regimes, are wide-ranging for financial institutions, investment entities, and many other global organisations.

— reporting and payment of tax on worldwide income, including investment income earned on financial accounts located outside the U.S.

— disclosure of foreign accounts on tax returns and “FBAR” forms, and of foreign assets on the new Form 8938

— reporting of gifts or bequests from non-U.S. sources, and distributions from and relationships with foreign trusts, as well as interests and certain transactions with foreign corporations and partnerships.

The failure to comply with these requirements can have significant, even potentially catastrophic consequences, including potential criminal prosecution for willful violations and substantial civil money penalties.

A willful FBAR violation can result in a penalty of 50% of the balance of any unreported account(s) per year, and the IRS is increasingly aggressive about this penalty.
Even non-willful conduct can result in substantial monetary sanctions, and the assessment of tax and interest.

– See more at:

Who is impacted?

Foreign financial institutions, including Hong Kong based financial institutions and Hong Kong branches of international financial institutions, are all subject to the impending FATCA regime.

Equally impacted are all residents in Hong Kong with U.S. citizenship or U.S. residency status, as the FATCA rules will require compliant financial institutions to disclose their account information to the Internal Revenue Service (IRS).
Additionally, certain non-U.S. account holders will be required to comply with requests from their financial institutions for additional documentation in order to avoid being subject to the 30 percent withholding tax.

Under FATCA, “Foreign financial institutions” (FFIs) include:

  • Banks
  • Private equity funds
  • Hedge funds
  • Institutional investment funds
  • Retirement funds & trusts
  • Insurance companies
  • Securities brokers and dealers

In essence, any non-U.S. organisation that holds, or manages customers’ money is considered an FFI subject to FATCA, irrespective of where it is headquartered or whether or not the shareholding structure is American.

What effect will FATCA have on your business?

Organisations will need to rapidly determine the potential business implications of FATCA and define their compliance strategy accordingly.

Executives should make it a priority to increase their organisation’s FATCA knowledge.

Scariest Tax Form? Skip It, and IRS Can Audit Forever

Are you a U.S citizen or resident who is an officer or director of a foreign corporation ?
Do you have a company that holds a foreign bank account ?

When a U.S. shareholder holds more than 50 percent of the vote or value of a foreign corporation, the company is a controlled foreign corporation or CFC.

A U.S. shareholder is a U.S. person who owns 10 percent or more of the foreign corporation’s total voting power.

1040 form

That triggers reporting, including filing an annual IRS Form 5471. It is an understatement to say this is an important form. Failing to file it means penalties, generally $10,000 per form. A separate penalty can apply to each Form 5471 filed late, and to each Form 5471 that is incomplete or inaccurate.

What’s more, this penalty can apply even if no tax is due on the return. That seems harsh, but the next rule—about the statute of limitations—is even more surprising. If you have a CFC but fail to file a required Form 5471, your tax return remains open for audit indefinitely. Normally, the statute expires after three or six years, depending on the issue and its magnitude.

This statutory override of the normal statute of limitations is sweeping. The IRS not only has an indefinite period to examine and assess taxes on items relating to the missing Form 5471. In fact, the IRS can make any adjustments to the entire tax return with no expiration until the required Form 5471 is filed. You might think of a Form 5471 like the signature on your return. Without it, it really isn’t a return.

And don’t assume that you have no issue if there is no CFC because U.S. shareholders don’t own over 50%. In fact, Forms 5471 are not only required of U.S. shareholders in CFCs. They are also required when a U.S. shareholder acquires stock that results in 10 percent ownership in any foreign company.

The harsh statute of limitation rule for Form 5471 was the result of the HIRE Act passed March 18, 2010. Not coincidentally, this was the same law that brought us FATCA, the Foreign Account Tax Compliance Act. Bottom line: be careful with CFCs and with Form 5471. The possibility that a statute will remain open can ruin more than your day.

Whats New: Filers of Form 5471 may be subject to net investment income tax on income from CFCs controlled foreign corporations.

This problem is commonly paired with other failings, such as the filing of foreign bank account forms known as FBARs. That means the potential for large civil penalties and perhaps even criminal liability can be palpable.

