International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Sunday, July 23, 2017

Canadian Man Pleads Guilty to Conspiring to Defraud U.S. With Fake Tax Refunds

A Canadian man pleaded guilty today in Rochester, New York to conspiring to defraud the United States and stealing Irs_logogovernment funds, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney James P. Kennedy Jr. for the Western District of New York.

According to documents filed with the court, Jose Compuesto, 52, of Mississauga, Ontario, Canada, along with other Canadian citizens, participated in a scheme to file fraudulent claims for refund with the Internal Revenue Service (IRS). In January 2010, Compuesto filed a fraudulent nonresident alien income tax return seeking a refund of $383,155.46. On this return, Compuesto falsely claimed that the requested refund represented the amount of income taxes that had been withheld and paid to the IRS on his behalf. After the IRS issued the refund to Compuesto, he entered the United States and opened a bank account in Kenmore, New York to deposit the fraudulently obtained check. In April 2010, Compuesto caused the funds to be transferred from this account to bank accounts in the United States and Canada in the name of one of his co-conspirators.

U.S. District Judge Frank P. Geraci Jr. of the Western District of New York scheduled sentencing for Oct. 17. Compuesto faces a statutory maximum sentence of five years in prison, a period of supervised release and monetary penalties. As part of his plea agreement, Compuesto agreed to pay restitution to the IRS in the amount of $383,155.46 plus interest.

Compuesto is the fourth Canadian citizen to be convicted for his role in this scheme. In January 2016, Kevin Cyster of Burlington, Ontario, was sentenced to 135 months in prison after a jury convicted him of conspiring to defraud the United States and steal government funds, making a false claim against the United States and transferring stolen money in foreign commerce. In June 2014, Renee Jarvis, also of Ontario, pleaded guilty to conspiring to defraud the United States and steal government funds. Last month, Timothy Johnston of Calgary, Alberta also pleaded guilty to conspiring to defraud the United States and steal government funds. Jarvis and Johnston are both awaiting sentencing.

July 23, 2017 in AML | Permalink | Comments (0)

Saturday, July 22, 2017

Don’t Take the Bait: Be Alert to Account Takeover Tactics

The IRS, state tax agencies and the tax industry today warned tax professionals that account takeovers by cybercriminals are Irs_logo on the rise and practitioners increasingly are the targets.

Account takeovers occur when a thief manages to steal or guess the username and password of a tax professional, enabling access of their computers or their other online accounts. With these credentials, thieves can, for example, access a tax professional’s IRS e-Services account to steal their Electronic Filing Identification Number (EFINor access tax pro software account to obtain critical taxpayer information.

“We urge tax professionals to be on the lookout for the warning signs of these schemes and many others that can contribute to data loss and identity theft,” said IRS Commissioner John Koskinen. “A few simple steps can protect tax professionals as well as their clients.”

Increasing awareness about account takeovers is part of the “Don’t Take the Bait” campaign aimed at tax professionals. This is the second part of a special 10-week series aimed at increasing security awareness in the tax community. It is part of the Protect Your Clients; Protect Yourself effort. The IRS, state tax agencies and the tax industry, working together as the Security Summit, urge practitioners to learn to protect themselves from account takeovers.

Tax professionals and taxpayers are among a larger set of groups that face increased threats from account takeovers.

Javelin Strategy and Research conducts an annual identity fraud report. In 2017, it reported a surge in account takeover incidents nationwide – generally aimed at financial accounts – after years of decline. There was a 31 percent increase in the number of incidents for 2016 from 2015.

Account takeovers are a common source of data breaches of taxpayer data, leading to fraudulent tax filings for individuals and for businesses. Account takeovers are often the result of spear phishing emails specifically targeting the tax community. See last week’s “Don’t Take the Bait” news releasefor information about spear phishing.

