taxation law services

Last Swiss Bank Program Category 2 Resolution

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On January 27, 2016, the US Department of Justice (DOJ) declared the last Swiss Bank Program Category 2 Resolution. The Swiss Bank Program was proclaimed on August 29, 2013, and constituted an unprecedented triumph of US economic might over the most formidable bank secrecy bulwark (though, already a greatly weakened one since the 2008 UBS case) which Switzerland had been for hundreds of years.

Under the Swiss Bank Program, the Swiss banks were forced to turn over a large amount of information regarding foreign accounts held by US persons, cooperate with US information requests, and, in case of category 2 banks, pay a fine. In return, the Swiss banks were provided a guarantee against US criminal prosecution in the form of non-prosecution agreements.

The Swiss Bank Program was successful, though not every eligible Swiss bank actually chose to participate in the Program. The most profitable part of the Program consisted of the Category 2 banks, which had to pay fines as a condition of their participation in the Swiss Bank Program.

The first resolution with a Category 2 bank occurred on March 30, 2015. On January 27, 2016, the last Swiss Bank Program Category 2 resolution took place after reaching a Non-Prosecution Agreement with HSZH Verwaltungs AG (HSZH).

In total, the DOJ signed Non-Prosecution Agreements with about 80 banks and collected more than $1.36 billion in Swiss Bank Penalties, including $49 million from the last Swiss Bank Program Category 2 resolution. While this amount pales in comparison with the originally-projected amounts (due to penalty mitigation), the enormous impact the Program has had on the worldwide US tax compliance and convincing foreign governments to accept FATCA render this Program an important success for the US government.

The final Swiss Bank Program Category 2 resolution marked the end of the Category 2 part of the Swiss Bank Program, but an important question remains – will we see the re-appearance of the Swiss Bank Program with Category 2 banks in another country? While the implementation of FATCA reduces the probability of a chance of another program similar to Swiss Bank Program, one cannot fully discount this possibility. It is possible that the IRS will identify another important center (such as the Cayman Islands, Hong Kong, Isle of Mann, Singapore, et cetera) of US tax non-compliance based on the information collected in the Swiss Bank Program and attack this center.

On the other hand, one can also see the appearance of a global “Swiss Bank Program” which banks of any country can enter in order to prevent US criminal prosecution.

Whatever form the future voluntary disclosure program for foreign banks will take, one can be certain that the last Swiss Bank Program Category 2 Resolution with HSZH was not the last IRS enforcement effort with respect to foreign banks.

2015 Form 8938 and FBAR Currency Conversion Rates

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Currency conversion is a critical part of preparing 2015 FBAR and Form 8938. This is why 2015 Form 8938 and FBAR Currency Conversion Rates are so important.

The 2015 Form 8938 and FBAR Currency Conversion Rates are the December 31, 2015 rates officially published by the U.S. Department of Treasury (they are called “Treasury’s Financial Management Service rates” or the “FMS rates”). Recently, the Treasury Department published the FMS rates for December 31, 2015.

The 2015 Form 8938 and FBAR Currency Conversion Rates also serve for other purposes beyond the preparation of the 2015 FBAR and Form 8938.

The instructions to both forms, the FBAR and Form 8938, require (in case of Form 8938, this is the default choice) to use the 2015 Form 8938 and FBAR Currency Conversion Rates published by the Treasury Department.

For this reason, the 2015 Form 8938 and FBAR Currency Conversion Rates are very important to international tax lawyers and international tax accountants. For your convenience, Sherayzen Law Office provides the table below of the official 2015 Form 8938 and FBAR Currency Conversion Rates (keep in mind, you still need to refer to the official website for any updates).

