aicpa annual congress presentation
DESCRIPTION
US Tax Reporting requirements for international accounts and investmentsTRANSCRIPT
New US International Reporting Requirements
AICPA PFP12 Jan. 2011
Prof. William H. Byrnes &Prof. Stephen Polak
International Tax & Financial Services Graduate Program
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)
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)
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)
FACTA in brief
Excluded from reporting by FFIs & FEs– Public listed companies– Individual Retirement Plans in rare situations– Banks– REIT– TEOs– ECI
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
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
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
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
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
Typologies & Trends Part ISecurities
Trade Based
Counterfeit Trade
Sports Clubs (and Equestrian)
Typologies & Trends Part IIChild Pornography & Human Trafficking
Government Contracting / Bribery / PEPs
Internet Based Market Systems – Amazon, E-Bay, Second-Life & World of Warcraft
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…
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
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)
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
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)
Predictive Modeling
• Neural Networks
• Concept Mapping
• Evolutionary Programming = Genetic Algorithms
http://amlsample.googlepages.com/Securities_and_Trade_ML.html
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/