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Compass F inan ce
“Secret” Banking Dies
If you have financial accounts abroad, you need to understand the Foreign
Account Tax Compliance Act (FATCA). The FATCA requires a country to
report its U.S. banking clients to the IRS or face punitive withholding
on its financial transactions in U.S. markets. It goes into effect July 1,
2014. Countries that have signed FATCA agreements with the U.S. include
those that have historically been considered offshore financial centers
like Switzerland and The Cayman Islands. Many other traditional offshore
banking countries are currently in the process of implementing FATCA
agreements. The end of “bank secrecy” and the march toward “global
transparency” is here. All U.S. citizens, Green Card holders or tax residents
with financial accounts abroad need to review their accounts to ensure
proper reporting. If you haven’t been reporting, seek competent advice
from a CPA or tax attorney that specializes in U.S. international taxation.
The IRS offers a Voluntary Disclosure Program to report foreign accounts
without facing criminal prosecution. While the penalties assessed can be
substantial, the penalties assessed outside the program, as well as the
prospect of criminal prosecution, are far worse.
With offshore banking gone as a way to protect assets,
what other (legal) options do investors have to shelter
their hard-earned dollars?
T e x t by d ena r o ch é
The financial vehicle known as
Grantor Retrained Annuity Trust,
or GRAT, is used to make large
financial gifts to family members
without paying a gift tax.
Partnerships, or FLPs, are
created to move wealth
from one generation to
the next with favorable
*Pursuant to requirements relating to practice before the Internal Revenue Service, any tax advice in this
communication is not intended to be used, and cannot be used, for the purpose of (1) avoiding penalties
imposed under the United States Internal Revenue Code, or (2) promoting, marketing, or recommending to
another person any tax-related matter.
ABOUT THE AUTHOR
Richard › Lancaster A & Reed, Reed CPA, PLC who M. Tax, focuses is a Principal U.S. & at
on International tax practices. He can be reached at
305.361.1014 or Lancaster-CPAS.com.
38 Smart Funds
A tax-exempt bond fund
with a viable yield is not
subject to income tax
or the additional 3.8%
Obamacare tax on Net