Country Currency Foreign Currency to $1.00
Afghanistan Afghani 67.9000
Albania Lek 125.5400
Algeria Dinar 106.8780
Angola Kwanza 145.0000
Antigua-Barbuda East Caribbean Dollar 2.7000
Argentina Peso 12.9460
Armenia Dram 484.0000
Australia Dollar 1.3680
Austria Euro 0.9190
Azerbaijan Manat 1.6200
Bahamas Dollar 1.0000
Bahrain Dinar 0.3770
Bangladesh Taka 79.0000
Barbados Dollar 2.0200
Belarus Ruble 18555.0000
Belgium Euro 0.9190
Belize Dollar 2.0000
Benin CFA Franc 602.7900
Bermuda Dollar 1.0000
Bolivia Boliviano 6.8600
Bosnia-Hercegovina Marka 1.7970
Botswana Pula 11.2360
Brazil Real 3.9590
Brunei Dollar 1.4160
Bulgaria Lev 1.7970
Burkina Faso CFA Franc 602.7900
Burma-Myanmar Kyat 1311.0000
Burundi Franc 1600.0000
Cambodia (Khmer) Riel 4103.0000
Cameroon CFA Franc 602.6800
Canada Dollar 1.3860
Cape Verde Escudo 101.2220
Cayman Islands Dollar 1.0000
Central African Republic CFA Franc 602.6800
Chad CFA Franc 602.6800
Chile Peso 709.9800
China Renminbi 6.4920
Colombia Peso 3169.2800
Comoros Franc 435.3000
Congo CFA Franc 602.6800
Congo, Dem. Rep Congolese Franc 920.0000
Costa Rica Colon 531.9400
Cote D’Ivoire CFA Franc 602.7900
Croatia Kuna 6.8200
Cuba Peso 1.0000
Cyprus Euro 0.9190
Czech Republic Koruna 24.2030
Denmark Krone 6.8560
Djibouti Franc 177.0000
Dominican Republic Peso 45.4000
Ecuador Dolares 1.0000
Egypt Pound 7.8300
El Salvador Dolares 1.0000
Equatorial Guinea CFA Franc 602.6800
Eritrea Nakfa 15.0000
Estonia Euro 0.9190
Ethiopia Birr 21.0700
Euro Zone Euro 0.9190
Fiji Dollar 2.1250
Finland Euro 0.9190
France Euro 0.9190
Gabon CFA Franc 602.6800
Gambia Dalasi 40.0000
Georgia Lari 2.4000
Germany FRG Euro 0.9190
Ghana Cedi 3.8200
Greece Euro 0.9190
Grenada East Carribean Dollar 2.7000
Guatemala Quentzel 7.6320
Guinea Franc 8004.0000
Guinea Bissau CFA Franc 602.7900
Guyana Dollar 202.0000
Haiti Gourde 56.5840
Honduras Lempira 22.3000
Hong Kong Dollar 7.7500
Hungary Forint 289.9800
Iceland Krona 129.6700
India Rupee 66.1000
Indonesia Rupiah 13550.0000
Iran Rial 29830.0000
Iraq Dinar 1166.0000
Ireland Euro 0.9190
Israel Shekel 3.8990
Italy Euro 0.9190
Jamaica Dollar 118.7000
Japan Yen 120.4200
Jerusalem Shekel 3.8990
Jordan Dinar 0.7080
Kazakhstan Tenge 339.5000
Kenya Shilling 102.2000
Korea Won 1175.9000
Kuwait Dinar 0.3030
Kyrgyzstan Som 75.5000
Laos Kip 8128.0000
