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Latest FBAR Voluntary Disclosure and Impending FATCA Reporting DutiesAnalyzing Pros and Cons of the IRS Offer; Data to Include on Form 8938

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WEDNESDAY, MARCH 21, 2012

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

Matthew D. Lee, Partner, Blank Rome LLP, Philadelphia, , , p

Kelley Miller, Atty, Reed Smith, Philadelphia

Kevin Packman, Partner, Holland & Knight, Miami, Fla.

Igor Drabkin, Principal, Holtz Slavett & Drabkin, Beverly Hills, Calif.

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Latest FBAR Voluntary Disclosure and I di FATCA R ti D ti Impending FATCA Reporting Duties Seminar

March 21, 2012

Kevin Packman, Holland & [email protected]

Matthew Lee, Blank [email protected]

Igor Drabkin, Holtz Slavett & [email protected]

Kelley Miller, Reed Smith [email protected]

Today’s Program

The 2012 IRS OVDI Program[Matthew Lee]

Slide 7 – Slide 14

FATCA Foreign Account Information Reporting[Kevin Packman, Kelley Miller and Igor Drabkin]


Other Recent Developments Of Note[Matthew Lee and Igor Drabkin]


THE 2012 IRS OVDI PROGRAMMatthew Lee, Blank Rome

THE 2012 IRS OVDI PROGRAM

IRS Offshore FocusIRS Offshore Focus

IRS Commissioner Douglas H. Shulman:• “The IRS has been steadily increasing the pressure on offshore financial institutions that facilitate concealment of taxable income by US citizens. That pressure will only increase under my watch. Those who are unlawfully hiding assets should come and get right with their government through our voluntary disclosure process.” (March 17, 2009)

• “Combating international tax evasion is a top priority for the IRS. We have additional cases and banks under review. The situation will just get worse in the months ahead for those hiding assets and income offshore.” (Feb. 8,the months ahead for those hiding assets and income offshore. (Feb. 8, 2011)

• “Our focus on offshore tax evasion continues to produce strong, substantial results for the nation’s taxpayers ... As we’ve said all along, people need to come in and get right with us before we find you We are following morecome in and get right with us before we find you … We are following more leads and the risk for people who do not come in continues to increase.” (Jan. 9, 2012)

8

Justice DepartmentOff h C li I i i iOffshore Compliance Initiative

“The Tax Division’s top litigation priority is the concerted civil and criminal effort to combat the serious problem of non‐compliance with our tax laws by U.S. taxpayers using secret offshore bank accounts – a problem that a 2008 Senate report concluded costs the U.S. Treasury at least $100 billion

ll ”annually.”

– U.S. Department of Justice Web site

9

Internal Revenue Manual 9.5.11.9:V l Di l P iVoluntary Disclosure Practice

• “A voluntary disclosure will not automatically guarantee immunity f ti h l t di l lt ifrom prosecution; however, a voluntary disclosure may result in prosecution not being recommended. This practice does not apply to taxpayers with illegal source income.”

• A disclosure is timely if it is received before:A disclosure is timely if it is received before: – The IRS has initiated a civil examination or criminal

investigation of the taxpayer.– The IRS has received information from a third party alerting theThe IRS has received information from a third party alerting the

IRS to the specific taxpayer’s non‐compliance.– The IRS has initiated a civil examination or criminal

investigation that is directly related to the specific liability of the taxpayer.

– The IRS has acquired information directly related to the specific liability of the taxpayer from a criminal enforcement action.

10

Recap Of 2009 OVDP And 2011 OVDIRecap Of 2009 OVDP And 2011 OVDI

• 2009 program: $3.4 billion in revenue, 95% of cases closed

• 2011 program: $1 billion in revenue so far; cases starting to be assigned to revenue agents nowrevenue agents now

• 33,000 taxpayers have come forward since 2009

• Compare: IRS normally receives 100 voluntary disclosures per year

11

2012 Offshore Voluntary Disclosure Program2012 Offshore Voluntary Disclosure Program

• Reopened on Jan. 9, 2012

• Procedure largely remains the same.Pre clearance by IRS CI Lead Development Center– Pre‐clearance by IRS‐CI Lead Development Center

– Submission of offshore voluntary disclosure letter (questionnaire) to IRS‐CI Lead Development Center

– Complete voluntary disclosure package and send to Austin, TX

• Participants must file amended tax returns for up to 8 years, as well as pay p p y p yaccuracy‐related and/or delinquency penalties with interest, plus FBAR penalty.

12

2012 OVDP: Key Differences2012 OVDP: Key Differences

• FBAR penalty– 27.5% (up from 25% in OVDI)– 12.5% (no change in OVDI)

5% (no change in OVDI)– 5% (no change in OVDI)• No set deadline for participation• Program terms are subject to change

– IRS press release: “However, the terms of the program could change at any time going forward. For example, the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.”

• Opting out remains an option (per FAQ 51).

13

Risks Of “Quiet Disclosures”Risks Of Quiet Disclosures

• FAQ 15: “Taxpayers are strongly encouraged to come forward under the 2011 OVDI to make timely accurate and complete disclosures Those2011 OVDI to make timely, accurate, and complete disclosures. Those taxpayers making ‘quiet’ disclosures should be aware of the risk of being examined and potentially criminally prosecuted for all applicable years.”

• FAQ 16: “The IRS is reviewing amended returns and could select any amended return for examination. The IRS has identified, and will continue to identify, amended tax returns reporting increases in income. The IRS will closely review these returns to determine whether enforcement action isclosely review these returns to determine whether enforcement action is appropriate. If a return is selected for examination, the 25 percent offshore penalty would not be available When criminal behavior is evident and the disclosure does not meet the requirements of a voluntary disclosure under IRM 9.5.11.9, the IRS may recommend criminal prosecution to theIRM 9.5.11.9, the IRS may recommend criminal prosecution to the Department of Justice.”

