international tax lawyers

Foreign Accounts Tax Attorney: FATCA – Nowhere to Hide

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As a foreign accounts tax attorney, I get a lot of questions from US taxpayers with undisclosed offshore accounts with respect to what FATCA means for the purposes of global transparency. As any foreign accounts tax attorney would tell you, FATCA will and already does make a huge dent in U.S. tax non-compliance. The purpose of this article is to explain why that is the case from a perspective of a foreign accounts tax attorney.

FATCA Background

The Foreign Accounts Tax Compliance Act (FATCA) was enacted as part of the Hiring Incentives to Restore Employment Act of 2010 (“HIRE Act” or “Act”). From the perspective of a foreign accounts tax attorney, there are two major parts of FATCA that make this law so unique.

First, FATCA imposed a new set of foreign asset disclosure requirements on U.S. persons which has to be filed with a U.S. tax return: Form 8938. Second, FATCA imposes an international reporting regime of offshore accounts owned by U.S. persons. This regime is enforced through a network of FATCA implementation treaties which are negotiated between the IRS and governments of foreign jurisdictions.

Form 8938 Reporting Requirement

Form 8938 compliance is one of the most immediate concerns for a foreign accounts tax attorney. In a previous article, I detailed Form 8938 reporting requirements. For the purposes of this article, I will briefly summarize these requirements here. In general, under IRC section 6038D, disclosure is required if the aggregate value of all “specified foreign financial assets” as defined in the statute, exceeds $50,000 (compare this threshold to the FBAR requirement of $10,000). This information must be attached to the current year tax returns. This provision of FATCA is effective as of tax year 2011. Covered individuals or entities must disclose the maximum value of the asset(s) during the year, as well as other pertinent information regarding the account, stock, financial instrument, contract, interest, or related items.

Worldwide Foreign Accounts Reporting

In addition to targeting U.S. taxpayers directly with Form 8938, FATCA also establishes the framework for the worldwide reporting of US-owned foreign accounts by foreign financial institutions (the “FFI”). Through a network of FATCA-implementation treaties with other foreign governments, the FFIs will be (and, in some countries, already are) required to report foreign financial accounts owed by U.S. persons and impose a withholding tax on the earnings of these accounts.

In essence, as a Foreign Accounts Tax Attorney would assert, FATCA turns the FFIs into the IRS withholding and reporting agents on an unprecedented, systematic scale of the entire globe (or, at least, the participating countries which are likely to include some of the largest world economies, particularly European countries and Japan).

Cumulative Impact of FATCA Provisions on the Non-Compliant US Taxpayers

In the long term, as a Foreign Accounts Tax Attorney, I believe that FATCA has the ability to create the environment of global tax compliance with respect to undisclosed foreign accounts – probably, not 100%, but close. Of course, a lot will depend on the ability of the US government to promote FATCA implementation treaties around the globe. As a Foreign Accounts Tax Attorney, I anticipate great unwillingness of countries like China and Russia to fully participate in the Program. Nevertheless, at this point, it appears that Western Europe, Canada, Australia and Japan are likely join the global web of FATCA enforcement. I predict that special pressure may be applied to certain Central American countries, Singapore and the Caribbean countries to enroll them into FATCA compliance as soon as possible.

For non-compliant US taxpayers, this means that it is time to consider the impact of global FATCA enforcement as well as learn from the lessons of the Program for Swiss Banks. This means that the voluntary disclosure options should be considered as soon as possible to avoid dire consequences later. This type of analysis should be undertaken by an experienced Foreign Accounts Tax Attorney.

Contact Sherayzen Law Office for Help with the Voluntary Disclosure of the Offshore Accounts

If you have undisclosed offshore accounts, contact Sherayzen Law Office for help with your voluntary disclosure as soon as possible. Our experienced Foreign Accounts Tax law firm will thoroughly analyze your case, identify your voluntary disclosure options, prepare all of the necessary legal documents and tax forms, file your voluntary disclosure package and rigorously defend your case during the IRS negotiations.

OVDP Lawyers Little Rock: Raiffeisen and Postfinance Join Program for Swiss Banks

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On December 13, 2013, two Swiss Banks, Raiffeisen and Postfinance, joined the growing number of Swiss Banks who announced their participation in the The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”) initiated by the U.S. Department of Justice (“DOJ”) on August 29, 2013 – an event long anticipated by many OVDP lawyers, including the OVDP lawyers Little Rock. These news further confirm the precarious situation of the U.S. taxpayers with undisclosed foreign accounts in Switzerland.

