May 2015
Co-Authors: Eric Swenson and Agustin Ceballos
“The Hiring Incentives to Restore Employment Act of 2010 (“HIRE”) added a new Chapter 4 to Subtitle A – Income Taxes of the Internal Revenue Code (the “Code”), entitled “Taxes to Enforce Reporting of Certain Foreign Accounts”, otherwise known as the Foreign Account Tax Compliance Act (“FATCA”). FATCA is generally thought of as an “invitation” to foreign banks, entities, and trusts which have any type of investment in the United States (“U.S.”) to report its U.S. persons/customers to the Internal
Revenue Service (“IRS”) or suffer the consequences of a 30% withholding rate on such U.S. investment payments. Due to such a significant withholding rate on U.S. investment income, it is well known in the international tax and finance community that such “invitation” is not likely to be turned down. After certain extensions of the effective date of the FATCA provisions, the tax year 2014 saw the beginning of a large piece of FATCA compliance that will only increase (and become better understood by
everyone) over the coming years.”
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