• United States v. Schiavo (D. Mass. 2011)

14

Kevin Packman, Holland & KnightKelley Miller Reed Smith

FATCA FOREIGN ACCOUNT

Kelley Miller, Reed SmithIgor Drabkin, Holtz Slavett & Drabkin

FATCA FOREIGN ACCOUNT INFORMATION REPORTING

Introduction To FATCA And Sect. 6038D

• Foreign Account Tax Compliance Act (FATCA) enacted on March 18• Foreign Account Tax Compliance Act (FATCA) enacted on March 18,2010, as part of the Hiring Incentives to Restore Employment (HIRE) Act

• FATCA requires certain U.S. taxpayers holding specified foreignfinancial assets outside the U.S. that meet certain thresholds to reportthose assets on Form 8938.

• FATCA reporting is in addition to the FBAR filing requirements.

16

Introduction To FATCA And Sect. 6038D (Cont.)

• Applies to assets held during tax years beginning after FATCA’s effectivedate of March 18, 2010,

• For calendar-year taxpayers, this would require Form 8938 to be filed withh i i fil d d i l dtheir 2011 income tax returns filed during calendar year 2012.

• File Form 8938 to satisfy the FATCA reporting requirements for specifiedforeign financial assets

• U.S. taxpayers are not required to file Form 8938 unless their specified foreignfinancial assets exceed certain reporting thresholds.

17

Current Guidance

• 12/14/11: Temporary regulations (T.D. 9567), effective for tax years p y g ( ) ybeginning after Dec. 19, 2011

12/14/11 P d l ti R 130302 10) If t d th d• 12/14/11: Proposed regulations Reg-130302-10). If enacted, the proposedregulations will apply for tax years beginning after Dec. 31, 2011.

• 2/29/12: IRS posted guidance in the form of 14 FAQs.

18

Form 8938 History

• Draft version released July 2010, but no instructionsy ,

• Revised draft Form 8938 released June 2011, again without instructions

• June 2011: Notice 2011-55 relieving taxpayers of the filing requirement untilsuch time as the Form 8938 was released

O 3 2011 D f i i l d Th i i id d i i l• Oct. 3, 2011: Draft instructions released. The instructions provided transitionalrules that essentially relieved taxpayers of the requirement to file forms 8938until 2012. If a taxpayer had a 2011 filing obligation, the form for such yearwould be filed in 2012 along with any required 2012 formwould be filed in 2012, along with any required 2012 form.

19

Specified Individuals

– U.S. citizens

– Permanent residents (i.e., green card holders)

– Individuals satisfying the substantial presence test

– A non-resident alien making an election to file a joint income tax returnwith a U.S. spouse

– A non-resident alien who is a bona fide resident of a U.S. possession(“specified individual”)

Even if a permanent resident or substantially present resident elects to bep y ptreated as a foreign resident under an income tax treaty, such person continuesto be a specified individual, and the Form 8938 must be filed.

No filing obligation unless the specified individual is required to file either aNo filing obligation unless the specified individual is required to file either aU.S. Form 1040 or Form 1040-NR

20

Specified Individuals With An Interest

• A specified individual is defined as having an interest in an SFFA if suchp gperson reports on their tax return any income, gain, loss, deduction, credit,gross proceeds or distribution attributable to the holding or disposition of theasset.

• Notwithstanding, specified individuals can have an interest in a SFFA even ifno income gain loss deduction credit gross proceeds or distribution isno income, gain, loss, deduction, credit gross proceeds or distribution isattributable to the holding or disposition of the asset during the tax year.

• If a parent makes an election under Sect. 1(g)(7) to include his or her child’sunearned income on the tax return, the parent is deemed to have an interest inany SFFA held by the child.

21

Specified Individuals With An Interest (Cont.)

• Because the proposed regulations are not yet effective, a specified individualp p g y pis not deemed to have an interest in an SFFA held by a partnership,corporation, trust or estate solely as a result of the taxpayer’s being a partner,shareholder or beneficiary.

• Owner of a disregarded entity with an SFFA

• Grantor trust with an SFFA

22

Filing Thresholds

• Unmarried, or married filing separate; taxpayers living in the U.S.

– > $50,000 on the last day of the year, or– > $75,000 on any day during the year

• Married taxpayers filing jointly and living in the U.S.

– > $100,000 on the last day of the year, or

– > $150,000 on any day during the year

• Taxpayers meeting one of Sect 911 tests• Taxpayers meeting one of Sect. 911 tests

– Single or married filing separate

• > $200,000 on the last day of the year, or

• > $300,000 on any day during the year

– Married filing joint

• > $400,000 on the last day of the year, or

• > $600,000 on any day during the year

23

Miscellaneous Filing Issues

• Because the proposed regulations are not yet effective, a Specified Individualp p g y pis not deemed to have an interest in an SFFA held by a partnership,corporation, trust or estate solely as a result of the taxpayer’s being a partner,shareholder or beneficiary.

• Specified individual who owns a disregarded entity must file Form 8938, ifthe entity owns a SFFAthe entity owns a SFFA.

• If a specified individual owns any part of a grantor trust that holds an SFFA,then the specified individual must file Form 8938 to report the SFFA held bythe trust.

24

Jointly Held Assets

• Married individuals/joint return: Single Form 8938 reports all SFFAs held byj g p ythe couple.

• Joint owners married/specified individuals, and file separate tax returns: Eachspouse includes 50% of the asset’s value when computing the total value ofspouse includes 50% of the asset s value when computing the total value oftheir SFFAs.

When filing Form 8938, each spouse files and reports 100% of the jointlyheld asset not the 50% value used when computing the thresholdheld asset, not the 50% value used when computing the threshold.

• Joint owner not a spouse: Each owner files and reports 100%.

• Joint owner spouse who is not a SI: Owner files a Form 8938 reporting 100%• Joint owner spouse who is not a SI: Owner files a Form 8938 reporting 100%of value.

25

Specified Foreign Financial Assets: Accounts

• SFFAs include both foreign financial accounts and other foreign assets• SFFAs include both foreign financial accounts and other foreign assets.

• Foreign account: The most notable SFFA is a foreign financial account. Forpurposes of Sect. 6038D, the account must be maintained, and that term is notdefined in the statute or regulations, by the foreign financial institution. Theseterms, however, are defined by reference to the withholding provisions in Sect.1471.

• A financial account includes any depository or custodial account maintained bya financial institution. It also includes any equity or debt interest in suchfinancial institution (other than interests which are regularly traded on anestablished securities market).

