What is FATCA?
The U.S. Congress enacted the Foreign Account Tax Compliance Act (FATCA) in March 2010 with focus on detecting and taxing foreign accounts and assets hold by American residents and citizens. According to IRS, there are three main components of this act: 1) individuals, 2) institutions, and 3) governments (IRS 2015):
1) U.S. individual taxpayers must report foreign financial accounts and offshore assets on Form 8938, unless the total value is at or below $50,000 at the end of the tax year, with exception that if the total value was more than $75,000 at any time during the tax year. These threshold amounts may vary depending on the marital status of the tax payer and how long the tax payer lives in the U.S. during the tax year.
2)
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financial institutions and other U.S withholding agents must withhold 30% on certain transactions to offshore entities that do not register with the IRS and report information regarding certain non-financial foreign entities to the IRS.
Foreign financial institutions may elect to register with the IRS and report certain U.S. accounts to the IRS in order to avoid being withheld upon.
3) If a jurisdiction enters into an Intergovernmental Agreement (IGA) to enforce FATCA, the financial institutions in the jurisdiction may simplify their reporting and other compliance process, and these financial institutions will not be subject to withholding under FATCA.
What is the purpose of FATCA?
According to the U.S Treasury, Congress enacted FATCA for the purpose of combating international tax evasion. The act targets wealthy American residents and citizens who evade taxes through offshore account. And this act is expected to increase federal revenue and maintain the fairness of the tax system (U.S. Treasury 2014).
For more information about FATCA, please refer to the following sources:
Title V – Offset Provisions, Hiring Incentives to Restore Employment Act:
Moreover, to receive a record of completion from the IRS, the independent preparer must agree to accept the duties and restrictions relating to practice before the IRS in subpart B and section 10.51 of Treasury Department Circular No. 230. Rev. Proc. 2014-42 § 4.05(4). The voluntary program does not bind return preparers to all of Circular 230. Subpart B of Circular 230 describes noncontroversial ethical duties and responsibilities applicable to anyone who represents a taxpayer before the IRS, such as the duty to provide information promptly when requested, the duty not to charge an unconscionable fee, and rules regarding conflicts of interests and solicitation of
·The law furthermore specified that all trials concerning tax evasion be conducted in federal courts
Whether or not to keep or discard the Bush era tax cuts for the wealthy, give tax breaks to the lowest tax bracket, and even throwing out the entire current tax code and replacing it with a simpler version, tax code and tax law has been a very controversial topic for the past few years. As it stands, the current tax code has over seventy two thousand pages, compared to the four hundred pages it had in 1913. There are many different stakeholders in this debate including taxpayers, corporations, businesses, etc. Americans for Tax Reform (ATR) is an organization that was “founded in 1985 by Grover Norquist at the request of President Reagan”(.N.p.). Their goal is to create and advocate for a simple flat tax,“...on the belief that they will provide a strong stimulus to investment, employment, and output” (Stokey 1). They promote their organization and represent taxpayers in all fifty states. Along with tax reform, ATR also advocates for individual health care, free trade, and spending transparency (.N.p.). Using very simple and easy to understand images, ATR is able to convey their goals and get information across to the general audience that visits their website.
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
To understand this compromise, there needs to be a basic understanding of the United States current tax code, more specifically in this situation the federal income tax code. The income tax makes up 46 percent of the federal governments three trillion dollar internal revenue, that is 1.38 trillion dollars (.N.p.).
