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Summing It Up

Keeping you ahead of the curve with timely news & updates.


Why Are So Many People Renouncing Their U.S. Citizenship?

The Impact of the Foreign Account Tax Compliance Act (FATCA) of 2010

Expat_iStock_84123421-517146-edited.jpgBreathes there the man with soul so dead, who never to himself hath said, “This is my own, my native land.” - Edward Everett Hale, “The Man Without a Country”

 

Poetic and patriotic words, but the reality of today is that many U.S. citizens don’t feel this way about their native land. In 2015, 4,279 U.S. persons relinquished or renounced their U.S. citizenship, a record-breaking amount. Many analysts project that the total number of renunciations or relinquishments in 2016 will exceed the 2015 mark. To put these numbers in perspective, less than 300 people renounced their U.S. citizenship in 2006.

Looking at statistics like these, you may ask yourself: “Why are so many people giving up U.S. citizenship?” And possibly, “Is this something I should consider?”

The Foreign Account Tax Compliance Act (FATCA) of 2010 and other U.S. tax reporting regulations may have something to do with why this is happening.

A simplified explanation of the FATCA legislation is as follows:

  • It is primarily aimed at preventing tax evasion by U.S. taxpayers through the use of non-U.S. financial institutions and offshore investments.
  • Foreign financial institutions are required to identify accounts held by U.S. persons and report account information to the IRS. Absent this information, they are required to withhold U.S. tax on U.S. source income paid and may decline account opening or terminate services.

Furthermore, the U.S. tax system is based on citizenship. A U.S. citizen pays tax on their worldwide income no matter what country they live in.

Beyond the tax compliance burden, the financial institution impact of the FATCA legislation has significantly impacted U.S. citizens living abroad. Rather than attempt to comply with FATCA reporting requirements, many foreign financial institutions are simply refusing to open or hold accounts for U.S. persons.

To alleviate the financial hardship and tax compliance burden, many U.S. citizens living abroad have decided not to maintain their U.S. citizenship. U.S. citizenship can be terminated through renunciation. A formal renunciation of U.S. citizenship must be made in a foreign state, generally at a U.S. consulate, and there are several State Department forms to file along with a processing fee.

In addition to the paperwork and fees, the exit tax under Internal Revenue Code Sec. 877A may apply. Generally speaking, in order to avoid the exit tax you must:

  • be current with U.S. tax filings for the past 5 years,
  • have had annual U.S. tax liabilities below $160,000 for those 5 years, and
  • a net worth of less than $2,000,000.

If you find yourself in the situation where you are considering renunciation of your U.S. citizenship, there are planning opportunities and compliance requirements that must be considered. Contact Freed Maxick's International Expatriate Tax Services professionals to discuss your specific situation, or call to speak with an individual directly at 716.847.2651.

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OVDP's and IRS Data Mining

By: Howard Epstein, CPA, Director, International Tax

Opening a new front in the U.S. crackdown on offshore tax evasion, federal investigators have won court approval for a summons on a Caribbean bank, to turn over account data for wealthy American clients. This is just the latest of several overseas banks served with similar demands from the IRS, in an effort to identify federal tax evaders who have assets and income hidden offshore. This comes in response to the IRS leniency program (or Voluntary Disclosure Program), in which Americans can disclose previously secret foreign accounts to the IRS to avoid tax liens and pay back taxes.

The fact that the IRS is using John Doe Summons and other data mining means to flesh out non filers of FBARs provides further proof that they are steadfast in their resolve to find people committing tax fraud. The unfortunate part is that honest people that simply don't know the law are being compromised at the same time. It is important that those innocent people come forward under the current programs available before the IRS taps them on the shoulder and such relief is not available. 

FBAR Filing Assistance

At Freed Maxick, we are poised to assist you in assessing your FBAR filing requirements, integrate the necessary information, and prepare your current and past due FBARs. We also have considerable experience helping taxpayers that have not been historically compliant navigate the IRS guidelines, minimizing any potential penalties through the various IRS Voluntary Disclosure Programs that are available.

For a confidential discussion of your FBAR situation, call us at 716.847.2651, or complete and submit this form for more information.

 

 

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Webcast Event: ASC740: Income Tax Accounting for 2013- May 17th

With the ever-changing and complex regulatory environment, compliance with accounting for income taxes (ASC 740), formerly known as FAS 109, has become more difficult for companies to manage efficiently. Companies must work hard to ensure that they minimize compliance related errors with the current tax laws and financial accounting and reporting standards.

