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.
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.
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:
- 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.
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: firstname.lastname@example.org
If you have a pension in UK or Ireland, and now either reside in another country, or plan to, you can transfer your pension into a QROPS, short for Qualifying Recognised Overseas Pension Schemes – and access a host of benefits.
QROPS offer some significant advantages no other type of pension scheme can.
30% Lump Sum Available
Flexible income drawdown rules
No obligation to ever buy an annuity
Avoid high tax on pension income
Consolidate pensions into one easy to manage fund
Greater investment flexibility
Currency of your choice
Retirement age of 50
Avoid further changes to UK tax and pensions legislation
There are now over three thousand QROPS available, and a myriad of different pension structures on offer.
Finding the best solution for your needs can be frustrating & time consuming, which is where I can help:
Email: email@example.com for a FREE Pension Scheme Transfer Guide and an update on the safest tax efficient jurisdictions offering high yielding income.
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
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.
The NEW Tax liability increases 41 days from now on UK pension schemes that breach the reduced LTA threshold !?
This means that over half of retirement savings could be taken away from UK held pensions because of the new Tax threshold change on April 6th, 2014.
This massive Tax charge is decided by a calculation that tests it’s value against the LTA (Life Time Allowance) to do this the income needs to be capitalised. This is achieved by multiplying the income by 20 & adding any additional PCLS (Pension Commencement Lump Sums)
DB pensions (Final Salary Scheme) exceeding £62,500 are more likely to breach the new LTA threshold!
Even more people may be caught out if the LTA threshold continues to fall even lower before retirement (Death in service is also calculated as part of LTA at 3-4 times your salary)
Do nothing may result in higher losses to your hard earned retirement money! Or find out NOW if you qualify to prevent the increased tax liability effective in 41 days & counting down.
That’s of course is if your pension fund is still around at retirement, as 97% of all UK pensions are underfunded with a widening deficit!
Some of the biggest companies in the UK have pension liabilities so large that even if the entire company was sold, it still could not honour even half their pension payments to its future retires! Did you pay into this company pension scheme & waiting for promised retirement payments? When did you last review your pension position & rules?
What are the government & companies response?
Some companies have attempted one off contributions to lower the deficit, but with pension fund investment returns lower than inflation & expenses, these efforts are short lived.
All final salary schemes are now closed to new employees, which along with lower employment opportunities reduces the number of contributors to support the increasing number of retires.
Raise retirement age!
Raise member contributions!
Raise individual pension tax liabilities!
Raise the cost of living thru inflationary monetary policies by competitive currency debasement!
Reduce pension funds investment returns thru investment restrictions & by keeping interest rates at artificially low levels in favour of debtors!
Sounds like a plan, but for who?
Future promises are already being broken on your savings that were paid into pension schemes! some people don’t have to accept this, there are preventative actions. Have you found out your position?
Get advised now! or pay the increasing costs later.
Link: Why This Harvard Economist Is Pulling All His Money From Bank Of America ?
What about in Europe ?
FT Link: Bundesbank proposes taking money from bank accounts as a contribution towards paying Euro Zone debt!
The IMF said the tax rates needed to bring down public debt in eurozone countries to pre-crisis levels would be hefty; it reckoned a rate of about 10 per cent on households with positive net wealth.
Last year, Cypriot deposit holders were forced to take losses on their bank accounts to help pay for the country’s €10bn international bailout. But those deposits were used to limit the price tag for its rescue as opposed to paying down the country’s sovereign debt load.
How about Japan ?
Link: Japan plans to use funds from dormant bank accounts
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!?
Link: FEDERAL TAKEOVER OF RETIREMENT PLANS IS COMING!
By SD Contributor AGXIIK
The surprise new tax law introduced by President Ricardo Martinelli of Panama, has just changed the Panama tax code making Panama companies of all types liable to tax on their worldwide income from now, starting on New Year’s Eve !
This will effect thousands of offshore companies, Private Interest Foundations and Trusts etc, nominee directors and public registry officials. Panama also runs a huge ship registry which will be drastically affected by worldwide taxation: most ships are owned by Panamanian companies and no ship owner will want to pay taxes on profits generated by their ships in international waters
Should alternative jurisdictions now be considered?