TaxNewsFlash-United States

October 27, 2009
No. 2009-484

PRINTABLE VERSION

Legislative Update: Finance, Ways and Means Chairmen Unveil Tax Havens Legislation

Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways and Means Committee Chairman Charles Rangel (D-NY) today unveiled the Foreign Account Tax Compliance Act of 2009—companion bills that would require foreign financial institutions, foreign trusts, and foreign corporations to provide information about their U.S. account holders, grantors, and owners, respectively.

The lawmakers said they had consulted with IRS and Treasury officials about the legislation (which has not yet been formally introduced). Treasury Secretary Tim Geithner praised the bill in a statement. The legislation is based upon Treasury proposals included in the 2010 budget, legislation introduced by Senator Carl Levin (D-MI) and Rep. Lloyd Doggett (D-TX), and draft legislation Chairman Baucus circulated in March.

Overview

Among its provisions, the bill would:

Require 30% withholding on payments to foreign financial institutions and other entities unless they acknowledge the accounts’ existence to the IRS and disclose relevant information including account ownership, balances and amounts moving in and out of the accounts

Require individuals and entities to report offshore accounts with values of $50,000 or more on their tax returns and extend to six years the statute of limitations on assessment, when offshore accounts are unreported or misreported

Require advisors who help set up offshore accounts to disclose their activities or pay a penalty, and require electronic filing of information reports about withholding on transfers to foreign accounts

Tighten rules and penalties with regard to foreign trusts, including rules to determine whether distributions from foreign trusts are going to U.S. beneficiaries and reporting requirements on U.S. transfers to foreign trusts

Provides that U.S. dividend payments received by foreign persons are treated as dividends even when structured as another type of distribution in an effort to avoid U.S. taxes

The Joint Committee on Taxation (JCT) released a technical explanation of the legislation: JCX-42-09

For an electronic version of the text of the House bill (identical to the Senate companion): Tax Haven Legislation (October 2009)

ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY KPMG TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in TaxNewsFlash-United States is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to US-KPMGWNT@kpmg.com. For more information, contact KPMG’s Federal Tax Legislative and Regulatory Services Group at + 1 202.533.4366, 2001 M Street NW, Washington, DC 20036-3310.

To unsubscribe from TaxNewsFlash-United States, reply to US-KPMGWNT@kpmg.com and type ‘TaxNewsFlash Unsubscribe' in the subject line, then click on the SEND button.

Privacy | Legal