Here’s how account takeovers work: Thieves do their homework; perusing web sites and social media for clues about tax preparer’s email addresses and business activities. Then, they pose as a familiar organization, for example, IRS e-Services or a private-sector tax pro software provider by sending a spear phishing email that appears similar to the IRS or the software provider. They may even pose as another tax professional, a familiar bank or, increasingly, a cloud-based storage provider.

Often, the email seems urgent with descriptions like: “Avoid Account Shutdown” or “Unlock Your Account Now.” The email includes a disguised link that may take users to a page that looks like the login pages for IRS e-Services or a tax preparation software provider.

Alternatively, the email link or attachment may load malware onto computers to capture keystrokes, eventually giving the thieves access to user credentials when users log into their accounts. The thieves may pose as a potential client, emailing an attachment that claims to contain tax information but is really infected with keystroke logging malware. Here’s an example of a fake IRS e-Services email:

example of a fake IRS e-Services email

The email claims to be from “IRS E Services,” slightly off from the official IRS e-Services name. Also, IRS e-Services does not send emails except through the Quick Alerts system. Note the “Account Closure Now!” subject line to instill urgency, as does the “update now” link.

Tax professionals should hover their cursors over a suspicious link to see the destination, which may be a URL like: bit.ly; ow.ly; or tinyurl.com, as opposed to an actual IRS.gov URL. The suspicious link takes the practitioner to a website designed to appear as the actual e-Services login page. Here’s one example of a fake web page:

example of a fake web page

Once a thief obtains a tax pro’s credentials, they immediately can access accounts and steal EFIN, which they can use either to file fraudulent tax returns or sell to other criminals who could file fraudulent tax returns. They may also use a Power of Attorney and Centralized Authorization File (CAF) number, allowing them to access clients’ transcripts. Those who reuse usernames and passwords for multiple online accounts -- as many people do – may find the thief has accessed those accounts as well.

Protecting Clients and Businesses from Account Takeovers

Identity thieves have many schemes to steal login credentials. A common tactic is to use a spear phishing email that targets tax professionals. Here are a few steps to protect clients and business accounts:

  • Educate all employees about the dangers of spear phishing and account takeovers. It only takes one employee to open a link to give cybercriminals access the entire system.
  • Use strong, unique passwords. Better yet, use a phrase instead of a word. Use different passwords for each account. Use a mix of letters, numbers and special characters. Longer is better, but a minimum of eight to 10 characters. Use a password manager if necessary to help remember these unique credentials.
  • Use the strongest encryption software available. Encrypt and password protect all sensitive data, using unique passwords for each document.
  • Use strong malware/phishing software protection. Good software can help detect and stop malware or warn users when they are going to a suspected phishing site. A periodic deep scan also may help uncover embedded malware lurking in systems.
  • Use two-factor authentication whenever possible – This practice helps protect accounts by requiring two steps for access. For example, the IRS Secure Access process requires credentials (username and password) plus a security code that is sent as a text to a mobile phone that is registered with the IRS. Account takeovers are one reason the IRS is moving to protect e-Services with this more rigorous process. Many banks and social media outlets are moving to two-factor authentication, either by using a code sent to an email address or phone. Use the two-factor option whenever possible.
  • Check EFIN counts weekly. Access the application via e-Services and select “Check EFIN Status.” If someone is using the EFIN without your knowledge, a higher number of returns filed under that number will result. Call the Help Desk immediately.
  • Report phishing emails. Fraudulent phishing or malicious email can be sent to phishing@irs.gov.  For more information, see Report Phishing.
  • Report security incidents. The IRS considers these examples to be security incidents: a user clicked on a phishing link and entered their email credentials; a user clicked on a malicious URL that infected the computer; or someone created a domain like the user’s domain and used that to send phishing emails to other preparers.  Publication 4557, Safeguarding Taxpayer Data, provides guidance to report incidents. If the incident was an IRS-related scam, report it to the Treasury Inspector General for Tax Administration (TIGTA).