OVDP Lawyers Little Rock: The Program

The DOJ, in cooperation with the Swiss government, instituted the Program at the end of August of 2013. I already described the Program in detail in another article; for the purpose of the present writing, it is sufficient to state that the Program is essentially a voluntary disclosure program for Swiss Banks, not that dissimilar from the OVDP (the Offshore Voluntary Disclosure Program) currently available to U.S. taxpayers. Essentially, in return for turning over very detailed information about their cross-border operations and U.S. accountholders with accounts over $50,000 (going back to August 1, 2008), the banks receive either a Non-Prosecution Letter or a Non-Target Letter which basically promises that the U.S. government is not going to criminally prosecute or target the participating banks. As in the OVDP, the Program excludes banks currently under the DOJ investigation from participating in the Program. Another similar with the OVDP feature – category 2 banks will pay a hefty penalty.

OVDP Lawyers Little Rock: Why the Joining of Raiffeisen and PostFinance Significant

Size matters, and this why the cooperation of Raiffeisen and PostFinance is important. Raiffeisen is the third largest bank in Switzerlan. Postfinance, is the banking arm of the Swiss state-owned postal services company and the fifth-biggest retail financial institution in Switzerland.

OVDP Lawyers Little Rock: Growing Number of Swiss Banks Join the Program

A total of seven banks (among them: St. Galler Kantonalbank, Valiant Holding, Berner Kantonalbank and Vontobel Holding AG) have now come forward to say that they are participating in the Program. Most of them will participate as a Category 2 bank while the rest intend to participate as a Category 3 bank. PostFinance will be participating in the Program as a Category 2 bank, while Raiffeisen said that it is likely that it will register as a Category 3 bank (even though, the bank did not rule the possibility that some of the its U.S. clients may have been non-compliant with U.S. tax laws). It seems that Vontobel is the only other bank that adopted this position.

These seven banks, however, constitute but a tiny part of the total number of banks who are likely to participate in the Program. While the total number of banks varies, it is expected that about 100 banks are expected to enter the Program by December 31, 2013, deadline.

The DOJ strongly encourages Swiss Banks to participate in the Program and promises tough action with respect to non-participating Banks. “Banks that facilitated U.S. tax evasion but do not come forward by the December 31 deadline bear significant risks that information provided by others may cause the bank to be targeted and prosecuted,” said Assistant Attorney General Kathryn Keneally.

Side Effect on Category 1 Banks

The Program has had a peculiar side effect on the Category 1 banks who are not eligible to participate in the Program (e.g. UBS, Credit Suisse, Julius Baer, et cetera). The cases of these banks have been frozen by the DOJ pending the resolution of the Program in the wider Swiss banking sector.

As some OVDP Lawyers Little Rock may predict, the number of banks that participate in the Program will likely affect the DOJ’s attitude toward the other banks.

Direct Effect of the Program: Non-Compliant US Taxpayers Should Consider Voluntary Disclosure NOW

The effect of the Program on US Taxpayers with undisclosed Swiss accounts is very direct and severe. They are quickly running out of options. If they do not consider their voluntary disclosure options at this point, they may lose the ability to participate in the IRS Offshore Voluntary Disclosure Program (“OVDP”).

Contact Sherayzen Law Office for Help with the Voluntary Disclosure of Your Swiss Financial Accounts

Given the time limitations, it is extremely important that you contact Sherayzen Law Office as soon as possible. Owner Eugene Sherayzen, an experienced offshore voluntary disclosure attorney will thoroughly analyze your case, identify the available voluntary disclosure options, prepare your voluntary disclosure package and negotiate the Closing Agreement with the IRS (for the OVDP cases).

2014 First Quarter Underpayment and Overpayment Interest Rates

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On December 9, 2013, the IRS announced that the underpayment and overpayment interest rates will remain the same for the calendar quarter beginning January 1, 2014. The rates will be:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of Revenue Ruling 2011-32. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 7, 9, 11, and 15 of Rev. Proc. 95-17, 1995-1 C.B. 561, 563, 565, and 569.

Does Location Matter? Retaining Orlando International Tax Attorney

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Retaining an international tax attorney is a very important decision. One of the frequent issues that my clients in Florida face is whether it is better to retain an international tax attorney in Orlando or in Minneapolis if you live in Orlando, Florida? If you were to search “Orlando international tax attorney”, Sherayzen Law Office, Ltd. (which is based in Minneapolis) is likely to come out on the first page together with other international tax attorneys in Orlando. The question is: should the geographical proximity of an international tax attorney play a role in the retainer decision?

The answer is “NO”! Obviously, in a case that involves a local matter, such as Florida sales tax issues, you may not have a choice but to find a local attorney. This is because local law and procedure would govern in this case, and an attorney familiar with local sales tax issues would be the best choice for handling a sales tax case. Of course, even in this case, there are exceptions because, sometimes, the unique qualities of an outside attorney are so desirable by the client that the court may accede in temporarily admitting this outside lawyer to practice just for one case.