Latvia Euro 0.9190
Lebanon Pound 1500.0000
Lesotho South African Rand 15.5560
Liberia Dollar 88.0000
Libya Dinar 1.3890
Lithuania Euro 0.9190
Luxembourg Euro 0.9190
Macao Mop 8.0000
Macedonia FYROM Denar 56.2900
Madagascar Aria 3196.0000
Malawi Kwacha 662.0000
Malaysia Ringgit 4.2900
Mali CFA Franc 602.7900
Malta Euro 0.9190
Marshall Islands Dollar 1.0000
Martinique Euro 0.9190
Mauritania Ouguiya 330.0000
Mauritius Rupee 35.8000
Mexico New Peso 17.3620
Micronesia Dollar 1.0000
Moldova Leu 19.6000
Mongolia Tugrik 1967.0500
Montenegro Euro 0.9190
Morocco Dirham 9.8740
Mozambique Metical 45.50000
Namibia Dollar 15.5560
Nepal Rupee 105.7500
Netherlands Euro 0.9190
Netherlands Antilles Guilder 1.7800
New Zealand Dollar 1.4610
Nicaragua Cordoba 27.8600
Niger CFA Franc 602.7900
Nigeria Naira 198.9000
Norway Krone 8.8290
Oman Rial 0.3850
Pakistan Rupee 104.7000
Palau Dollar 1.0000
Panama Balboa 1.0000
Papua New Guinea Kina 2.9410
Paraguay Guarani 5750.0000
Peru Nuevo Sol 3.3940
Philippines Peso 46.8360
Poland Zloty 3.9170
Portugal Euro 0.9190
Qatar Riyal 3.6410
Romania Leu 4.1540
Russia Ruble 73.7950
Rwanda Franc 742.3300
Sao Tome & Principe Dobras 22350.3086
Saudi Arabia Riyal 3.7500
Senegal CFA Franc 602.7900
Serbia Dinar 111.2500
Seychelles Rupee 13.0440
Sierra Leone Leone 5750.0000
Singapore Dollar 1.4160
Slovak Republic Euro 0.9190
Slovenia Euro 0.9190
Solomon Islands Dollar 8.0710
South Africa Rand 15.5560
South Sudananese Pound 18.5500
Spain Euro 0.9190
Sri Lanka Rupee 144.1500
St Lucia East Carribean Dollar 2.7000
Sudan Pound 6.6000
Suriname Guilder 4.0000
Swaziland Lilangeni 15.5560
Sweden Krona 8.4430
Switzerland Franc 0.9940
Syria Pound 219.6500
Taiwan Dollar 32.8740
Tajikistan Somoni 7.0000
Tanzania Shilling 2155.0000
Thailand Baht 36.0500
Timor-Leste Dili 1.0000
Togo CFA Franc 602.7900
Tonga Pa’anga 2.1270
Trinidad & Tobago Dollar 6.4040
Tunisia Dinar 2.0330
Turkey Lira 2.9180
Turkmenistan Manat 3.4910
Uganda Shilling 3378.0000
Ukraine Hryvnia 23.9520
United Arab Emirates Dirham 3.6730
United Kingdom Pound Sterling 0.6750
Uruguay New Peso 29.8900
Uzbekistan Som 2857.0000
Vanuatu Vatu 108.5500
Venezuela New Bolivar 6.3000
Vietnam Dong 22480.0000
Western Samoa Tala 2.5020
Yemen Rial 214.5000
Zambia Kwacha (New) 10.9900
Zambia Kwacha 5455.0000
Zimbabwe Dollar 1.0000