July 22, 2017 in AML | Permalink | Comments (0)

Friday, July 21, 2017

Director of South Korea's Earthquake Research Center Convicted of Money Laundering in Million Dollar Bribe Scheme

The Director of South Korea’s Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources FBISeal (1)(KIGAM) was convicted yesterday following a four-day jury trial of laundering bribes that he received from two seismological companies based in California and England through the U.S. banking system. Sentencing is scheduled to occur before the Honorable John F. Walter of the U.S. District Court for the Central District of California, on October 2.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Sandra R. Brown for the Central District of California and Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office, announced the conviction.

Heon-Cheol Chi (Chi), 59, of South Korea, was convicted of one count of transacting in criminally derived property, in violation of 18 U.S.C. § 1957. According to the charges, the funds that he laundered were proceeds derived through violations of South Korea’s bribery law, Article 129 of South Korea’s Criminal Code.

“International corruption undermines the rule of law, threatens our national security, and harms honest companies who are playing by the rules,” said Acting Assistant Attorney General Blanco. “As this case demonstrates, the Criminal Division will hold responsible the companies and individuals who are paying bribes to foreign government officials, and the foreign government officials themselves.  For the second time in recent months, the Criminal Division has convicted a foreign official who solicited bribes and then laundered the illicit proceeds in the United States. We will continue to hold such individuals responsible and accountable.”

“The American financial system is not to be used as a storehouse for the proceeds of corrupt activity,” said Acting U.S. Attorney Brown. “This defendant used a bank account here in Southern California to conceal over one million dollars in bribe money obtained through the abuse of his public position. This conviction sends a message that should be heard around the world.”

“Defendant Chi exploited the U.S. banking system to enrich himself and to conceal his corrupt practices,” said Assistant Director in Charge Fike. “The FBI and our partners will continue to hold accountable international offenders who gain the advantage on the global playing field by breaking U.S. law.”

According to the evidence presented at trial, between at least 2009 and 2015, Chi abused his official position at KIGAM to demand and receive over $1 million in bribes from two seismological companies in exchange for providing them with unfair business advantages in the South Korean seismological market. In particular, the trial evidence showed that Chi advocated the purchase and use of equipment from these two companies by KIGAM and other South Korean customers, and he provided these companies with market intelligence and inside information, including confidential information about their competitors and the KIGAM bidding process. The evidence also showed that Chi directed that his bribe payments be paid in cash or wired to his personal bank account in Glendora, California. From that account, Chi transferred approximately half of those bribe payments to an investment account he held in New York City and spent approximately 70 percent of the remaining funds back in South Korea, where he resided and worked, according to the evidence.

In addition to his use of cash payments and the U.S. banking system, the trial evidence showed that Chi took a number of steps to conceal his bribery scheme, including instructing representatives of the companies to delete or not respond to his emails, requesting that these company representatives not inform his colleagues at KIGAM of his illegal arrangements with these companies, and by sending fictitious invoices listing a false address in New Jersey. As Chi acknowledged in an email to one of the companies in 2005, “Usually I deleted almost all e-mail or papers related to [payments from these companies] because I am the director of earthquake research center and I am not allowed to be involved in it.”

The evidence at trial included numerous additional emails in which Chi admitted that he was acting illegally. For example, Chi wrote to a company representative in 2014, “I am a governmental officer and I should not have any contact with [a] private company. Moreover, it is illegal to assist any company related to the test.”

According to the trial evidence, the total of the bribe payments to Chi exceeded his legitimate income from KIGAM by a substantial margin and, during the relevant time period, Chi was paid more in bribes than in KIGAM salary.

The case is being investigated by the FBI’s International Corruption Squad in Los Angeles. Trial Attorneys David Fuhr and Anna Kaminska of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Poonam Kumar of the Central District of California are prosecuting the case. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. 

The Department is grateful to the government of South Korea for providing substantial assistance in gathering evidence during this investigation. The Department also thanks its law enforcement colleagues in the United Kingdom for their assistance in the Department’s investigation.