However, if you are searching for an Orlando international tax attorney because you have undeclared offshore accounts, then the knowledge of local law and procedure are likely to be of very little value. Instead, the experience and knowledge of an attorney in his area of offshore voluntary disclosures will become the most important factors in retaining an international tax attorney.

What if you have an international tax lawyer in Orlando, do you still want to consider an attorney in Minneapolis? The answer is “yes” – for two reasons. First, international tax attorneys differ in their natural ability to identify problems and find solutions, creativity, advocacy and many other factors. Therefore, there is no reason to stay away from a better international tax attorney in Minneapolis even if there is a lawyer in Orlando. Sherayzen Law Office provides professional legal expertise in international tax law that may be more helpful to you than a local attorney in Orlando.

Second, in addition to differences in personal qualities, the experience of the international tax attorney in the area of offshore voluntary disclosures and the ability to analyze the specific subject matter of the undisclosed accounts in the broader context of the voluntary disclosure (including potential strategies that may become available due to client’s specific facts) are very important factors in retaining the attorney and should override the attorney’s particular geography.

One of the most unique features about Sherayzen Law Office is that we can handle the entire case internally – both, the legal and the accounting sides of it. Most Orlando international tax attorneys in this area of law do not do that and rely on the outside accountant to provide such additional services. The outsourcing approach has various disadvantages, including potential leak of information, lack of close coordination between both sides of the case, increased possibility of missed opportunities and absence of the unity of goal among the professionals who are preoccupied with their respective areas only. The unique business model adopted by Sherayzen Law Office is aimed to reduce and eliminate such problems.

So, the next time you search for a Orlando international tax attorney, keep these issues in mind while retaining an attorney from Minneapolis or any other city.

Contact Sherayzen Law Office for Help With International Tax Issues

If you have any international tax issues with respect to undeclared foreign financial accounts or international tax compliance in general, please contact Sherayzen Law Office for comprehensive legal and tax help.

Retaining Savannah International Tax Attorney: Location Choice

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One of the important issues that US taxpayers with undisclosed foreign accounts face is whether it is better to retain an international tax attorney in Savannah or in Minneapolis if you live in Savannah, Georgia? If you were to search “Savannah international tax attorney”, Sherayzen Law Office, Ltd. (which is based in Minneapolis) is likely to come out on the first page together with other international tax attorneys in Savannah. The question is: should the geographical proximity of an attorney play a role in the retainer decision?

The answer depends on many factors. On the one hand, if you are looking for a sales tax attorney, then you may not have a choice but to find a local attorney. This is because local law and procedure would govern in this case, and an attorney familiar with local sales tax issues would be the best choice for handling a sales tax case. Of course, even in this case, there are exceptions because, sometimes, the unique qualities of an outside attorney are so desirable by the client that the court may accede in temporarily admitting this outside lawyer to practice just for one case.

One the other end of the spectrum, if you are searching for a Savannah international tax attorney because you have undeclared offshore accounts, then the knowledge of local law and procedure are likely to be of very little value. Instead, the experience and knowledge of an attorney in his area of offshore voluntary disclosures will become the most important factors in retaining an international tax attorney.

What if you have an international tax lawyer in Savannah, do you still want to consider an attorney in Minneapolis? The answer is “yes” – for two reasons. First, international tax attorneys differ in their natural ability to identify problems and find solutions, creativity, advocacy and many other factors. Therefore, there is no reason to stay away from a better international tax attorney in Minneapolis even if there is a lawyer in Savannah.

Second, in addition to differences in personal qualities, the experience of the international tax attorney in the area of offshore voluntary disclosures and the ability to analyze the specific subject matter of the undisclosed accounts in the broader context of the voluntary disclosure (including potential strategies that may become available due to client’s specific facts) are very important factors in retaining the attorney and should override the attorney’s particular geography.

What is a fairly unique feature about Sherayzen Law Office is that we can handle the entire case internally – both, the legal and the accounting sides of it. Most Savannah international tax attorneys in this area of law do not do that and rely on the outside accountant to provide such additional services. The outsourcing approach has various disadvantages, including potential leak of information, lack of close coordination between both sides of the case, increased possibility of missed opportunities and absence of the unity of goal among the professionals who are preoccupied with their respective areas only. The approach adopted by Sherayzen Law Office is aimed to reduce and eliminate such problems.

So, the next time you search for a Savannah international tax attorney, keep these issues in mind while retaining an attorney from Minneapolis or any other city.

Contact Sherayzen Law Office for Help With International Tax Issues

If you have any international tax issues with respect to undeclared foreign financial accounts or international tax compliance in general, contact Sherayzen Law Office for comprehensive legal and tax help.