FATCA: Why It’s Still Important, New Filing Requirements, & More

We continue to see interest in the legal implications for US taxpayers and foreign financial institutions alike of the Foreign Account Tax Compliance Act, known as FATCA. For your reference, here’s a roundup of recent advisories from lawyers and law firms on JD Supra.

[See also the updated 5 Takeaways from New IRS FATCA Guidance

Why You Still Need to Care about FATCA (K&L Gates LLP)

“FATCA was the result of a ‘perfect storm’ of world events, technological changes, the economic crisis and political pressure to curb offshore tax abuse… [It] is a sea change approach to international tax compliance intended to thwart offshore tax evasion by giving the IRS tools to identify US owners of foreign accounts and entities.” Read the full presentation»

Are You Ready for March 18, 2012 — a Key Date in the U.S. Taxation of Cross-Border Financing Transactions (Morrison & Foerster LLP)

“March 18, 2012 marks the end of the nearly 30-year old practice whereby U.S. issuers (and controlled foreign corporations) can sell bearer bonds to foreign investors. Thus, with respect to U.S. issuers of foreign-targeted bearer bonds, FATCA repealed the exception that permits interest deductions for interest on bearer bonds sold under ‘arrangements reasonably designed to ensure’ sales to non-U.S. persons. In addition, interest paid on such bonds will no longer qualify for treatment as ‘portfolio’ interest, thereby subjecting such interest to a 30% U.S. withholding tax.” Read the full update»

FATCA – New Filing Requirements for Foreign Assets (Davis, Brown, Koehn, Shors & Roberts, P.C.)

“Congress and the IRS have determined that taxpayers need yet an additional form to file in order to report foreign held assets… Holding foreign assets has never been more difficult and potential very costly from a tax perspective.” Read the full update»

Broad Regulations for Foreign Financial Asset Reporting (Morgan Lewis)

“… the U.S. Department of the Treasury issued temporary and proposed regulations relating to information reporting of certain foreign financial assets required under Section 6038D of the Internal Revenue Code of 1986, as amended… Section 6038D, enacted as part of the Foreign Account Tax Compliance Act … requires individuals holding specified foreign assets in excess of certain thresholds to attach detailed information to their tax returns concerning such assets.” Read the full update»

FORM 8938 – Expansion of International Tax Reporting Requirements (Venable LLP)

“A $10,000 penalty applies for failure to file a Form 8938; the penalty is increased by an additional $10,000 (up to a maximum of $50,000) for each 30 day period the failure continues for more than 90 days after the IRS mails a notice of failure to file the Form. The penalty will not be imposed if the failure to file was due to reasonable cause and not willful neglect.” Read the full update»

IRS Reconsidering FATCA Rules (Darrin Mish)

“There is good news for foreign financial institutions – the IRS is reconsidering the Foreign Account Tax Compliance Act (FATCA). The FATCA requires all financial institutions to declare details of their American clients to the IRS for tax purposes… But upon reviewing the regulation, it was brought up that such a requirement may contravene privacy laws.” Read the full update»

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See also: 5 Takeaways from New IRS FATCA Guidance [UPDATED] 

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