July 21, 2017 in AML | Permalink | Comments (0)

Thursday, July 20, 2017

Mallinckrodt Agrees to Pay Record $35 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical Drugs and for Recordkeeping Violations

Mallinckrodt LLC, a pharmaceutical manufacturer and one of the largest manufacturers of generic oxycodone, agreed to pay $35 million to settle DEA badge allegations that it violated certain provisions of the Controlled Substances Act (CSA) that are subject to civil penalties, Attorney General Jeff Sessions of the Justice Department and Acting Administrator Chuck Rosenberg of the Drug Enforcement Administration (DEA) announced today.

 This is the first settlement of its magnitude with a manufacturer of pharmaceuticals resolving nationwide claims that the company did not meet its obligations to detect and notify DEA of suspicious orders of controlled substances such as oxycodone, the abuse of which is part of the current opioid epidemic. These suspicious order monitoring requirements exist to prevent excessive sales of controlled substances, like oxycodone in Florida and elsewhere. The settlement also addressed violations in the company’s manufacturing batch records at its plant in Hobart, New York. Both sets of alleged violations impact accountability for controlled substances, and the compliance terms going forward are designed to help protect against diversion of these substances at critical links in the controlled substance supply chain.

 “In the midst of one of the worst drug abuse crises in American history, the Department of Justice has the responsibility to ensure that our drug laws are being enforced and to protect the American people,” said Attorney General Sessions. “Part of that mission is holding drug manufacturers accountable for their actions. Mallinckrodt’s actions and omissions formed a link in the chain of supply that resulted in millions of oxycodone pills being sold on the street. Thanks to the hard work of our attorneys and law enforcement, Mallinckrodt has agreed to do everything they can to help us identify suspicious orders in the future. And as a result of today's settlement, we are sending a clear message to drug companies: this Department of Justice will hold you accountable for your legal obligations and we will enforce our laws. I believe that will prevent drug abuse, prevent new addictions from starting, and ultimately save lives.”

“Manufacturers and distributors have a crucial responsibility to ensure that controlled substances do not get into the wrong hands,” said DEA Acting Administrator Chuck Rosenberg. “When they violate their legal obligations, we will hold them accountable.”

The government alleged that Mallinckrodt failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances – orders that are unusual in their frequency, size, or other patterns. From 2008 until 2011, the U.S. alleged, Mallinckrodt supplied distributors, and the distributors then supplied various U.S. pharmacies and pain clinics, an increasingly excessive quantity of oxycodone pills without notifying DEA of these suspicious orders. Through its investigation, the government learned that manufacturers of pharmaceuticals offer discounts, known as “chargebacks,” based on sales to certain downstream customers. Distributors provide information on the downstream customer purchases to obtain the discount. The groundbreaking nature of the settlement involves requiring a manufacturer to utilize chargeback and similar data to monitor and report to DEA suspicious sales of its oxycodone at the next level in the supply chain, typically sales from distributors to independent and small chain pharmacy and pain clinic customers.

 

The government also alleged that Mallinckrodt violated record keeping requirements at its manufacturing facility in upstate New York. Among other things, these violations created discrepancies between the actual number of tablets manufactured in a batch and the number of tablets Mallinckrodt reported on its records. Accurate reconciliation of records at the manufacturing stage is a critical first step in ensuring that controlled substances are accounted for properly through the supply chain.

In addition to the significant monetary penalty, this settlement includes a groundbreaking parallel agreement with the DEA, as a result of which the company will analyze data it collects on orders from customers down the supply chain to identify suspicious sales. The resolution advances the DEA’s position that controlled substance manufacturers need to go beyond “know your customer” to use otherwise available company data to “know your customer’s customer” to protect these potentially dangerous pharmaceuticals from getting into the wrong hands. DEA’s Memorandum of Agreement with Mallinckrodt also sets forth specific procedures it will undertake to ensure the accuracy of batch records and protect loss of raw product in the manufacturing process.