This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
Forbes Article Source:

The Plan to Trap Your Money

The $3.5 Billion in Taxes the IRS is Ignoring

I often think the Internal Revenue Service was designed to strike fear into the hearts of Americans — the government’s own boogie man. And what better way to scare people who have been careful enough to protect their wealth from America’s downward spiral by putting it on those of us smart enough to stock our wealth outside of U.S. shores and financial institutions.

The government’s latest attempt at currency controls comes in the form of the Foreign Account Tax Compliance Act (FATCA), which is set to take effect on July 1. By forcing banks across the globe to report on any American account holders, the IRS will now have the ability it wants to go after wealth held overseas. But the real value of FACTA will be to make Americans unattractive clients … giving us no way to move our money out of harm’s way.


Democratic Senator Carl Levin claims that $100 million in taxes is being evaded each year by U.S. citizens through the use of offshore accounts.

That’s a pretty figure, Senator Levin, but I’ve got a better one for you.

How about $3.5 billion in unpaid taxes from just federal employees?

Shocking, isn’t it? But it’s true.

According to the IRS, and reported by USA Today, more than 311,000 federal employees were tax delinquents in 2011, owing a total of $3.5 billion to the government.

Yes, as you can see, the best way to avoid paying taxes is to actually work for the government. And here I thought having an offshore account to protect and diversify my assets against the coming dollar collapse due to government mismanagement and asinine monetary policies was the best choice. It’s almost as if FATCA were little more than a diversion to keep you from realizing that the real money owed is held in Washington D.C.

And the icing on the cake? The pièce de résistance?

You could actually earn a bonus while not paying your taxes. A recent report from the Treasury Inspector General for Tax Administration showed that the IRS paid out discretionary awards of more than $1 million in cash bonuses and more than 10,000 hours in paid vacation time — valued at about $250,000 — was awarded to more than 1,100 IRS employees who have not paid their taxes. What’s more, five employees were given performance awards after they were disciplined for intentionally under-reporting their tax liabilities for several years, paying their taxes late and under-reporting taxes.

Last I checked, the entire purpose of the IRS was to enforce U.S. tax laws. If I had failed to pay my taxes last year, I’m pretty sure that IRS wouldn’t have handed me a cash bonus. But apparently all I really needed to do was get a job with the IRS.

An Old-Fashioned Witch Hunt

Rather than get its house in order and force its own employees to operate by the rules they are supposed to be enforcing, Washington has chosen to chase after fiscally responsible Americans who are trying to protect what they’ve worked hard to earn.

The palpable desperation in Washington to bring in funds for their reckless spending has made them indifferent to that fact that the implementation of FATCA will result in banks spending about $1 billion to ensure compliance, according to a survey by the Securities Industry and Financial Markets Association. They also seem indifferent to the fact that record numbers of Americans are giving up their citizenship not to avoid taxes but to protect their privacy and the income of their non-American spouses from FATCA. Instead these people trying to protect themselves have been labeled traitors and tax dodgers, while the real tax dodgers are living fat and sassy working for the government.

We’ve seen countries enact harsh laws in the past to keep money from leaving their borders. Just look at Iceland in 2008 when they made it illegal for their citizens to exchange their massively deflated krone for dollars or euros. Or how about Argentina’s corralito in 2001, when banks froze all assets for 12 months, allowing only small sums to be withdrawn. FATCA is proving to be a more subtle form of the exact same monetary policy, making America landlocked for investments. If the government makes it too difficult to diversify your assets in offshore accounts, the idea is that you will give up and keep them in the U.S., where they remain vulnerable to dollar collapse and economic upheaval.

There is a small hope of reform. Bills have been introduced to both the House of Representatives and to the Senate that would require federal employees to be fired if they are seriously late paying their taxes. Despite the government’s efforts to get its hands on our hard-earned wealth, keeping a portion of your money outside the U.S., while being fully compliant in all the reporting regulations is an absolute necessity so you are protected against additional government antics.

“Trust me, they’re not done yet”
By Erika Nolan, Executive Publisher of The Sovereign Society


Conclusion:  Take Action Now !