26

Foreign Financial Institution

• A foreign financial institution is an entity that:g y

• Accepts deposits in the ordinary course of a banking or similar business

• Holds financial assets for the account of others as a substantial portion ofpits business, or

• Is engaged or holds itself out as being engaged, primarily in the businessof investing, reinvesting or trading in securities (as defined in Sect.of investing, reinvesting or trading in securities (as defined in Sect.475(c)(2) without regard to the last sentence thereof), partnership interests,commodities (as defined in Sect. 475(e)(2)), or any interest (including afutures or forward contract or option) in such securities, partnershipinterest or commodities.

27

Foreign Financial Institution (Cont.)

• Even though Sect. 1471(d)(4) specifically excludes a foreign financialg ( )( ) p y ginstitution organized under the laws of a U.S. possession from the withholdingregime, an account located within a U.S. possession is included within thedefinition of a SFFA.

Account located in a U.S. possession is an SFFA.

If it is held by bona fide resident of a U.S. possession, an account is exempt.

28

Specified Foreign Financial Assets: Assets

• Foreign assets: Foreign assets held outside of a financial institution can also• Foreign assets: Foreign assets held outside of a financial institution can alsoclassify as a SFFA.

SFFA must be held for an investment to be reportable.

Reportable unless held for trade or business

Examples: Life insurance or annuities with a cash surrender value, aninterest in an estate, an interest in a retirement plan, an account held with ainterest in an estate, an interest in a retirement plan, an account held with atrust company, shares in a mutual fund, and interest in a hedge fund orprivate equity fund. It can also include deferred compensation and pensionplans held by U.S. expatriates working abroad.

29

Specified Foreign Financial Assets: Assets (Cont.)

• Sect. 6038D(b) includes the following assets provided they are held for( ) g p yinvestment:

– Stock or securities issued by a non-U.S. person. A U.S. person is definedwith regard to Sect. 7701(a)(30).with regard to Sect. 7701(a)(30).

– Any financial interest or contract held for investment that has a non-U.S.issuer or counter-party. U.S. taxpayers with foreign family members shouldwatch for this trap as a loan from or to a foreign family member canwatch for this trap, as a loan from or to a foreign family member canqualify as a SFFA.

– Any interest in a foreign entity. Foreign entity is defined with regard toSect 1473(5) which holds it is an entity that is not a U S personSect. 1473(5), which holds it is an entity that is not a U.S. person.

30


• Regulations provide the following examples of other assets that qualify asg p g p q ySFFAs:

• Stock issued by a foreign corporation

i l fi i i f i hi• A capital or profits interest in a foreign partnership

• A note, bond, debenture or other form of indebtedness issued by a foreignperson; or an interest in a foreign trust or estate

• An interest rate swap, currency swap, basis swap, interest rate cap, interest ratefloor, commodity swap, equity swap, equity index swap, credit default swap orsimilar agreement with a foreign counter-partyg g p y

• An option or other derivative instrument with respect to any of these examplesor with respect to any currency or commodity that is entered into with aforeign counter-party or issuerforeign counter party or issuer

31


• Beneficial interests in foreign estates and trustsBeneficial interests in foreign estates and trusts

• Not reportable unless taxpayer has reason to know of their interest. If thetaxpayer receives a distribution from the trust or estate, then knowledge isattributable to him or herattributable to him or her.

• REMINDER: Foreign asset is reportable if it is held for investment.

• The regulations instruct that an asset is held for investment and thereforereportable, unless the taxpayer uses it or holds it in the conduct of their trade orb ibusiness.

• To determine how the asset is used, the regulations apply, with certainmodifications, the asset-use test of Sect. 1.864-4(c)(2)., ( )( )

32


• Sect. 1.864-4(c)(2): Consequently, an asset will qualify for the exception if it is:

• Held for the principal purpose of promoting the present conduct of a trade orbusiness

- Confusion may exist regarding compensatory stock optionsConfusion may exist regarding compensatory stock options

• Acquired and held in the ordinary course of a trade or business; for example,when the business accrues an account receivable

O h i h ld i di l i hi h d b i• Otherwise held in a direct relationship to the trade or business

- An asset is presumed to have a direct relationship if it was purchased withassets generated by the trade or business, if the income from the asset isreinvested in the business and if employees from the trade or businessreinvested in the business, and if employees from the trade or businessoperate significant management and control over the asset. Stock will neverqualify for the trade or business exception, nor will an asset acquired to helpwith future diversification or future business contingencies.

33

Excluded Foreign Assets

• Foreign currencyg y

• Payments received in the form of Social Security, social insurance or othersimilar programs administered by a foreign government

R l h h d l d d i bl• Real estate, whether developed or rented, is not a reportable asset.

• Personal property, such as art work, jewelry and automobiles

If i l d h l i lik l bl If asset is leased, the lease is likely reportable as a contract.

If payments are deposited into a foreign account, reportable

If held through a foreign entity, reportable

If grantor trust or disregarded entity

34

Duplicate Reports Exception

– Exemption for SFFAs that would otherwise be reported on more than one informationalform

• Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Foreign Gifts

• Form 3520-A, Annual Return of Foreign Trust with U.S. Beneficiaries

• Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations

• Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund

• Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnershipsf p g p

• Form 8891, U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans

– However the taxpayer must still complete Part IV of Form 8938 and provideHowever, the taxpayer must still complete Part IV of Form 8938 and provideidentifying information on the top of the form.

35

Additional Exemptions

• Accounts maintained by dealers or traders in securities or commodities areyexempt, if all of the holdings are subject to the mark to market accountingrules for dealers in securities or an election under Sect. 475(e) or (f) is made.

• Financial account with domestic branch of foreign company, or foreign sub ofFinancial account with domestic branch of foreign company, or foreign sub ofU.S. parent

• Bona fide resident of a U.S. possession, provided asset is located within U.S.possession and meets other standardspossession and meets other standards

• If bona fide residents only accounts are within U.S. possession, not reportable

36

Required Information

• Foreign financial account, the name and address of the financial institution,the account number, and the date on which the account was opened or closed

• Stock or security, the name and address of the issuer, other informationnecessary to determine the class or issue of the stock or security, and the date

hi h th SFFA i d ldon which the SFFA was acquired or sold• Financial instrument or contract held for investment, the names and addresses

of all issuers and counter-parties including information that identifies thefinancial instrument or contractfinancial instrument or contract

• Interest in a foreign entity, information that identifies the interest includingthe name and address of the entity

• The maximum value of the SFFA during the portion of the year in which thespecified individual held an interest

37

Required Information (Cont.)

