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Yearly Archives: 2012

It may be better to take a hit on FATCA?

May 11, 2012

The Association of Investment Companies (AIC) has suggested to members with modest investments in US securities that they may be better off not signing up to controversial tax initiative FATCA and taking the penalty charge.

FATCA, or the Foreign Account Tax Compliance Act, is a set of measures designed to fight offshore tax evasion by US citizens. It will be a significant cost and administrative burden for financial institutions and investment companies.

For companies which do not derive a significant proportion of their revenues from the US and have few US investors, the cost of complying outweighs the 30% withholding penalty, the AIC said.

The number of US shareholders with stakes in UK registered trusts is minimal, argues the AIC.

“If you are not invested in the US, or have minimal exposure, it might be better to take the modest hit from the 30% withholding tax as opposed to racking up much more substantial costs from all the administration in complying,” said Ian Sayers, director general at the AIC .

“For these trusts the impact would be too small, so it is not worth signing up.

“VCTs, for example, are predominately made up of UK retail money and UK investments, so they may not have to sign up and in fact will be better off not complying.”

FATCA timetable

Autumn 2012:IRS to publish final model FFI agreement.
January 2013: Entities can start signing IRS agreements.
January 2014: Start of withholding of US-source income to non-participating entities.
January 2015: Start of withholding of US-source gross proceeds to non-participating entities, also reporting of ‘passthru payments’ commences.
January 2017: Institutions required to withhold on their payments to other non-participating institutions.

For more go to IFALogo   

Read more at: Tax Times blog

10 Strategies Used by the Rich to Pay No Taxes!

May 11, 2012

If you have lots of money, Tuesday, April 17, was one of the best tax days since the early 1930s: Top tax rates on ordinary income, dividends, estates, and gifts remain at or near historically low levels. That’s thanks, in part, to legislation passed in December 2010 by the 111th Congress and signed by President Barack Obama. Starting next January, rates may be headed higher.

For the 400 U.S. taxpayers with the highest adjusted gross income, the effective federal income tax rate—what they actually pay—fell from almost 30 percent in 1995 to just over 18 percent in 2008, according to the Internal Revenue Service. And for the approximately 1.4 million people who make up the top 1 percent of taxpayers, the effective federal income tax rate dropped from 29 percent to 23 percent in 2008. It may seem too fantastic to be true, but the top 400 end up paying a lower rate than the next 1,399,600 or so.

That’s not just good luck. It’s often the result of hard work, as suggested by some of the strategies below. Much of the income among the top 400 derives from dividends and capital gains, generated by everything from appreciated real estate—yes, there is some left—to stocks and the sale of family businesses. As Warren Buffett likes to point out, since most of his income is from dividends, his tax rate is less than that of the people who clean his office.

For more go to Blumberg Business Week.

Read more at: Tax Times blog

Swiss bank Pictet gave data to U.S. in tax probe

May 8, 2012

ZURICH (Reuters) - Swiss bank Pictet said on Sunday it handed over bank account details to U.S. authorities probing cases of tax evasion, as a newspaper reported it had accepted funds from two former UBS clients suspected of having cheated on taxes.

Pictet said in a statement the data handover took place in November 2010 via the Swiss tax office, which had received a request for assistance from its U.S. counterparts.

This is the latest episode in an ongoing dispute between the United States and Switzerland over wealthy Americans accused of avoiding taxes by hiding money in secret Swiss accounts.

Eleven Swiss banks - including Credit Suisse and Julius Baer but not Pictet - are under scrutiny by the United States for aiding U.S. citizens suspected of tax dodging.

Banking secrecy has helped the Swiss build up a $2 trillion offshore wealth management industry.

The investigation into the 11 Swiss banks was fed by data culled in a crackdown on UBS, which that bank settled in 2009 by handing over thousands of client data, paying a fine and admitting wrong-doing.

In a related interview with the SonntagsZeitung, Patrick Odier, president of the Swiss Bankers Association, said another case like that of Wegelin & Co. could not be ruled out.

Wegelin, Switzerland's oldest bank, buckled under the pressure of a long-running campaign by U.S. tax authorities and broke itself up in January. Wegelin had accepted money from UBS clients suspected of dodging tax.

"U.S. authorities could have enough material to weigh on banks other than those on the 11-bank list," Odier said.

Switzerland is trying to get investigations into 11 banks dropped in return for the payment of fines and the transfer of U.S. client names. It is also seeking a deal to shield the remainder of its 300 or so banks from U.S. prosecution.

Swiss Finance Minister Eveline Widmer-Schlumpf has said she hoped for a deal before the end of the year.

"We need to draw a line under it, so there are no more charges," Odier said.

The Tax Lawyers of Marini and Associates, P.A. have helped many Taxpayers resolve their tax issues associated with unreported Foreign Bank Income!

We can advise you on how to obtain a Deferred Prosecution Agreement, how to make a Voluntary Disclosure and alternative defenses for dealing with your unreported Foreign Bank Income.

If you have unreported Foreign Bank Income, contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free 888 882 9243 (888 8 TaxAid).

Read more at: Tax Times blog

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