Discover how to plan your taxes & how to maximize this opportunity
Free FATCA SEMINAR at the Ritz Carlton Tokyo: June 4th at 18:45

Reserve your seat by now Email:


The FATCA Tax Hunt is for Anyone – not just the Rich!

July 2014 enter the Foreign Account Tax Compliance Act ( known as FATCA )
or put another way: Finding Americans True Capital Abroad.
imageHere are a few IRS FATCA Strategies that I have read via online sources and 20 ways the IRS will find you, shown further below;

Banking clerks & cashiers are now agents for the IRS, if they tell you that your under investigation, they can go to jail.
IRS extended authority to airport personnel with incentives for reporting & seizing US passports if viewed as non compliant, behind, or under reported taxes!
Mobile phone networks & service providers.
When you access the internet & social sites.
Online payment transactions,
Credit card services, Visa & MasterCard etc
Renew your passport or Green Card
Registrations & Licences
All PO Box addresses are assumed American owned!


All U.S. persons, green card holders, all nationalities exceeding 10% business interests in a US company as an owner, shareholder, partner, beneficiary etc, any company doing business with, providing or receiving services with a US company, or a foreign company with a US partner or US entity with more than 10% interest in the business.

FATCA requires foreign financial institutions (FFI) of broad scope — banks, stock brokers, hedge funds, pension funds, insurance companies, trusts — to report directly to the IRS all clients’ accounts owned by U.S. Citizens and U.S. persons (Green Card holders).


Starting July 1, 2014, FATCA will require FFIs to provide annual reports to the Internal Revenue Service (IRS) on the name and address of each U.S. client, as well as the largest account balance in the year and total debits and credits of any account owned by a U.S. person.

If an institution does not comply, the U.S. will impose a 30% withholding tax on all its transactions concerning U.S. securities, including the proceeds of sale of securities.


In addition, FATCA requires any foreign company not listed on a stock exchange or any foreign partnership which has 10% U.S. ownership to report to the IRS the names and tax I.D. number (TIN) of any U.S. owner.

FATCA also requires U.S. citizens and green card holders who have foreign financial assets in excess of $50,000 (higher for those who are bona-fide residents abroad) to complete a new Form 8938 to be filed with the 1040 tax return, starting with fiscal year 2011.

20 ways the IRS will catch you.


By acts that re-establish US ties

It may seem obvious, but Americans who have lived abroad for many years and not filed tax returns still sometimes do not realise that they will bring the IRS down on them like a ton of old tax records when they:

1. Register the birth of their child at a US embassy in the country where they now live, or

2. Renew a long-dormant US passport.

3. Appearing at a US airport with a non-US passport that reveals the bearer was born in the US is almost certain to set alarm bells clanging back at IRS headquarters in Washington. This is because even though they may have been full citizens of other countries for decades, Americans are not allowed to enter the US on anything but an American passport – as American-born London mayor Boris Johnson discovered (to his fury) in 2006. (Those who try, as the then-Spectator columnist discovered, will be barred by sharp-eyed border staff, who spot the place of birth in their foreign passports.)

4. When the children of Americans who left the tax system years before apply to attend US universities, their university application forms can reveal the existence and residence details of the parents that, until this point, had not been known.

5. An American who is unknown to the IRS and who notifies the US authorities of his or her presence overseas in order to begin receiving Social Security payments, and/or any other US pension entitlements, is likely to receive some considerable official interest, alongside the new monthly cheques.

6. Merely paying money into the US domestic banking system can, in some situations, call attention to a “lost” American’s existence by reactivating dormant records.

By getting married, divorcing or dying

The IRS takes an active interest in the key life events of American citizens, for the simple reason that such events can shine a spotlight on individuals who may have disappeared from its radar years before.

For example:

7. If a US parent or relative of a non-US-resident individual dies, and leaves that non-US resident money, the IRS will immediately want to see that this “income” is declared by the recipient.

8. and 9. Marriage and divorce are other rites of passage that can reveal “lost” Americans to the US authorities.

10. The action of having someone granted power of attorney on behalf of an incapacitated non-US living individual who at one time held an American passport, meanwhile, can be a giveaway.

