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New Tax Law Looms for U.S. Taxpayers With Overseas Assets
[March 27, 2012]

New Tax Law Looms for U.S. Taxpayers With Overseas Assets


(Marketwire Via Acquire Media NewsEdge) NEW YORK, NY -- (Marketwire) -- 03/27/12 -- For U.S. taxpayers with overseas assets, the 2012 tax filing season brings fresh headaches in the form of a new law with complex, overlapping reporting requirements and the prospect of severe penalties for incomplete or incorrect disclosure, says Marks Paneth & Shron international tax advisor.



FATCA -- the Foreign Account Tax Compliance Act -- goes into effect for 2012 tax filings that cover the 2011 tax year. The law was passed as part of the Hiring Incentives to Restore Employment (HIRE) Act -- the so-called "Jobs Bill" -- in March 2010. It adds a new reporting burden and a risk of severe punishment -- a fine of up to $50,000 and significant accuracy-related penalties.

The new law is similar in intent to FBAR -- the Treasury Department's long-established Foreign Bank and Financial Account Report -- but it brings with it new forms, new deadlines and new disclosure requirements that may differ from FBAR. FATCA filings, an IRS requirement, are due much sooner -- on April 17, as part of the overall tax filing deadline. FBAR filings are not due until June 30.


"The requirements of FATCA are challenging to interpret and it's easy to misstep," says James Robbins, JD, LLM,a principal in the Tax Practice of New York accounting firm Marks Paneth & Shron LLP (MP&S) who specializes in international tax.

"In many cases, FATCA and FBAR will duplicate each other -- but not always," Mr. Robbins says. "Taxpayers need to understand the different requirements and make sure they are reporting correctly for each regulation. But it will be difficult for them to do that without professional advice." Mr. Robbins is available for interviews and can author a bylined article that discusses the details of the new FATCA requirements and the differences between FATCA and FBAR: FATCA requires a different filing process with a different -- earlier -- deadline: FBAR is a U.S. Treasury requirement, reportable on a U.S. Treasury form. The FBAR filing is due June 30 with no extensions. FATCA, by contrast, is an Internal Revenue Service requirement, reportable on the April 17 tax return on the new Form 8938.There are significant differences in what must be disclosed -- but the differences are not always obvious. FBAR requires disclosure of foreign accounts with assets over $10,000. With FATCA, the threshold is higher -- $50,000 or more -- but the definition is broader. Under FATCA, taxpayers are required to report any interest in a financial asset -- any entity or contract -- including stock, debt, or a swap entered into with a non-U.S. person. Penalties for noncompliance with FATCA are severe. Those who fail to report all foreign information, starting at the filing date, will have to pay a minimum penalty of $10,000, increased by $10,000 every 30 days after a 90-day grace period, to a maximum of $50,000. In addition, underpayments will be subject to a 40 percent penalty on the amount that wasn't disclosed -- double the old figure, as a result of the amendment of Internal Revenue Code 6662. "The penalties can be significant," Mr. Robbins says. "It's not just the $50,000, but also accuracy-related penalties that could cost you a substantial amount over and above that." "Given the complexity of FATCA reporting requirements and the severity of the penalties, taxpayers will be hard-pressed to know their exposure or understand what has to be reported. A consultation with a tax professional is essential," Mr. Robbins says.

For more information, or to schedule an interview or request a bylined article, contact Katarina Wenk-Bodenmiller of Sommerfield Communications at (212) 255-8386 or katarina@sommerfield.com.

About James M. Robbins, JD, LLMJames M. Robbins, JD, LLM, is a principal at Marks Paneth & Shron LLP. He is an international tax specialist with 25 years of public accounting experience.

A specialist in corporate international tax as well as financial products and derivatives, Mr. Robbins has a particular background in multi-jurisdictional issues including foreign taxation, and commercial and regulatory matters.

About Marks Paneth & Shron LLP Marks Paneth & Shron LLP is an accounting firm with nearly 475 people, of whom approximately 60 are partners and principals. The firm provides businesses with a full range of auditing, accounting, tax, consulting, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services and energy clients. The firm has a strong track record supporting emerging growth companies, entrepreneurs, business owners and investors as they navigate the business life cycle.

The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in Morison International, a leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world. Marks Paneth & Shron LLP, whose origins date back to 1907, is the 30th largest accounting firm in the nation and the 13th largest in the New York area. In addition, readers of the New York Law Journal rank MP&S as one of the area's top forensic accounting firms.

Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.

Contact: Katarina Wenk-Bodenmiller Sommerfield Communications, Inc.

(212) 255-8386 katarina@sommerfield.com Source: Marks Paneth & Shron LLP

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