The amount of any income, gain, loss, deduction or credit recognized; and ay , g , , g ;cross-reference to the IRS form on which reported

Exchange rates used

d f i d h d li i l h For SFFAs excepted from reporting under the duplicate reporting rules, theforms on which the SFAA was reported

3520 or 3520 A 5471 8621 8865 8891 3520 or 3520-A, 5471, 8621, 8865, 8891

38

Valuation Guidelines

• General rules that apply when determining an asset’s value:• General rules that apply when determining an asset s value:

– All foreign currencies must be converted to U.S. dollars.

Fair market value is the default valuation– Fair market value is the default valuation.

– The value is never less than zero.

i l i i d– No appraisal is required.

39

Valuation Guidelines (Cont.)

• Compute value, both for determining aggregate value of SFFAs to see if itp , g gg gexceeds threshold and for purposes of reporting the maximum value on Form8938

For both purposes, the asset’s maximum value is generally its highest fair For both purposes, the asset s maximum value is generally its highest fairmarket value during the tax year.

Financial accounts may rely on statements provided by the financial institution(if issued at least annually)(if issued at least annually)

Unless knowledge that they do not provide reasonable estimate of theaccount’s maximum value.

Foreign assets, may use the year-end value

Unless knowledge that it is not a reasonable estimate of the asset’smaximum valuemaximum value

40


• For the beneficiary of a foreign trust the maximum value is the sum of the• For the beneficiary of a foreign trust, the maximum value is the sum of thefollowing:

– The total of all distributions received during the tax year from the trust,whether money or property; andwhether money or property; and

– The value as of the last day of the taxpayer’s right to mandatorydistributions, with such distributions valued in accordance with the rulesin Sect. 7520.

41


• For the beneficiary of a foreign estate foreign pension plan or foreign deferred• For the beneficiary of a foreign estate, foreign pension plan or foreign deferredcompensation plan:

– Maximum value is the fair market value of the taxpayer’s interest as ofyear endyear-end.

– If the taxpayer does not know the value or cannot determine it, the valueto be used is equal to the cash and other property distributed to the

d i htaxpayer during the year.

– If, however, the taxpayer did not receive any distributions during the year,the value of the interest is zero.

42

Foreign Currency Conversion

The value of SFFAs (both) aggregate and maximum value is first determined( ) gg gin the local foreign currency.

The foreign currency value is then converted into U.S. dollars, using theforeign currency exchange rateforeign currency exchange rate.

Determination date is the last day of the taxable year, even if the assetwas disposed of earlier.

Currency conversion should be done using the U.S. Treasury Department’sFinancial Management Service foreign currency exchange rate.

If th h h t th bli l il bl t If there no such exchange rate, you can use any other publicly availably ratebut must disclose it on 8938.

43

Penalties

• Minimum penalty is $10,000.p y ,

• Increases by $10,000 for each 30-day period following notification fromTreasury, with the maximum penalty being $50,000.

90 d i d f ll i ifi i f h T b f• 90-day grace period following notification from the Treasury beforeadditional $10,000 penalties accrue

• Reasonable cause: The burden will be on the taxpayer to establish thatreasonable cause exists, although the determination will be based upon thefacts and circumstances of the specific case.

– The fact that a foreign jurisdiction would impose a civil or criminal penaltyg j p p yfor disclosing the information will not satisfy reasonable cause.

44

Penalties (Cont.)

Married taxpayers filing a joint return who fail to file a Form 8938 arep y g jsubjected to the penalty, as if each was a single person. Both spouses willincur liability for the penalties, and such liability will be joint and several.

For purposes of assessing penalties, if the taxpayer does not provide evidenceFor purposes of assessing penalties, if the taxpayer does not provide evidenceof value, then the value will be presumed to exceed the reporting threshold.

Deficiency from a SFFA is subject to a 40% penalty.

If the taxpayer underpays tax as a result of fraud,then the deficiency will be subject to a 75% penalty.

Criminal penalties may also apply.p y pp y

45

Statute Of Limitations Changes

If it th $5 000 f i tt ib t bl t t• If you omit more than $5,000 of income attributable to one or more assetsrequired to be reported under Sect. 6038D, the IRS will have six years fromthe date the Form 8938 is filed to audit the taxpayer.

• The same six-year SOL will apply to a domestic entity that is formed oravailed of to hold foreign financial assets and is subject to the reportingrequirements of Sect. 6038D

Th t t t f li it ti i t ll d til th f i fil d• Three-year statute of limitations is tolled until the form is filed.

46

Proposed Regulation Sect. 1.6038D-6

• Issued on Dec 14 2011Issued on Dec. 14, 2011

• Intent to finalize proposed regulation during 2012

• Effective for tax years beginning after Dec 31 2011• Effective for tax years beginning after Dec. 31, 2011

• As currently proposed, a domestic corporation, partnership or trust is deemedto be a specified domestic entity, if it is availed for the purpose of holding,directly or indirectly, SFFAs.

The determination as to whether such a domestic entity is availed for thestated purpose of holding a SFFA is made annuallystated purpose of holding a SFFA is made annually.

47

Specified Domestic Entity(Corporations/Partnerships)(Corporations/Partnerships)

– Corporation/partnership: Will be deemed to have been formed or availed– Corporation/partnership: Will be deemed to have been formed or availedif this three-part test is satisfied:

i. The entity has an interest in an SFFA.

ii. The entity is closely held by specified individual.

iii. One of two passive income tests is met.

48

Specified Domestic Entity (Corporations/Partnerships) Cont(Corporations/Partnerships), Cont.

• Passive asset tests

– At least 50% of the entity’s gross income for the taxable year is passive, orat least 50% of the assets held at any time during the taxable year areassets that produce or are held for production of passive income; orassets that produce or are held for production of passive income; or

– At least 10% of the entity’s gross income for the taxable year is passive;or, at least 10% of its assets are passive and the entity is formed or availed

f b ifi d i di id l ith th i i l f idi thof by a specified individual with the principal purpose of avoiding thereporting obligations under 6038D (facts-and-circumstances test)

49

Specified Domestic Entity(Corporations/Partnerships) Cont(Corporations/Partnerships), Cont.