In this two-hour LIVE webcast on May 17th, a panel of distinguished professionals assembled by The Knowledge Group will discuss the significant topics related to tax accounting rules and implementation of ASC 740. The faculty will discuss:

    • Brief Overview of ASC 740 and Refresher in Current and Deferred Tax Computation

    • Pertinent Accounting Principles and Tax Accounting Provisions

    • Application of ASC 740 to State and International Income Taxes

    • Hot Topics in Internal Controls

    • Issues Relating to Compensation and Benefits Developments

    • Best Practices and Practical Guidance for Tax Preparation, Compliance and Effectiveness

    • Up-to-the-Minute Regulatory Updates

This is a must attend event for Finance Executives, CPAs, Attorneys, Enrolled Agents, Tax Practitioners, and other Interested Professionals. Attending this course will give you the tools you need to understand the latest developments in ASC-740.

Course Level: Intermediate
Prerequisite: None
Method Of Presentation: Group-Based-Internet
Developer: The Knowledge Group, LLC
Recommended CLE/CPE Hours: 1.75 - 2.0
Advance Preparation: Print and review course materials
Course Code: 134416
NASBA Fields of Study: Accounting – 1.00 credit and Taxes – 1.00 credit
Other Certifications: IRS EA Credits: Federal Tax – 2:00 credits
Course Fees:
$199 - $249 (Early Bird Discounted Rate - on or before 05/07/2013)
$299 - $349 (Regular Rate - registration after 05/07/2013)
$149 (Government / Nonprofit Rate)

(Please click here for details)

Featured Speakers for ASC 740: Income Tax Accounting for 2013 LIVE Webcast :


Douglas I. Schwartz, CPA/CFF, Cr.FA, Managing Member,
Douglas I Schwartz, LLC

  • Identification of permanent versus temporary differences

  • Valuation Allowance, balancing positive versus negative indicia on the recording of deferred tax assets and the related VA.

  • Valuation Allowance considerations for an investment company versus an operating company.

  • Impact of recent tax legislation.

  • APB 23 Repatriation of Foreign Earnings.

  • Consolidated provision considerations for the multinational company.

  • FIN 48 GAAP accounting versus tax return accounting and disclosure of uncertain tax positions (UTP’s).

Mark A. Stebbins, CPA, Director - Tax Practice Leader

Samuel C. DiSalvo, CPA J.D., Director,

Freed Maxick CPAs, PC

  • Business combination issuesFresh start accounting

  • Interim Reporting

  • Stock based compensation issues

  • Foreign operations

  • Financial instrument issues

  • Accounting period and methods

Angela L. Evans, Partner, Business Tax Services,
Ernst & Young LLP 

Douglas I Schwartz, LLC
Douglas I. Schwartz, CPA/CFF, Cr.FA
Managing Member
speaker bio »»

Freed Maxick CPAs, PC
Mark A. Stebbins, CPA
Director - Tax Practice Leader
speaker bio »»

Freed Maxick CPAs, PC
Samuel C. DiSalvo, CPA J.D.
Director
speaker bio »»

Ernst & Young LLP
Angela L. Evans
Partner, Business Tax Services

Who Should Attend?

- Finance Executives
- CPAs
- Tax Attorneys
- Enrolled Agents
- Tax Practitioners
- Tax Directors
- Tax Managers/Executive
- Internal Audits
- CFOs
- Financial Planners and Executives
- Tax Consultants
- And Other Interested Professionals

Why Attend?

This is a must attend event for anyone interested in understanding the related issues and changes to Income Tax Accounting (ASC 740). In this live virtual course, you will hear:

- Detailed guidance explained by the most qualified key leaders & experts
- Hear directly from experienced practitioners & thought leaders
- Interact directly with panel during Q&A

Advanced registration is recommended as space is limited. Please click the “Register” button below to enroll in this course today. Significant discounts apply for early registrants.

Registration Information:                                                                                                                                 

(Click here for information on group registrations and discounts)

Disclaimer:
Please note, the event date is firm although it may be subject to change. Please click here for details.
The Knowledge Group, LLC is producing this event for information purposes only. We do not intend to provide or offer business advice. The contents of this event are based upon the opinions of our speakers. The Knowledge Congress does not warrant their accuracy and completeness. The statements made by them are based on their independent opinions and does not necessarily reflect that of The Knowledge Congress' views. In no event shall The Knowledge Congress be liable to any person or business entity for any special, direct, indirect, punitive, incidental or consequential damages as a result of any information gathered from this webcast.

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