Circular 230 contains the ethical rules that detail a tax professional’s duties and obligations while practicing before the IRS; it essentially consists of the guidelines for tax practice. In June of 2014, the IRS finalized and implemented new regulations that made sweeping changes to several sections of Circular 230. Most of these changes had been in consideration since 2012 and were needed to do away with rules that were simply too difficult to apply and did not help produce higher-quality tax services. I will focus on why the revisions to Circular 230 were necessary, what was changed, the effectiveness of the changes, and how wording in the new sections makes the regulations more comparable to those found in other ethical codes that govern
The goal was to push congress to address the immigration issue. However, from a political standpoint, it was never in the president’s power to actually implement a program like DACA. The issues surrounding DACA came to light when Donald Trump took office because one of his biggest goals is to enforce a stricter immigration policy, beginning with his infamous ‘wall’ idea. Trump and his administration made the decision to revoke DACA’s status. Since this decision was announced, there has been a storm of emotion on both sides of the argument. Some think DACA should be revoked completely, leaving the current recipients in fear. Some believe it should be discontinued but those already impacted by it should be allowed to continue under its benefits. Others feel that it should be continued in the same fashion as it already has been. Some even think that the people with DACAs should be granted citizenship. The main questions that are highly debated within our government are one, does the DACA program conflict with the Constitution, and two, what are we supposed to do about the 800,000 people that currently qualify for the
American Express Tax & Business Services, a subsidiary of the American Express Corporation acquired CPA practices all over the United States. This practice by a non-CPA firm can encourage its employees not to serve the public interest as the firm is not subjected to as many regulations as a CPA firm would be. A financial firm providing accounting services poses a conflict of interest for its CPA employees. For example, the CPA provides accounting services along with financial services like insurance sales. The CPA would be endorsing the insurance products of the company which can affect the CPA’s objectivity with respect to the product being offered to third-parties (Ponemon, 1996). The scope and nature of the services performed influence the accountant to great lengths.
The cons to the argument for saying the Foreign Corrupt Practices Act is obsolete is discussed in the article With Wal-Mart Claims, Greater Attention on a Law by Charlie Savage. In this article Charlie Savage argues that the FCPA has always been a useful tool in stopping corruption but in recent years with companies becoming more globalized other countries gradually adopted similar laws, the United States has started to enforce it more strictly. The dollar amount of fines imposed by the Justice Department and the Securities and Exchange Commission has increased even more, including a record-setting $800 million paid by Siemens in 2008. Enforcement under the act has soared, from just two enforcement actions in 2004 to 48 in 2010. There are currently at least 100 open investigations, specialists estimate.
International pilots, flight attendants and cruise ship employees earn income like salary and wages while working abroad. Most of them might assume that they earn foreign income. As such, under Sec. 911(e), they are eligible to elect the foreign income exclusion on the United States (U.S.) expatriate tax return. However, taxpayers should first determine the source of their income by dividing their earnings based on (1) hours spent in the U.S and the airspace over the U.S.; (2) hours spent in foreign countries and airspace over foreign countries; and (3) hours spent in international airspace and waters. The first two are self explanatory. (1) are considered as the US source of income, and (2) is consider as foreign source of income. But what about number (3)? How should taxpayers classify their source of income while flying in international airspace or performing services over international waters?
During this article she brings in some good examples such as the company Theranos and Donald Trump, although many people may not know what the company Theranos many know Donald Trump, making this article easy for people not in the business world relate to while still keeping that target audience of those in the business and finance industry. She uses a quote from trump saying tax evasion is a smart move, however it is anything but. “The Internal Revenue Service estimated that in 2001, the tax gap was $345 billion. The tax gap is the difference between the amount of tax legally owed and the amount actually collected by the government. The tax gap in 2006 was estimated to be $450 billion. The tax gap two years later in 2008 was estimated to be in the range of $450–$500 billion and unreported income was estimated to be approximately $2 trillion. Therefore, 18-19 percent of total reportable income was not properly reported to the IRS.”Taxes pay for our roads to get fixed and many other things, this quote tells us just how much money for our roads, government workers, and many others we are missing out
The law that applies to the crime of evading taxes in the United States of America is under section 7201 called Attempt to defeat or avoid tax. It states that “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall. In addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution.” The violation of this law is evident where Erik Fresen who served in the Florida House of Representatives evaded to pay tax for eight years while in power and accepted the same mistake of voluntarily violating the legal duty.
ensures adherence to these processes, while similar laws are enforced in the U.S by the
The third organization that helps to regulate the accounting standards is the IASB. “Our mission is to develop, in the public interest, a single set of high quality, understandable and international financial reporting standards (IFRSs) for general purpose financial statements”(IASB 2008,¶ 1). The IASB consists of a board that is made up from nine different countries with the sole purpose of expanding accounting standards. Their main hope and goal is to one day that there will be only one set of accounting standards that will be used throughout the world.