Florida tax attorney Richard S. Lehman, Esq., has created an international website to help educate American’s living abroad of current United States taxation. These are excerpts from his website, posted with his permission.
A little known new law was enacted for the year 2011 that requires, that once certain minimum amounts are exceeded, any specified person that holds any interest in a specified foreign financial asset during the taxable year to attach a statement to that person’s U.S. tax return and report information that identifies the value of those specified foreign financial assets in which the individual holds an interest.
This new United States law requires Foreign Financial Institutions (FFIs) to provide information to the Internal Revenue Service (IRS) regarding the Foreign Financial Institutions’ United States accounts (U.S. accounts). It also requires certain Non-financial Foreign Entities (NFFEs) to provide information on their substantial United States owners (substantial U.S. owners).
Helpful definitions on the the Foreign Account Tax Compliance Act (FATCA)
Financial Account maintained by a Foreign Financial Institution
A financial account is defined as respect to any financial institutions –
- Any depository account maintained by such financial institution;
- Any custodial account maintained by such financial institution; and
- Any equity or debt interest in such financial institutions (other than interests which are regularly traded on an established securities market).
Any equity or debt interest which constitutes a financial account with respect to any financial institution shall be treated for purposes of this section as maintained by such financial institution.
A Foreign Financial Institution is a financial institution that is a foreign entity that:
- Accepts deposits in the ordinary course of a banking or similar business;
- Holds financial assets for the account of others as a substantial portion of its business; or
- Is engaged, or holds itself out as being engaged, primarily in the business of investing, reinvesting, or trading in securities, or any other financial interest such as forward contracts or options on securities, partnership interests, or commodities
Read full article on LehmanTaxLaw.com