By showing up in gov’t, tax authority exchanges

There has long been the possibility that the existence of Americans who are not living in the US and have been unknown to the authorities there for some time might become known to the IRS

11. As a result of data exchanged between the US and other governments under long-standing, existing treaties.

However, since the 2001 attacks on the US, Washington has been ramping up the amount of information it expects to receive from other countries on all people, not just Americans. The Foreign Account Tax Compliance Act is just the latest in a series of such measures.

Thus, the presence of Americans may now also be revealed to the IRS:

12. By the IRS’s foreign counterpart bodies, such as HM Revenue & Customs.

13. As a result of information supplied to it, under FATCA, from foreign banks and financial institutions.

14. As a result of information provided to it by the Serious Organised Crimes Office (SOCA), after a UK professional adviser alerted SOCA to his or her suspicions that a client might have unpaid US tax liabilities.

15. From data held by the US Treasury’s Financial Crimes Enforcement Network.

16. From data already held by the IRS, for example, provided to them through the Offshore Voluntary Disclosure Program, perhaps by other taxpayers.

17. From data stolen from banks and financial institutions and acquired by governments (as has happened a couple of times in recent years in Europe).

18. From information provided to the IRS in return for payment of a reward (the largest reported reward paid out so far having been $104m).

By participating in online activities

It is a well-known fact that the Internet is a wealth of information about people, whether they like it or not. So it is hardly surprising that the IRS may discover someone who does not live in the US is an American from the trail of information they leave online.

For example, it may obtain the fact of a “lost” American’s birth…

19. From information gathered from eBay, Google, Apple, Visa or MasterCard or another US institution that has servers located in the United States, and which hold data on US persons who live overseas.

20. From any other information in the public domain, such as LinkedIn entries listing individuals living outside the United States who the IRS records show is not filing US tax returns.

Original source link: 20 ways the IRS will catch you

15 Things You Must Do Before the 15th April Deadline

Are you a US person?
Do you know what the 15th April tax deadline means to you?
Below are 15 things that US Tax & Financial Services advises you do, or consider now to ensure you meet the 15th April deadline.

US tax compliance is something that many push to the back of their minds until the deadline is upon us. After all, it’s a time-consuming and complex process.

You’re likely to be aware of the United States’ Foreign Account Tax Compliance Act (FATCA), but did you know that Americans living abroad are given an automatic extension to file US tax returns until June?

Although expats have an automatic extension until June 15 to file and pay, interest will accrue from April 15 on any tax due. We recommend starting and completing returns early to avoid a last minute rush and possible interest or penalty charges for late filings.

2014 US Tax Deadline Is Approaching

With changes to the tax system in effect this year and the payment due date fast approaching, it’s easy to get overwhelmed, especially since preparing for your taxes always takes longer than you expect. However, it’s not too late to get your finances in order and meet that 15th April deadline.

1. Find last year’s return
This is vital, as you will need this to compare where your circumstances may have changed from what you have previously filed.


2. Apply for the Social Security number of any children born in 2013
To claim any new arrivals from the last 12 months as Dependents, they must have Social Security numbers, which you will need to apply for now


3. Did you get married in 2013 ?
First of all, congratulations! Secondly, your filing status will have changed from ‘single’ to ‘married filing separately’ or ‘married filing jointly’ and there are tax implications for this change, which you will need to understand fully before filing


4. Did you buy in a new home or sell your old one ?
If you did either of these things, the mortgage interest may be deductible or you may owe capital gains tax


5. Have you made a financial settlement through divorce ?
If you have, these may be taxable, so you will need to take professional advice before submitting your US tax payment and filing your return


6. Did you retire last year ?
If you received any lump sum pay outs or if you have a pension then you may have tax due to be paid on 15th April


7. Has there been a death in the family ?
This may also generate some unexpected tax issues. You should take professional advice to discover what steps to take to ensure you are compliant


8. Did you work in the US in 2013 ?
Even if this was just for a single day, it may mean that you are required to do a state tax return, so seek advice as soon as possible


9. Do you have an Individual Retirement Account (IRA) ?
If you do have an IRA and you are able to make a contribution before April 15th 2014, it could be offset against your 2013 taxes


10. Have you paid non US taxes between January and December 2013 ?
You will need to collate this information and declare it in your US tax return