By entering into these agreements, elements of which Mallinckrodt is already implementing, the company is becoming part of the solution to this public health epidemic.

This lengthy investigation was led by DEA’s Detroit Field Division on the suspicious order issues and the New York Field Division on the manufacturing record keeping issues.

July 20, 2017 in AML | Permalink | Comments (0)

Wednesday, July 19, 2017

Four More Members of ATM Skimming Conspiracy Targeting Multiple New Jersey Bank Locations Plead Guilty

Four members of a scheme that used secret card-reading devices and pinhole cameras on PNC and Bank of America ATMs to steal at least $428,581 ICE logopleaded guilty today in Newark federal court.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Acting U.S. Attorney William E. Fitzpatrick of the District of New Jersey; and Acting Special Agent in Charge Brian A. Michael of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Newark Division made the announcement.

Marcel Peckham, 43, of Little Neck, New York; Catalin Mihai Dragomir, 33, of Glendale, New York; Eduard Vasilica Ticu, 32, of Glendale; and Silvester Florentin Papp, 25, of Ridgewood, New York, pleaded guilty before U.S. District Judge Esther Salas to separate informations charging them each with one count of conspiracy to commit bank fraud.

According to documents filed in this case and statements made in court:

Peckham, Dragomir, Ticu, Papp, and others sought to defraud financial institutions and their customers by illegally obtaining customer account information, including account numbers and personal identification numbers. Peckham admitted providing counterfeit ATM cards to other conspirators, knowing that they were going to use them to withdraw cash from compromised bank accounts at ATMs in New Jersey. Dragomir, Ticu, and Papp each admitted that between March 2015 and July 2016, they made unauthorized cash withdrawals using the counterfeit ATM cards.

The conspiracy to commit bank fraud charge carries a maximum potential penalty of 30 years in prison and a $1 million fine. Sentencing for all four defendents is set for Oct. 23, 2017.

Joel Abel Garcia, Victor A. Hanganu, and Radu Bogdan Marin also pleaded guilty to their roles in the scheme and await sentencing. To date, seven of the 13 defendants charged in this matter have been convicted.

July 19, 2017 in AML | Permalink | Comments (0)

Tuesday, July 18, 2017

Mauritius signs the multilateral BEPS Convention to tackle tax avoidance by multinational enterprises

Mahess Rawoteea of the Ministry of Finance and Economic Development of Mauritius, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI) in the presence of Douglas Frantz, OECD Deputy Secretary-General.

Based on expressed reservations at this point in time, 23 tax treaties would be impacted by this signing. We note that Mauritius issued a statement today, reaffirming its commitment to OECD implement the minimum standards developed in the course of the OECD/G20 BEPS Project into its entire tax treaty network by the end of 2018. Mauritius has committed to modify its remaining tax treaties through bilateral negotiations. 

The  MLI is a legal instrument designed to prevent base erosion and profit shifting (BEPS) by multinational enterprises. BEPS refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. The MLI allows jurisdictions to transpose results from the OECD/G20 BEPS Project, including minimum standards to implement in tax treaties to prevent treaty abuse and “treaty shopping”, into their existing networks of bilateral tax treaties in a quick and efficient manner. It was developed through inclusive negotiations involving more than 100 countries and jurisdictions, under a mandate delivered by G20 Finance Ministers and Central Bank Governors at their February 2015 meeting.

The OECD is the depositary of the MLI and is supporting governments in the process of signature, ratification and implementation. The 69 jurisdictions participating in the MLI and the position of each Party and Signatory under the Convention are available on the OECD website.

The text of the MLI, the explanatory statement and background information are available at: oe.cd/mli.

July 18, 2017 in BEPS, OECD | Permalink | Comments (0)

Monday, July 17, 2017

Public comments published on the BEPS discussion draft on the Implementation Guidance on Hard-to-Value Intangibles

On 23 May 2017, interested parties were invited to provide comments on a discussion draft that provides guidance on the implementation of the approach to pricing transfers of hard-to-value intangibles described in Chapter VI of the Transfer Pricing Guidelines. The OECD is grateful to the commentators for their input and now publishes the public comments received.