• Passive income appears to follow foreign personal holding company incomepp g p g p ydefinitions.

• Presumably passive assets follow PFIC rules.

l l h ld ll f h l i l fi• Closely held generally means 80% of the vote, value, capital or profitsinterest, as the case may be, applying attribution rules under 267(c) and (e)(3).

• Examples in the regs show how complex an undertaking this will be in certaincases to determine if reporting is required.

50

Specified Domestic Entity(Domestic Trusts)(Domestic Trusts)

• A trust is a specified domestic entity if it has an interest in SFFAs withA trust is a specified domestic entity if it has an interest in SFFAs withaggregate value > $50,000 at the end of the year or $75,000 at any time duringthe year.

• Has one or more specified persons as a current beneficiary

– Current beneficiary is any person who at any time during the year mayCurrent beneficiary is any person who at any time during the year may(whether by entitlement or exercise of discretion) receive a distributionfrom principal or income from the trust.

C t b fi i i d t i d ith t d t f– Current beneficiary is determined without regard to any power ofappointment, to the extent such power remains unexercised at the end ofthe year.

51

Specified Domestic Entity(Domestic Trusts) Cont(Domestic Trusts), Cont.

• The following domestic trusts are exempt from 6038D reporting:• The following domestic trusts are exempt from 6038D reporting:

– Trusts exempt from tax under §664(c), excepted from definition ofspecified U.S. person under §1473(3) regulations thereunder (i.e., publicly

d d i d h i ffili i i f dtraded corporations and their affiliates; entities exempt from tax under§501(a); IRAs; U.S. or state government or government agency orinstrumentality; banks; REITs; RICs; common trust funds; and trustsexempt from tax under §664(c) or described in §4947(a)(1) )exempt from tax under §664(c) or described in §4947(a)(1).)

– Domestic trust, if trustee is a bank, financial institution or certaincorporations subject to financial oversight; provided that the trustee timelyfil l t d i f ti t f th t tfiles annual returns and information returns for the trust.

– Grantor trusts described in §§671-679; grantor is treated as directlyowning specified foreign financial assets.

52

FATCA Overview And ImplicationsFATCA Overview And Implications FATCA facts FACTA adds Chap. 4 to the Code; enacted as part of the HIRE

ActAct. The purpose of FATCA is to increase compliance with U.S. tax

laws through increased disclosure of offshore assets. The goal of FATCA is to ensure that the U.S. can determine the ownership of U.S. assets in foreign accounts.

The goal of FATCA is not to increase taxes; however, there is a 30% withholding tax.

FATCA affects payors of “withholdable payments” that are made to any foreign entities: Irrespective of where payor is in the stream of payment Irrespective of whether entities have U.S. owners Irrespective of whether entities have U.S.-source income Irrespective of whether entities own U.S. securities

53

FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Previous guidance Hire Act (2010) included FATCA provisions. TheHire Act (2010) included FATCA provisions. The

provisions applied to foreign securities lending transactions done for tax avoidance.

Notice 2010-60: Provided guidance on requirements for a foreign financial institution (FFI); addressed due diligence issuesdiligence issues

Notice 2011-34: Provided guidance on documentation of pre existing accounts pass through payments andpre-existing accounts, pass-through payments and reporting requirements, transitional relief for FATCA withholding on payments to FFIs

54

FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Summary overview New proposed regulations were released on Feb. 8,New proposed regulations were released on Feb. 8,

2012.

U S Treasury Code sections 1471 through 1474 U.S. Treasury Code sections 1471 through 1474 (effective for payments after Dec. 31, 2012)

All foreign financial institutions (FFIs) will be required to enter into disclosure compliance agreements with the U.S. Treasury, and all non-financial foreign entities (NFFEs) must report and/or certify their ownership or be(NFFEs) must report and/or certify their ownership or be subject to the same 30% withholding.

55

FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Foreign entities (FFIs/NFFEs) Foreign financial institutions (FFIs)Foreign financial institutions (FFIs) Engaged in business of holding financial assets for

the account of others Accept deposits in the ordinary course of banking Accept deposits in the ordinary course of banking Investing; reinvesting; trading in securities,

partnership interests, commodities, or derivatives (mutual and hedge funds private equity funds(mutual and hedge funds, private equity funds, securities)

Non-financial foreign entities (NFFEs) A NFEE i f i tit th t i t fi i l An NFEE is any foreign entity that is not a financial institution.

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Withholdable payments/source of same Sect. 1473(1)

A t th t i di bj t t ithh ldi t Any payment that is ordinary subject to withholding tax Fixed, determinable, annual, periodical (FDAP) income Gains derived from the sale of real or personal property

(including market discount and option premiums but not(including market discount and option premiums, but not including original issue discount)

Items of income excluded from gross income, without regard to the U.S. or foreign status of the owner of the g gincome. Examples are as tax-exempt municipal bond interest and qualified scholarship income.

Chap. 3 Gross proceeds from sale of any property that could produce

interest or dividends from a source in the U.S. “Grandfathered obligations” are not included!

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) “Grandfathered obligations” Any legal agreement that produces or could produce a withholdable

payment or “pass-through payment,” other than an instrument that is d i f U S h l k d i itreated as equity for U.S. tax purposes or that lacks a stated expiration

or term The proposed regulations expand the definition of a grandfathered

obligation to include obligations outstanding on Jan. 1, 2013.g g g That is NOT materially altered after 1/1/2013 If MM, obligation will be treated as newly issued on the date of the

material modification. If obligation is a debt instrument for U S tax purposes MM is If obligation is a debt instrument for U.S. tax purposes, MM is

defined as “a significant modification pursuant to Treasury regulations.”

In all other cases, whether a modification of an obligation is i l ill b d i d b d ll l f dmaterial will be determined based upon all relevant facts and

circumstances. Withholding is not required with respect to any payment under a

grandfathered obligation or from the gross proceeds from any g g g ydisposition of such an obligation.

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) “Grandfathered obligations” (Cont.)

