AICPA annual congress presentation

20
New US International Reporting Requirements AICPA PFP 12 Jan. 2011 Prof. William H. Byrnes & Prof. Stephen Polak International Tax & Financial Services Graduate Program

description

US Tax Reporting requirements for international accounts and investments

Transcript of AICPA annual congress presentation

Page 1: AICPA annual congress presentation

New US International Reporting Requirements

AICPA PFP12 Jan. 2011

Prof. William H. Byrnes &Prof. Stephen Polak

International Tax & Financial Services Graduate Program

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Compliance Topics Foreign Account Tax Compliance Act (FATCA) Qualified Intermediary Regime (before and after UBS) (QI) 1099 major change Jan 1, 2011 reporting for expenditures of $600

or more within a year with any person Report of Foreign Bank and Financial Accounts Form TD F 90-22

(FBAR) Currency Transaction Reports FINCEN Form 104 Report of International Transportation of Currency or Money

FINCEN Form 105 Patriot Act - Suspicious Activity Reports (SARS) for foreign tax

evasion … see Pasquantino v. United States (2005)

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FACTA in brief

Foreign Financial Institution (FFI) provide IRS any US persons invested in accounts outside the US

Foreign entities provide IRS any US substantial (10%) owners information (0% if invest vehicle)

All FFIs and FEs with payments from US Requires Sec. 1471(b) agreement with IRS

– (like Sec. 1441 QI agreement but more bite)

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FACTA in brief

Requires 30% w/h on all US source income including all types of sales if no agreement with IRS

Reverse onus – burden on FFI / FE to prove not USAll persons must prove to FFI / FE NOT a US person,

otherwise a US person – UBO standardFFI / FE must EDD the non-US personsJan 1, 2013 (b/c hundreds of thousands of new

FATCA agreements)

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FACTA in brief

Excluded from reporting by FFIs & FEs– Public listed companies– Individual Retirement Plans in rare situations– Banks– REIT– TEOs– ECI

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FACTA in brief

Report must contain– Name / address / TIN– Account No(s) / Balance(s)– Gross transactions (receipt/dep/payment/withdrawal)

Can elect to report like US-FI (1099s)Or w/h and close account

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FACTA in brief

Penalties– Personal liability for w/h tax (x2)– 40% of w/h accuracy related penalty– 75% of w/h if civil fraud– Lack of w/h = “uncertain tax position” FASB No. 48

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QI differences

QI differencesExpanded application of reporting

– (names + specific account in(s)/out(s))Look throughExpanded application of reporting persons Expanded application of reportable transactionsFFI cannot determine customer w/h poolsOnly approx. 5,500 QI v. 100,000s of FFIs and FEs

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FIRPTA

See IRS website http://www.irs.gov/businesses/small/international/article/0,,id=120943,00.html

Form 1099-S, Proceeds From Real Estate Transactions

Form 8288-A

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Other Survey TopicsFBARCurrency Transaction ReportsReport of International Transportation of Currency or

MoneySuspicious Activity Reports (SARs)

… see Pasquantino v. United States (2005)1099 major changeCredit card merchant 1099

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Typologies & Trends Part ISecurities

Trade Based

Counterfeit Trade

Sports Clubs (and Equestrian)

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Typologies & Trends Part IIChild Pornography & Human Trafficking

Government Contracting / Bribery / PEPs

Internet Based Market Systems – Amazon, E-Bay, Second-Life & World of Warcraft

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Topic II: I - Securities

If incidence of Opaqueness relative to Transparency; with higher Liquidity is an indicator for Launderer, then Securities

• GEM, AIM, B®IC

• Hedge Funds

• Audit firms, banks, law firms = $100B in tax losses = $T alleged w/o business purpose and w/o risk, IMAGINE what launders can do…

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Topic II: I – Trade Based

Transfer Pricing

L.A. goods hP a USA

Dump (harm market price& higher risk detection)

Smurf purchases to avoid CTRs

Switzerland USA $31B

Russia USA $9B

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Topic II: I – Counterfeit Trade

• 2% - 7% of World Trade $200B - $650B

• CF currency

• CF goods perceived by BRIC as less harmful than drugs

This weakness in perception can allow substantial $ flows from other crimes

(B movie industry)

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Topic II: I - Equestrian

Equestrian > Hollywood Economic Impact = $25B / $100B indirect

# of Americans Involved = 7.1 Million# of Full-Time Jobs = 1.4 Million

# of Horses = 6.9 Million

Total Taxes Paid = $1.9 Billion

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Topic 2: II - Trends

• Child Pornography & Human Trafficking

• Government Contracting / Bribery / PEPs

• Internet Based Market Systems

• Amazon & E-Bay

• Second-Life (Direct) & World of Warcraft (3rd Party)

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Predictive Modeling

• Neural Networks

• Concept Mapping

• Evolutionary Programming = Genetic Algorithms

http://amlsample.googlepages.com/Securities_and_Trade_ML.html

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Contact Us for Further Details

See my daily tax and wealth management blogs –http://www.advisorfyi.com

Contact the International Tax and Financial Services graduate program http://www.tjsl.edu/

Contact me http://profwilliambyrnes.com/about-2/