Tuesday, August 30, 2016

More fallout from the "Panama Papers" - Commercial Bank of Taiwan To Pay a $180 Million Penalty

More fallout from the "Panama Papers" a/k/a leaked documents from the Panamanian law firm Mossack Fonseca.

We previously posted on June 25, 2016 Federal Agents & Prosecutors Gearing Up to Utilize "Panama Papers" in Their Prosecutions where we discussed that Federal agents and prosecutors are "chomping at the bit" to exploit the Panama Papers and launch prosecutions, a senior federal law enforcement official told NBC News, but want to be sure that the way the huge data dump about offshore money was obtained doesn't jeopardize their cases.

Now Financial Services Superintendent Maria T. Vullo announced  on 8/19/16 that Mega International Commercial Bank of Taiwan will pay a $180 million penalty and install an independent monitor for violating New York’s anti-money laundering laws.  

The fine is part of a consent order entered into with the Department of Financial Services (DFS) pursuant to which Mega Bank shall take immediate steps to correct violations, including engaging an independent monitor to address serious deficiencies within the bank’s compliance program and implement effective anti-money laundering controls.  Mega Bank is a major international financial institution with approximately $103 billion in assets, including $9 billion at its New York branch.

Violations of anti-money laundering requirements at Mega Bank were uncovered in a recent DFS examination, which found that the bank’s head office was indifferent toward risks associated with transactions involving Panama, recognized as a high-risk jurisdiction for money-laundering. Mega Bank has a branch in Panama City and another in Panama’s Colon Free Trade Zone.  DFS’s investigation identified a number of suspicious transactions running between Mega Bank’s New York and Panama Branches. 

The investigation also determined that a substantial number of customer entities, which have or had accounts at several other Mega Bank branches, were apparently formed with the assistance of the Mossack Fonseca law firm in Panama.  Mossack Fonseca is one of the law firms at the center of the formation of shell company activity, possibly designed to skirt banking and tax laws worldwide, including U.S. laws designed to fight money laundering.


Do You Have Undeclared Income 
From A Foreign Entity
Formed By Mossack Fonseca ?
 

  Do You Have Undeclared Accounts
With Any of the Following Foreign Banks?
 
 
 
Want to Know Witch OVDP Program is Right for You?


 
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
 
for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888) 882-9243






Sources:
Mondo Visione
 

 

Courts Not Sympathetic to FATCA Challenges!

On September 30, 2015, we posted Judge Denies Injunctive Relief for FATCA Implementation!, where we discussed that an Ohio federal judge said that Senator Rand Paul, R-Ky., and others do not have standing in a challenge to the offshore financial account tax enforcement measures enacted in the Foreign Account Tax Compliance Act and they were not likely to succeed on the merits in the case. The case is Crawford v. U.S. Dep't of Treasury, S.D. Ohio, No. 3:15-cv-00250, 9/29/15.


The only member of the group who has standing is Daniel Kuettel, a citizen of Switzerland who renounced his U.S. citizenship, and only regarding two counts alleging the heightened reporting requirements of the law deny equal protection to Americans living abroad and that the penalty for failing to file a Foreign Bank Account Report is excessive, Judge Rose said. However, those assertions do not survive a facial challenge, he said.

 

The public interest is also best served by keeping the FATCA provisions in place, Judge Rose said. 
 
More recently a district court has dismissed the amended complaint of a U.S. citizen living in Saudi Arabia challenging the constitutionality of the Foreign Account Tax Compliance Act (FATCA).

The court found that the amended complaint, like the original, failed to establish that the taxpayer had standing to bring the suit because it didn't sufficiently allege that he was in fact injured by FATCA or that any FATCA-related harms to him were imminent. Alsheikh v. Lew, et al, (DC CA 08/22/2016) 118 AFTR 2d ¶2016-5149.


It Is Time to Wake up and Smell the Coffee People
– FATCA Is Here to Stay!
 

 

Is This Your Idea of Dealing with 
Previously Undeclared Foreign Income?


Want to Know which OVDP Program is Right for You?


 
 Contact the Tax Lawyers at
Marini & Associates, P.A.  
 
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-924


Monday, August 29, 2016

OECD Adds 5 More Countries To Its CbC Automatic Exchange Agreement

On June 30, the Organization for Economic Co-operation and Development (OECD) announced that 5 new countries have signed the Multilateral Competent Authority Agreement for the automatic exchange of country-by-country (CbC) reports (CbC MCAA), which facilities the exchange of certain confidential transfer pricing information recommended under Action 13 of the G20/OECD project to target base erosion and profit shifting (BEPS). It brings the total number of signatories to 39 countries.
The 5 countries are:
  1. Argentina;
  2. Curacao;
  3. Georgia;
  4. Korea; and
  5. Uruguay.
First automatic exchanges of information will start in 2017-2018 on 2016 information.
    Have an International Tax Problem?  
     
    Contact the Tax Lawyers at
    Marini & Associates, P.A.
     
     for a FREE Tax Consultation Contact US at
    or Toll Free at 888-8TaxAid (888 882-9243).
     

U.S. Treasury Seeks Comments on Form 8975 - CbC Reporting Form

On May 5, 2016 we posted Possible CbC Optional Reporting for 2016 Under Consideration by US Treasury where we discussed that the Treasury and IRS were working towards a solution that would allow optional CbC reporting for 2016 and that more work would be needed to ensure that allowing optional filing for 2016 in the US would be effective in obviating the need for local filing. The Treasury and IRS also requested that US MNCs to engage in the global debate to ensure optional CbC reporting will be enough to protect US MNCs from becoming subject to secondary reporting requirements. 