The proposed regulations do not include in the p p gdefinition of a grandfathered obligation any interest in an entity that is treated as equity for U.S. tax purposes, regardless of whether such entity holds assets that give rise to grandfathered payments.

Preamble to the regulations: Treasury and the IRS are considering whether to treat as grandfathered obligations certain equity interests in vehicles that invest solely in debt and similar instruments, if certain requirements are satisfied.

Takeaway: Withholding is not required with respect to any payment made under a grandfathered obligation or from the gross proceeds from any disposition of such an bli iobligation.

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Pass-through payments Sect. 1471(d)(7) Defined as any withholdable payment or other

payment, to the extent attributable to a withholdable payment

FFIs that are participating FFIs (PFFIs) must withhold on pass-through payments made to non-participating FFIs and non-obliging account holders.

Proposed regs: Withholding will not be required with respect to foreign pass-through payments before Jan. 1, 2017. Until withholding applies, PFFIs must to report

annually to the IRS the aggregate amount of certain payments made to each non-participating FFIFFI.

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Pass-through payments (Cont.) Proposed regs No guidance on the definition of a foreign pass-throughNo guidance on the definition of a foreign pass through

payment, presumably due to the fact that withholding does not apply before Jan. 1, 2017

If made final, regs would implement withholding and reporting g p g p gon pass-through payments. Starting Jan. 1, 2014, FFIs will be required to withhold on

pass-through payments that are withholdable payments, d ill l b i d t t ll thand will also be required to report annually on the

aggregate amount of certain payments to each non-participating FFI for the 2015 and 2016 calendar years.

Starting Jan 1 2017 the scope of pass-through paymentsStarting Jan. 1, 2017, the scope of pass through payments will be expanded beyond withholdable payments, and FFIs will be required to withhold on such payments pursuant to and in accordance with future guidance.

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Pass-through payments (Cont.)/Dormant accounts Extends FATCA beyond the U.S.; could include

payments between two foreign entitiespayments between two foreign entities Preamble to regs: Treasury and the IRS are considering

modifications to pass-through payment withholding. M difi ti ld ll t i FFI t l Modification would allow certain FFIs to rely upon a safe harbor pass-through percentage, if the FFI does not elect to calculate an exact percentage.

R l id i l l f d t t Regs also provide a special rule for dormant accounts. A PFFI that withholds on pass-through payments

made to an account holder of a dormant account i t d f d iti th t ithh ld t idmay, instead of depositing the tax withheld, set aside

the amount withheld in escrow until the date that the account ceases to be a dormant account.

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Participating foreign financial institution (PFFI) Avoiding the 30% withholding requires FFI to be a PFFI PFFI requirements: Enter into an agreement with the Service Survey all account holders in order to determine y

which account holders are U.S. Comply with all due diligence requirements Report information on all U S accountsReport information on all U.S. accounts Withhold the 30% tax on any “pass-through

payments” to wayward account holders or FFIs that are not PFFIsare not PFFIs

Comply with all Service information requests Close any U.S. accounts (or consider alternatives)

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Financial accounts/FFI agreements FFIs entering into FFI agreements are required toFFIs entering into FFI agreements are required to

identify their U.S. accounts and comply with certain due diligence procedures.

Sect. 1471(d): Definition of U.S. accountSect. 1471(d): Definition of U.S. account As any financial account held by one or more

specified U.S. persons or owned foreign entities, subject to certain exceptionssubject to certain exceptions

Sect. 1471(d)(2): A financial account is any depository account, custodial account, or equity or debt interest in an FFI, other than interests that aredebt interest in an FFI, other than interests that are regularly traded on an established securities market.

But see proposed regs for further clarifications!

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Scope of FFI agreements FFIs that enter into FFI agreements: Agreements apply both to the U.S. accounts of the PFFI

and to the U.S. accounts of each additional FFI that is a member of the same expanded affiliated group.

Additional guidance: Additional guidance: Notice 2011-34

An FFI that is a member of an expanded affiliated group must be a PFFI or deemed-compliant FFI ingroup must be a PFFI or deemed-compliant FFI, in order for any FFI in the expanded affiliated group to become a PFFI.

Proposed regsg If an FFI cannot be FACTA-compliant, 2-year

“reprieve” (?) (1/1/2016) to become fully compliant/full implementation

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Deemed-compliant FFIs A deemed-compliant FFI may avoid the 30% withholding! Sect 1471(b)(2)Sect. 1471(b)(2) Provides requirements for FFI to be deemed-compliant FFI Notice 2011-34 Entities that will be deemed-compliant Proposed regs:

Registered, deemed-compliant FFIs Eliminate U.S. accounts (e.g., due diligence)

N ti 2010 60 Notice 2010-60 Notice 2011-34

Regs: Individual accounts/entity accounts, pre-existing accounts and new accounts p g

Register with the Service Certified, deemed-compliant FFIs

Certification to withholding agent

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Proposed regulations Must establish that withholding does not apply!

A l i th d t f t Applying the proposed regs to facts ANALYSIS Agent? Payee?

Withh ld bl t? Withholdable payment? Withholding avoidance?

“Intergovernmental approach” Statement: U.S., France, Germany, Italy, Spain, UK Preamble: “Alternative approach” FFI collects and reports the information to the government

f fof its country of residence, and the resident government enters into a reporting agreement with the Service (treaty, etc.).

Implications/thoughts Implications/thoughts

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FATCA Overview And Implications (Cont.)FATCA Overview And Implications (Cont.) Important forthcoming dates March 18, 2012

Cl ifi ti S f df th d bli ti Clarification: Scope of grandfathered obligations Summer-Fall 2012 Final regulations, draft and final versions of FFI

agreements reporting formsagreements, reporting forms Jan. 1, 2013 Effective date of FATCA legislation2013 2013 FFI agreements

Jan. 1, 2014FATCA ithh ldi t t FFI d NFFE b i FATCA withholding on payments to FFIs and NFFEs begins on withholdable payments.

Jan. 1, 2015Pass through payments subject to FATCA after 1/1/2015 Pass-through payments subject to FATCA after 1/1/2015.

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Form 8938:Statement Of Specified Foreign Financial AssetsStatement Of Specified Foreign Financial Assets

For tax years beginning after March 18, 2010 (i.e. 2011), certain individuals must file Form 8938 (Statement of Specified Foreign Financial Assets)must file Form 8938 (Statement of Specified Foreign Financial Assets).

