change in tax law

[trooper]

IRS Bows to Reason... For Now

Bob Bauman JD, Chairman, Freedom Alliance

Dear

It is not often that the U.S. Internal Revenue Service (IRS) bows to reason and changes its collective mind on a given tax enforcement issue, even a little bit.

Last week, in one of those rare instances, the IRS announced that the original January 1, 2013 effective date for the Foreign Account Tax Compliance Act (FATCA) has been dropped.

Under the new IRS schedule, offshore private banks, which face the most onerous IRS requirements under FATCA, will not have to provide details on U.S. clients with accounts with more than $50,000 until the middle of 2014. Lower value accounts at private banks do not need to be reported until the end of 2014. Certain other accounts do not have to be reported until 2015.

What FATCA means for you and me, is that foreign financial institutions - including banks, investment brokerages and insurance companies - are going to be awash in new reporting regulations if they agree to continue to welcome American clients once FATCA becomes law. Adhering to these regulations will cost these companies many millions of dollars. They will have to expand greatly their compliance departments to stay on top of the U.S. government’s complicated tax and reporting rules.

So if you ran a business, would you cater to the clients that cost you more to serve and bring with them more risk of litigation? Or would you say, “Thanks, but no thanks” and focus your business elsewhere? It seems pretty simple. And, that is the exact decision thousands of foreign institutions are about to make if FATCA passes.

[ExecConsult]

This is one advantage of having an off shore entity (trust) own a lot of your stuff. There are businesses that will not do business with US citizens. However, if you have a foreign entity you can still take advantage of their services through the entity.

Good Post.

Best of Blessings,

Mark