Download Public-comments-received-on-the-Implementation-Guidance-on-Hard-to-Value-Intangibles-2017

July 17, 2017 in BEPS, OECD | Permalink | Comments (0)

Sunday, July 16, 2017

Registration is Open for the CSLSA 2017 Conference

Registration is Open for the CSLSA 2017 Conference
 
Registration is now open for the Central States Law Schools Association 2017 Scholarship Conference, which will be held on Friday, October 6 and Saturday, October 7 at Southern Illinois University School of Law in Carbondale, Illinois. We invite law faculty from across the country to submit proposals to present papers or works in progress.

CSLSA is an organization of law schools dedicated to providing a forum for conversation and collaboration among law school academics. The CSLSA Annual Conference is an opportunity for legal scholars, especially more junior scholars, to present working papers or finished articles on any law-related topic in a relaxed and supportive setting where junior and senior scholars from various disciplines are available to comment. More mature scholars have an opportunity to test new ideas in a less formal setting than is generally available for their work. Scholars from member and nonmember schools are invited to attend. 

Please click here to register. The deadline for registration is September 2, 2017.  

Hotel rooms are now available for pre-booking.  The conference hotel is the Holiday Inn Conference Center in Carbondale.  To reserve a room, call 618-549-2600 and ask for the SIU School of Law rate ($109/night) or book online and use block code SOL.  SIU School of Law will provide shuttle service to and from the Holiday Inn & Conference Center for conference events.  Other hotel options (without shuttle service) are listed on our website.  Please note that conference participants are responsible for all of their own travel expenses including hotel accommodations.

Kara J. Bruce, Professor of Law
Associate Dean for Faculty Research and Development
University of Toledo College of Law
 
kara.bruce@utoledo.edu

July 16, 2017 in Academia | Permalink | Comments (0)

Texas A&M Law Dean Dr. Andrew Morriss Joins Main Campus As its New 'Innovation' Dean

Texas Lawyer reports and interviewed Dean Dr. Andrew Morriss: 

Andrew Morriss oversaw the transformation and dramatic rise in the rankings of the former Texas Wesleyan School of Law into the Texas A&M School of Law.

Now, the university has a new challenge for Morriss: heading up a brand new School of Innovation at its main campus in College Station, a gig he will assume Aug. 1.

Read the interview here.

Read in Texas Lawyer how Texas A&M Law jumped into 2nd Tier in 3 years under the leadership of Dean Dr. Andrew Morriss.

July 16, 2017 in Education | Permalink | Comments (0)

OECD reports major progress reported towards a fairer and more effective international tax system

Countries are making major progress towards the goal of creating a fairer and more effective international tax system, including increasing efforts to close down loopholes, improve OECDtransparency and ensure that multinational enterprises pay tax where they carry out their activities, according to a new OECD report.

The latest Report from OECD Secretary-General Angel Gurría to G20 Leaders  describes the continuing fight against tax avoidance and tax evasion as one of the major success stories of the G20, founded on enhanced international co-operation.  The report, released today, updates progress in key areas of OECD-G20 tax work, including movement towards automatic exchange of information between tax authorities and implementation of key measures to address tax avoidance by multinationals.

“Tax issues have been a key priority of the G20 since its inception, and 2017 is the year of implementation,” Mr Gurría said. “In the midst of the backlash against globalisation, we need to deliver on an agenda of inclusive growth. The work of the G20 and the OECD to repair and improve the international tax system so everyone pays their fair share remains one of the most important responses to these challenges, as well as one which is having a concrete impact.”

The report to G20 Leaders highlights progress in each of the areas where OECD has been mandated to boost international co-operation on tax issues.  This includes ongoing movement towards greater transparency, principally through the work of the OECD-hosted Global Forum on Transparency and Exchange of Information for Tax Purposes, which now includes 142 members and is managing worldwide implementation of the Common Reporting Standard and the first automatic exchanges of financial account information (AEOI), to take place in September 2017.