For 2011, only specified individuals are required to file Form 8938: • A U.S. citizen • A resident alien• A non‐resident alien who makes an election to be treated as a resident alien• A resident of certain U S possessions• A resident of certain U.S. possessions

Specified foreign financial assets• Financial accounts (any depository or custodial account maintained by a foreign financial institution)• Assets held for investment (stock by foreign corporation, interest in foreign partnership, debt issue by a foreign person, interest in foreign trust or estate, options, swaps)trust or estate, options, swaps)

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Form 8938 OverviewFiling thresholds

d f h l l f h f hForm 8938 is required if the total value of the SFAs for the tax year is: Unmarried taxpayer living in the U.S.: More than $50,000 on the last day of the tax year or

more than $75,000 any time during the tax year Married taxpayers filing joint return and living in the U.S.: More than $100,000 on the last day

of the tax year or more than $150,000 at any time during the tax year Married taxpayers filing separate return and living in the U.S.: More than $50,000 on the last

day of the tax year or more than $75,000 at any time during the tax year Taxpayers living abroad and not filing joint returns: More than $200,000 on the last day of

the tax year or more than $300,000 at any time during the tax year Married taxpayers filing joint return and living abroad: More than $400,000 on the last day of

th t th $6 t ti d i th t the tax year or more than $600,000 at any time during the tax year

Relation to Form TD F 90‐22.1 (FBAR) Information to report on Forms 8938 and TD F 90‐22.1 overlaps as it relates to financial accounts. Form 8938 does not replace Form 90‐22.1, and individuals may now be required to file both 93 p 9 y q

forms. Form TD F 90‐22.1 is filed with the Treasury Department on or before June 30 with respect to the

preceding taxable year. Has to be received on or before June 30, 2012 No “timely mailing” = “timely filing” ruley g y g

Form 8938 is filed with the IRS along with the individual's income tax return. Can be filed on extension

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Structure Of Form 8938 Form 8938 consists of four parts:

Part I is for financial accounts, such as a deposit or custodial account with a financial institution.

Part II is for other types of financial assets, such as stocks, bonds and other financial instruments.

Form 8938 has room for just one asset in Part I and Part II. Form 8938 has room for just one asset in Part I and Part II. Taxpayers may use as many Forms 8938 as needed to report their foreign financial assets.

Part III is a summary showing where income from the foreign Part III is a summary showing where income from the foreign financial assets is reported elsewhere on the tax return.

Part IV is a summary for certain types of financial assets excepted from reporting on Form 8938, because that information is reported from reporting on Form 8938, because that information is reported elsewhere on the tax return.

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Form 8938: Taxpayer Identification Name or names on return SSN or tax identification number Tax yearTax year Type of taxpayer

Specified individual (married, filing jointly or other)S ifi d d ti tit Specified domestic entity For now, only specified individuals are required to file Form 8938.

Upon issuance of regulations, FATCA may require reporting by ifi d d ti titispecified domestic entities.

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Form 8938 Part I:Form 8938, Part I:Foreign Deposit And Custodial Accounts

Type of account: Deposit or custodial

Account numberAccount number

Check the box if the account was opened or closed during the tax year

Check the box if account is owned jointly with spouse

Check the box if no tax item was reported in Part III of Form 8938 with respect to this account

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Form 8938, Part I (Cont.) Maximum value of the account during tax year (in U.S. dollars)

Answer if you used a foreign currency exchange rate to provide the Answer if you used a foreign currency exchange rate to provide the maximum value

If “Yes” then identify the foreign currency in which account is If Yes , then identify the foreign currency in which account is maintained, identify the foreign exchange rate, and identify the source for the exchange rate if it is not from U.S. Treasury Financial Management ServiceManagement Service

Name and mailing address of financial institution

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Form 8938, Part II: Other Foreign Assets Description of asset ID or other designation If asset is acquired during the tax year, then list the dateIf asset is acquired during the tax year, then list the date If asset is disposed of during the tax year, then state the date Check the box if asset is jointly owned with spouse Ch k th b if t it i t d f thi t Check the box if no tax item is reported for this asset Check the value range; if more than $200K, provide specific value Answer if you used a foreign currency exchange rate; if “Yes”, then

identify the foreign currency in which account is maintained, identify the foreign exchange rate, and identify the source for the exchange rate if it is not from U.S. Treasury Financial Management Service

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Form 8938, Part II (Cont.) If the asset reported on line 1 of part II is stock of a foreign entity or an interest

in a foreign entity, report: Name of the entity Type of the entity (corporation, partnership, trust estate) Check if it is a passive foreign investment company (PFIC) Mailing address of the entity

If the asset reported on line of Part II is not stock or an interest in a foreign entity, report: Name of issuer or counter‐party (if more than one issuer or counter‐party,

attach additional pages for each one)attach additional pages for each one) Type of issuer or counter‐party (individual, partnership, corporation, trust,

estate) Identify issuer or counter‐party as a U S or foreign person Identify issuer or counter‐party as a U.S. or foreign person Mailing address of issuer or counter‐party

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Part III: Summary Of Tax Items AttributablePart III: Summary Of Tax Items Attributable To Specified Foreign Financial Assets

Part III of Form 8938 required taxpayers to enter the total income, gain or loss, deductions or credits for specified foreign financial assets; and the schedule, form, or return on which the item is reported.

Tax items attributable to foreign assets reported in Part I and Part II of Tax items attributable to foreign assets reported in Part I and Part II of the form should be reported separately.