1. Lesotho’s loti is pegged to South African Rand 1:1 basis
2. Macao is also spelled Macau: currency is Macanese pataka
3. Macedonia: due to the conflict over name with Greece, the official name if FYROM – Former Yugoslav Republic of Macedonia.
4. Please, refer to the Treasury’s website for amendments regarding any reportable transactions in January, February, and March of 2015.

Tax Deadlines Extended for Certain Mississippi Storm Victims

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As a result of the FEMA’s state of disaster declaration, certain Mississippi Storm victims will now benefit from the extension of the 2015 tax return filing and tax payment deadlines. In particular, the residents of Benton, Coahoma, Marshall, Quitman and Tippah counties (as well as other counties that may be added at a later time) will have until May 16, 2016 to file their 2015 tax returns and pay any tax due. All workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization also qualify for relief.

The extended deadline also affects the estimated tax payments; the IRS will waive all penalties associated with these deadlines for Mississippi Storm victims. Individual Mississippi Storm victims will now be able to benefit from this extended deadline with respect to January 15 and April 18 deadlines for making quarterly estimated tax payments.

Business Mississippi Storm victims will also benefit from this deadline extension, including February 1 and May 2 deadlines for quarterly payroll and excise tax returns. Furthermore, the deadline extension applies also to March 1 deadlines for farmers and fisherman who are Mississippi storm victims and choose to forego making estimated tax payments.

Additionally, the IRS will waive late-deposit penalties for federal payroll and excise tax deposits normally due on or after December 23 and before January 7 if the deposits are made by January 7, 2016. Details on available relief can be found on the disaster relief page on IRS.gov.

The IRS will automatically provide filing and penalty relief to any taxpayer with an IRS address of record located in the Mississippi disaster area. Thus, Mississippi storm victims need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Furthermore, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the Mississippi disaster area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227.

Finally, individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred, or the return for the prior year. See Publication 547 for details.

US Income Tax Obligations of Green Card Holders: General Overview

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There is a common misconception among Green Card Holders (a common name for US permanent residents) that their US income tax obligations are limited in nature in comparison to US citizens. In this article, I seek to dispel this erroneous myth and provide some general outlines of the US income tax obligations of Green Card Holders.

US Income Tax Obligations of Green Card Holders: Worldwide Income Reporting

I receive a lot of phone calls from Green Card holders who believe that their US income tax reporting obligations are limited only to US-source income (sourcing of income, by the way, is also a very complex subject and I often see egregious mistakes committed even by experienced accountants).

This is not correct. In fact, US permanent residents and US citizens are both considered to be “tax residents of the United States.” US tax residents are required to report their worldwide income on US tax returns and pay US income taxes on foreign-source income (and, obviously, US-source income).

Thus, if you have a Green Card and you have foreign assets (such as foreign bank and financial accounts, foreign businesses, foreign trusts, et cetera), you must report the income from such foreign assets on your US tax returns.

Be careful! You must remember that all foreign income must be reported in US dollars and according to US tax laws. Leaving aside the issue of currency conversion (which is a topic for another article), the reporting of foreign income under US tax laws may be extremely challenging because foreign tax laws may treat this income in a different manner. Let me emphasize this point – the treatment of income under foreign local tax rules may not actually be the same as the treatment of the same income under US tax rules.

For example, Assurance Vie accounts in France may be completely tax-exempt if certain conditions are met. However, the annual income from these accounts must be reported on US tax returns.

Moreover, to make matters worse, these accounts may contain PFIC (Passive Foreign Investment Company) investments which are treated in a very complex and generally unfavorable manner under US tax laws. The calculation of US tax liability in this case may be extremely complex (especially since the French banks are not required to keep the kind of information that is necessary to properly calculation PFIC tax and interest).

US Income Tax Obligations of Green Card Holders: Reporting of Foreign Bank and Financial Accounts

As US tax residents, the Green Card holders are also required to disclose their ownership of certain foreign bank and financial accounts to the IRS. Many US permanent residents are shocked to learn about these requirements and the draconian penalties associated with failure to file the required information reports.

The top two bank and financial account reporting requirements are FinCEN Form 114 (known as “FBAR” – the Report of Foreign Bank and Financial Accounts) and Form 8938 (which was born out of FATCA). Other forms, such as Form 8621, may apply.

It is beyond the scope of this article to discuss these requirements in detail. However, it is impossible to overstate their importance, especially the FBAR, due to potentially astronomical non-compliance penalties (including criminal penalties). You can find more information about these requirements at sherayzenlaw.com.

US Income Tax Obligations of Green Card Holders: Reporting of Foreign Business Ownership

Many US permanent residents are surprised to find out that they may be required to provide detailed reports about their foreign businesses – corporations, partnerships and disregarded entities. Indeed, Green Card holders may be subject to burdensome and expensive US reporting requirements on Forms 5471, 8865, 926, 8938, et cetera. These forms may require Green Card holders to provide foreign financial statements translated under US accounting standards, including US GAAP (Generally Accepted Accounting Practices).