The OECD recommended that the information required for the master and local files be filed by the MNEs directly with the local tax administrations. On the other hand, the CbC report would be filed in the jurisdiction of the tax residence of the ultimate parent entity and shared between jurisdictions through automatic exchange of information, pursuant to government-to-government mechanisms such as the multilateral Convention on Mutual Administrative Assistance in Tax Matters, bilateral tax treaties, or tax information exchange agreements (TIEAs).
As noted above, the final BEPS Action 13 report recommends that data collection for CbC reporting purposes begin in 2016 for reporting/filing in 2017. Under the secondary mechanism, U.S. Multi-National Enterprisess may be required to file CbC reports directly with other countries in 2017, as a result of the one year gap between when the proposed regs are expected to be finalized and the CbC reporting requirements that are already in place in other countries for 2016.

The IRS had issued final regs. on June 29, 2016 that require annual country-by-country (CbC) reporting by U.S. persons that are the ultimate parent entity of a multinational enterprise (MNE) group that has annual revenue for the preceding annual accounting period of $850 million or more. This information reporting requirement is satisfied by submitting the just released Form 8975, Country-by-Country Report, with an income tax return. TD 9773, 06/29/2016, Reg. § 1.6038-4

On June 29, the same day that IRS issued final Country-by-Country (CbC) reporting regs, the Organization for Economic Cooperation and Development (OECD) published guidance on the implementation of CbC reporting under Action 13 of the G20/OECD base erosion and profit shifting project. The guidance addresses issues arising due to the U.S.'s comparatively delayed implementation date for CbC reporting and specifically provides a voluntary, transitional filing optional called “parent surrogate filing.” OECD, “Guidance on the Implementation of Country-by-Country Reporting: BEPS Action 13” (June 29, 2016). 
 
Now on August 22, 2016, Treasury published a notice in the Federal Register seeking comments on IRS Form 8975 (Country-by-Country Report), which ultimate parent entities of U.S. multinational enterprise (MNE) groups will use for country-by-country (CbC) reporting purposes. Written comments are due by September 21, 2016.
The notice says that "businesses or other for-profits"
are to be affected by the new CbC
reporting requirement, which Treasury estimates
will take 4,680 Hours to comply with each year!

The Regulation § 1.6038-4(d)(1) says that the following information must be included on Form 8975 with respect to each constituent entity of the U.S. MNE group, as required:
  • The complete legal name of the constituent entity.
  • The tax jurisdiction, if any, in which the constituent entity is resident for tax purposes.
  • The tax jurisdiction in which the constituent entity is organized or incorporated (if different from the tax jurisdiction of residence).
  • The tax identification number, if any, used for the constituent entity by the tax administration of the constituent entity's tax jurisdiction of residence.
  • The main business activity or activities of the constituent entity.
In addition, Form 8975 must contain the following information for each tax jurisdiction in which one or more constituent entities of a U.S. MNE group is resident, presented as an aggregate of the information for the constituent entities resident in each tax jurisdiction (Reg. § 1.6038-4(d)(2)) :
  • Revenues generated from transactions with other constituent entities.
  • Revenues not generated from transactions with other constituent entities.
  • Profit or loss before income tax.
  • Total income tax paid on a cash basis to all tax jurisdictions, and any taxes withheld on payments received by the constituent entities.
  • Total accrued tax expense recorded on taxable profits or losses, reflecting only operations in the relevant annual period and excluding deferred taxes or provisions for uncertain tax liabilities.
  • Stated capital, except that the stated capital of a PE must be reported in the tax jurisdiction of residence of the legal entity of which it is a PE unless there is a defined capital requirement in the PE tax jurisdiction for regulatory purposes.
  • Total accumulated earnings, except that accumulated earnings of a PE must be reported by the legal entity of which it is a PE.
  • Total number of employees on a full-time equivalent basis-see Reg. 1.6038-4(d)(3)(iii) for the treatment of independent contractors and other details.
  • Net book value of tangible assets, which does not include cash or cash equivalents, intangibles, or financial assets.
The reporting period covered by IRS Form 8975 is the period of the ultimate parent entity's applicable financial statement prepared for the 12-month period (or a 52-53 week period described in Section 441(f)) that ends with or within the ultimate parent entity's tax year.

If the ultimate parent entity does not prepare an annual applicable financial statement, the reporting period covered by Form 8975 is the 12-month period (or a 52-53 week period described in Section 441(f)) that ends on the last day of the ultimate parent entity's tax year. (Reg. 1.6038-4(c)).
Whatever the reason for the strides, US Multi-National Entities may soon have an optional method for satisfying their CbC reporting requirements for 2016.
 
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Friday, August 19, 2016

Criminal Defense Lawyer's 5th Amendment Privilege Trumps an IRS Summon

Defense Lawyer Pleading The 5th Beats IRS Summons preview imageAccording to Law360, A Minnesota federal judge has denied the IRS’ request to enforce a summons against a local criminal defense lawyer the agency accused of hiding tax-related information, agreeing with his Fifth Amendment objection citing the right against self-incrimination.

Attorney Martin S. Azarian had provided the tax agency certain documents in response to a summons over his income taxes. The IRS then sued in Minnesota federal court to obtain more information from him that he allegedly improperly withheld. The attorney pushed back, asserting a reasonable fear of prosecution under the Fifth Amendment.

Agreeing with a magistrate judge's report and recommendation, U.S. District Judge Wilhelmina M. Wright ruled Tuesday that Azarian's Fifth Amendment privilege assertion is valid.
Have a Tax Problem?
 
 



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 for a FREE Tax Consultation Contact US at
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