Information for the following items must be reported separately: Interest Dividends Royalties Gains or losses Deductions Deductions Credits

Note: If no tax item is reported with respect to a specified asset, then box in line 3d should be checked in Part I or Part II of the Form.3

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Part IV:Part IV: Excepted Specified Foreign Financial Assets If certain assets were reported on other tax forms for the same tax year,

they may be excepted from reporting on Form8938. Exception applies to assets reported on: Form 3520 (Return to Report Transactions with Foreign Trusts and

Receipts of Foreign Gifts) Form 3520‐A (Annual Information Return of Foreign Trust with U.S. 35 g

Owner) Form 5471 (Information Return with Respect to CFC) Form 8621 (Information Return of a PFIC or QEF Shareholder)Form 8621 (Information Return of a PFIC or QEF Shareholder) Form 8865 (Return with Respect to Foreign Partnerships) Form 8891 (Information Return for Beneficiaries of Canadian

Registered Retirement Plans)Registered Retirement Plans) If a foreign asset was disclosed in one of these forms, then identify this

form in Part IV and provide the number of forms filed. 78

Matthew Lee, Blank Rome

OTHER RECENT

Matthew Lee, Blank RomeIgor Drabkin, Holtz Slavett & Drabkin

DEVELOPMENTS OF NOTE

IRS Fact Sheet 2011 13:IRS Fact Sheet 2011‐13:Information For U.S. Citizens Or Dual Citizens Residing Outside U.S. On Dec. 7, 2011, the IRS posted on its Web site Fact Sheet 2011‐13,

Information for U S Citizens or Dual Citizens Residing Outside Information for U.S. Citizens or Dual Citizens Residing Outside the U.S. The fact sheet discussed obligations by the U.S. taxpayers who reside abroad to file income tax returns and FBARs.

The fact sheet largely confirms that no penalties will be imposed on l h i d d h li d i h ll h late returns when no tax is due, and the taxpayer complied with all the tax laws of the country of residence. Failure to file required bank account information will also be forgiven for “reasonable cause.”

The IRS does not grant a blank forgiveness of the penalties, but g g p ,discusses what may constitute “reasonable cause.”

The IRS provided four examples of the situations in which penalties will not be applied. The facts discuss taxpayers who reside and work outside of the U S and were not aware of the U S filing obligations outside of the U.S. and were not aware of the U.S. filing obligations. The IRS seems to suggest that in these cases, the taxpayer may file delinquent returns directly with the IRS, attaching an explanation of reasonable cause.

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IRS Fact Sheet 2011‐13: Reasonable Cause With respect to a failure to file or failure to pay, reasonable cause is based on a consideration of all the facts and

circumstances. Reasonable cause relief is generally granted by the IRS when you demonstrate that you exercised ordinary business care and prudence in meeting your tax obligations, but nevertheless failed to meet them. In determining whether you exercised ordinary business care and prudence, the IRS will consider all available information, including: The reasons given for not meeting your tax obligations Your compliance history The length of time between your failure to meet your tax obligations and your subsequent compliance Circumstances beyond your control

Reasonable cause may be established if you show that you were not aware of specific obligations to file greturns or pay taxes, depending on the facts and circumstances. Among the facts and circumstances that will be considered are: Your education Whether you have previously been subject to the tax Whether you have been penalized before Whether there were recent changes in the tax forms or law that you could not reasonably be expected to know The level of complexity of a tax or compliance issue

You may have reasonable cause for non‐compliance due to ignorance of the law, if a reasonable and good faith effort was made to comply with the law, or you were unaware of the requirement and could not reasonably be expected to know of the requirement.

The IRS also discusses factors that may be relevant to determining “reasonable cause,” or whether failure to file an FBAR may be considered “willful” or “non‐willful.”

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DOJ/IRS Enforcement EffortsDOJ/IRS Enforcement Efforts

• Enforcement scorecard– 150 grand jury investigations of offshore‐banking clients – 36 accountholders criminally charged– 31 guilty pleas entered– Sentences generally have been light, however.– Numerous facilitators also charged (bankers, attorneys and advisors)

• Data being handed over to U S authoritiesData being handed over to U.S. authorities– “[T]he IRS is receiving, from UBS and from the Swiss, account information

about thousands of the most significant tax cheats among the U.S. taxpayers who maintain secret Swiss bank accounts.” (DOJ Web site)taxpayers who maintain secret Swiss bank accounts. (DOJ Web site)

– HSBC “John Doe” summons voluntarily withdrawn and account information handed over to U.S. (from HSBC SEC filing)

• U S charged two Swiss “full service tax evasion advisors” on March 13 2012• U.S. charged two Swiss full service tax evasion advisors on March 13, 2012.

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Increasing Rates Of FBAR ComplianceIncreasing Rates Of FBAR Compliance

From 2004 to 2009:– The number of FBARs filed with the IRS increased 145%, from

217,699 to 534,043.– FBAR‐related examinations increased 96%, from 334 to 656.FBAR related examinations increased 96%, from 334 to 656.– FBAR penalty assessments increased from $4.2 million to $20.5

million.• BUT:• BUT:

– IRS estimates that 1 million U.S. taxpayers are required to file FBARs annually (2008 guidance).

– State Department estimates 5 million U.S. citizens live abroad.

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Other Recent Developments

On Jan. 31, 2012, the Swiss Finance Ministry announced that it handed over to the U.S. secret banking data related to the DOJ tax investigation. Data contain approximately 20,000 pages of encrypted data on

Swiss banking practices, clientele and employees to the U.S. The key to unlocking the encrypted information remains in the

hands of the Swiss hands of the Swiss. The Swiss insist that in order to obtain unencrypted data, they

would like to reach a comprehensive bilateral solution with the U.S. and ensure that before the data is provided two conditions are met: (1) A request must be made pursuant to double taxation treaties (1) A request must be made pursuant to double‐taxation treaties, and (2) The individual named must have violated Swiss law.

On Feb. 2, 2012, DOJ indicted Wegelin & Co., the oldest Swiss private bank, for conspiring to hide more than $1.2 billion in secret offshore

taccounts.

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Focus On Foreign BanksFocus On Foreign Banks

• Swiss banks under investigation: Credit Suisse, Julius Baer Group, Basler Kantonalbank, Zuercher Kantonalbank, HSBC, Liechtensteinische Landesbank and Neue Zuercher Bank

• Wegelin & Co. was indicted, and correspondent accounts in U.S. seized, in February 2012

• Israeli banks under investigation: Bank Leumi, Bank Hapoalim and Mizrahi‐Tefahot Bank

• Other countries of interest: Liechtenstein, India, Singapore, Hong Kong

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Other Notable DevelopmentsOther Notable Developments

• Kawashima v. Holder (Feb. 21, 2012): Supreme Court held that tax fraud conviction is a deportable offense, for green card holders.

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