11. Have you joined any new pensions?
If so, especially with non US pensions, there are US tax implications (what’s a PFIC?!), whether you have joined a company pension or a personal pension, so get advice about this as soon as possible


12. Contact all of your banks

You will need to review all of your bank statements and note the highest balances for you and your family, for your Foreign Bank Account Report (FBAR) – FinCEN Form 114 and Form 8938, as well as noting any related income and non-US tax paid for each account


13. Collate your W-2, 1099, K1 (if applicable) and non US payslips (if applicable)
Your W-2 is a wage and tax statement (US employment), which should be sent by your US employer and is used to report wages paid to employees and the taxes withheld. The 1099 form is typically is sent by an employer to an independent contractor or freelancer as a record of the income they have received from a particular business. However, other versions of the 1099 exist and can be used to report different types of income, such as interest, dividends and debt cancellation, to name but a few. The K1 form is a tax form issued by a partnership to report a partner’s distributed share of income. You will need these forms to determine current figures, so if they are applicable to you, ensure you have received them.

If you work abroad, your non US employer will give periodic payslips and/or annual statements with your wages and tax deductions. Aside from different currencies, many countries work to different tax dates so you’ll need to pro-rate and translate the currency for your US tax filing which is based on world wide income.


14. Check if you qualify for the new Medicare tax
At the start of the 2013 tax year, President Obama and the US Congress imposed an additional tax of 3.8% on a taxpayer’s net investment income, which includes income from interest, rents, royalties and capital gains. Thresholds apply. You will need to check how you are affected and if you owe additional tax.


15. Estimate your tax due for 2013 and make your payment
Your tax payment on April 15th should cover your tax due for 2013 and your First Estimated Payment for Federal and State tax (if applicable)


These are just a few actions to take and factors to consider as you start preparing your 2013 US tax return, but there are more than 15 things to consider in the process and you need to start thinking about them NOW.
– See more at: US Tax & Financial Services

The 401K Scheme — Government to Confiscate ?

Watch the 401K Scheme video below – Government to Confiscate ?

In these times, it is critical not to rely on government schemes as your main strategy to financial freedom! Trusting the wrong team can be expensive, hope is a week strategy, now is the time to create financial independence for the future. Planning with the right team will enhance the odds of reaching your goals.

A short video highlighting the importance of being financially aware, with the importance of working with an independent professional financial consultant whom can educate, inform & provide access to the advantaged opportunities normally out of reach as an individual investor.

ABA American Bar Association on a Case Illustrating the US Reporting Liability for Having a Foreign Trust

An example of how the IRS imposed penalties on an estate for the decedent’s, and later the executor’s, failure to properly file the Forms 3520 and 3520-A.

The IRS requires certain U.S. persons to file informational returns to report
their relationships to, and transactions with, foreign trusts. Internal Revenue
Code § 7701(a)(30). This requirement also imposes the responsibility to file
such informational trust returns on the estates of some deceased U.S. persons.
Informational returns are just that, used to report certain information, but not
to directly impose taxes.
This article specifically explores the effects of these filing requirements on the executors of the estates of U.S. decedents, while also considering the effect of the open-ended Offshore Voluntary Disclosure Program (OVDP), offered by the IRS as an option to seek resolution of prior filing mistakes or omissions.

ABA Source Link: Foreign Trusts: Form 3520 and From 3520-A—Filing Deadlines and Liability of a Decedent’s Estate




10 countries in the Europe and South America have engaged in pension theft, conversion or expropriation to fund government operations.

It is quite likely that we will see more of this theft in 2014, and before the financial crisis is over, probably from the TSP.

The brokerages will be completely compliant with these actions just like the Bail-in provisions signed by the FDIC, FED Bank of Canada and BOE, as was reported here on Silver Doctors in 2013.

Like Detroit with its complete expropriation of the $11,000,000,000 in pension plan funds, the Feds will use the $1.6 trillion in the TSP as they see fit.

They are patterning this on Poland and the NDRP. Poland recently confiscated 28 billion in Euros to reduce their country debt to 56% of the GDP.

The government simply took the funds from the private and government pension plans WITHOUT ANY COMPENSATION.

Surely that could never happen here!?

By SD Contributor AGXIIK