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US Tax

  • Introduced in 2010 as part the Hiring Incentives to Restore Employment Act, the Foreign Account Tax Compliance Act (FATCA) came into effect 1 July 2014. FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts and affects foreign financial institutions worldwide.
  • Failure to comply with the Foreign Account Tax Compliance Act (FATCA) may result in U.S. withholding agents withhold tax on certain payment to foreign financial institutions (FFIs) that do not agree to report certain information to the Internal Revenue Service (IRS) regarding their U.S. accounts, and on certain payments to certain nonfinancial foreign entities (NFFEs) that do not provide information on their substantial U.S. owners to withholding agents.
  • On 13 November 2014 Hong Kong and the United States have signed an Intergovernmental Agreement (IGA) that will facilitate compliance with the Foreign Account Tax Compliance Act (FATCA) by Hong Kong financial institutions. Hong Kong has opted to enter into a Model 2 IGA with the US.  Under the Model 2 IGA financial institutions are required to report the relevant account information of U.S. taxpayers directly to the U.S. Internal Revenue Services.
  • The Offshore Voluntary Disclosure Program (OVDP) is a voluntary disclosure program specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. The Offshore Voluntary Disclosure Program imposes a 27.5% offshore penalty on the highest year’s aggregate value of offshore financial accounts during the period covered by the voluntary disclosure and the tax, accuracy-related penalties and interest charges. A 50% offshore penalty applies if either a foreign financial institution at which the taxpayer has or had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation. Refer to OVDP FAQ 7.2.
  • Another amnesty program is called streamlined procedures. Taxpayers under streamlined filing compliance procedures will be required to certify, in accordance with the specific instructions, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. No penalty will be imposed on the tax payers under streamlined procedures program.
  • Effective January 1, 2013, the IRS implemented new procedures for issuing new Individual Taxpayer Identification Numbers (ITINs). Designed specifically for tax-administration purposes, IRS issues ITIN to foreign nationals and others who have federal tax reporting or filing requirements and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).
  • There will be tax due date changes in 2015 tax filing as follows:
    • For partnership returns, the new due date is March 15 (for calendar-year partnerships) or the 15th day of the third month following the close of the fiscal year (for fiscal-year partnerships).
    • For C Corporations, the new due date is the 15th day of the fourth month following the close of the corporation's year.
  • The due date for FBARs for the 2016 calendar year (FinCEN Form 114, previously Form TD F 90-22,1) will be changed from June 30 to April 15, and the taxpayers will be allowed a six-month extension (until October 15th).