Again, you can find more information about these requirement at sherayzenlaw.com.

US Income Tax Obligations of Green Card Holders: Reporting of Foreign Trusts

Another complex trap for Green Card Holders is reporting of an ownership or a beneficiary interest in a foreign trust (generally, on Form 3520). This complicated topic is beyond the scope of this article, but you can find more information about these requirements at sherayzenlaw.com.

US Income Tax Obligations of Green Card Holders: Other Reporting Requirements

There are numerous other US income tax obligations of Green Card Holders that may apply. Moreover, US has multiple income tax treaties with various countries which may modify your particular tax situation. In order to fully determine your US tax obligations as a Green Card holder, it is best to consult with an experienced international tax attorney.

Contact Sherayzen Law Office for Help With Your US Income Tax Obligations

Sherayzen Law Office is a specialized international tax law firm which is highly experienced in helping US Permanent Residents with their US income tax obligations and reporting requirements. One of the unique features of our firm is that our tax team provides both legal and accounting services to our clients throughout the world.

Contact Us Now To Secure Professional Help and Avoid (or Rectify) Costly Mistakes!

Tax Year 2016 Business Income Tax Deadlines

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With the commencement of the new year, it is very important for business owners and corporate executives to focus on the main 2016 business income tax deadlines. In this short review of 2016 business income tax deadlines, I will focus only on the most common income tax deadlines of a corporation that operates on a calendar-year basis (i.e. the corporate fiscal year is the same as the calendar year).

It is important to keep in mind that other 2016 business income tax deadlines (such as employment tax deadlines) may apply to your particular situation. Furthermore, one must remember that the exact deadlines will change if the corporation does not operate on the calendar-year basis, but on its own fiscal year.

Keeping in mind these two important exceptions, here are the most common 2016 business income tax deadlines:

March 15, 2016: Forms 1120 and 1120S for tax year 2015 are due. Schedules K-1 (for S-corporations) are due at that time as well. If, however, the corporation does not wish to file its tax return at that time, it can file Form 7004 by March 15, 2016 to obtain an automatic six-month extension to file 2015 Forms 1120 or 1120S. (However, the estimated 2015 tax liability must still be paid by March 15, 2016). Moreover, electing large partnerships must also furnish Schedule K-1 (Form 1065-B) at that time.

April 18, 2016: There are three major 2016 business income tax deadlines associated with April 18, 2016. (Normally, the deadline would be on April 15, but April 15 2016 falls on a Saturday and April 17 is a federal holiday; therefore, in 2016, the due date shifts to April 18). First, partnerships must file their 2015 Forms 1065 and supply Schedules K-1 to each partner. If a partnership wishes to file its Form 1065 later, it must file Form 7004 by April 18, 2016, in order to obtain an automatic five-month filing extension.

Second, Electing Large Partnerships must file their 2015 Forms 1065-B. Similarly, Form 7004 must be filed by April 18, 2016, if the Electing Large Partnership wishes to obtain an automatic five-month filing extension.

Third, corporations must make their first corporate estimated tax payments by April 18, 2016.

June 15, 2016: Second corporate estimated tax payments are due.

September 15, 2016: There are three major 2016 business income tax deadlines associated with September 15, 2016. First, all partnerships that filed Form 7004 must file their 2015 Forms 1065 by September 15, 2016.

Second, all corporations that obtained six-month extension by filing Form 7004 must file their 2015 Forms 1120 and 1120S by September 15, 2016.

Third, corporations must make their third corporate estimated tax payments by September 15, 2016.

October 17, 2016: Electing Large Corporations must file their extended 2015 Forms 1065-B.

December 15, 2016: Fourth corporate estimated tax payments are due.