Global Forum members have established close to 2 000 bilateral exchange relationships for AEOI. “These efforts are already paying off, with 500 000 people having disclosed offshore assets and around EUR 85 billion in additional tax revenue identified as a result of voluntary compliance mechanisms and offshore investigations,” Mr Gurría said.

Implementation also continues on measures to reduce tax avoidance by multinational enterprises under the G20/OECD Base Erosion and Profit Shifting (BEPS) Project. 101 countries and jurisdictions are now working on an equal footing to set standards and monitor implementation via the OECD/G20 Inclusive Framework on BEPS. The OECD has established a peer review process to assess implementation of the BEPS minimum standards and work continues on pending issues including transfer pricing.

At the same time, countries are considering measures to enhance tax certainty based on the joint OECD-IMF report  to G20 Finance Ministers  in March, as well as progressing discussions on the complex issues around taxation of the digital economy. An interim report on taxation of the digital economy will be delivered by the OECD/G20 Inclusive Framework on BEPS in early 2018, followed by a final report in 2020.

July 16, 2017 in GATCA, OECD | Permalink | Comments (0)

Saturday, July 15, 2017

Barbados joins the OECD Inclusive Framework on BEPS

Barbados has become the 101st jurisdiction to join the Inclusive Framework on BEPS ("IF"). The IF was established in January 2016, after the G20 Leaders urged the timely OECDimplementation of the BEPS package released in October 2015 and called on the OECD to develop a more inclusive framework with the involvement of interested non-G20 countries and jurisdictions, including developing economies. The first progress report produced by the Inclusive Framework will be published tomorrow.

By joining the Inclusive Framework, Barbados will work on an equal footing with all other Inclusive Framework members on the implementation of the BEPS package and on developing further standards to address the remaining BEPS issues. The full list of members of the IF can be found at: www.oecd.org/tax/beps/inclusive-framework-on-beps-composition.pdf

Barbados has a long experience in working on international tax matters having joined the Global Forum on Transparency and Exchange of Information for Tax Purposes in September 2009 and having received a "Largely Compliant" rating in 2016, as well as having ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2016, which now has includes over 110 countries and jurisdictions, and having signed the CRS Multilateral Competent Authority Agreement‎ (CRS MCAA), to enable it to fulfil its commitment to implementing the automatic exchange of financial account information pursuant to the OECD/G20 Common Reporting Standard (CRS) in time to commence exchanges in 2018.

July 15, 2017 in BEPS, OECD | Permalink | Comments (0)

IRS Publishes New FAQs on FFI Agreement Renewal

The IRS published new FAQs on FFI Agreement Renewal. The FAQs can be found in the Registration Update section on the FATCA – FAQs General page. Treasury-Dept.-Seal-of-the-IRS

Qualified Intermediaries/Withholding Foreign Partnerships/Withholding Foreign Trusts

Q4. Section 1.01 of Rev. Proc. 2017-15 addresses the treatment of any home office (as defined in section 2.43 of Rev. Proc. 2017-15) or branch (whether or not a disregarded entity) that wants to be a QDD (each home office or branch, a prospective QDD).  Each prospective QDD must separately qualify, apply, and be approved for QDD status, including meeting the eligible entity requirements as if it were a separate entity.  If a prospective QI has a branch that is a prospective QDD, the branch may apply for QDD status even if the prospective QI (apart from such branch) is not an eligible entity.  A home office can apply for QDD status as part of the standard QI application.  In order to apply for QDD status for a branch on the QI System, the following steps must be taken:

Q8. How does an applicant provide the description of the types of transactions for applications submitted in 2017?
Q9. How does an applicant provide the approximate value of transactions by account holder type for applications submitted in 2017?

Q12. When submitting an application in 2017, should the applicant address non-delta one transactions when completing section 3?

Registration Update

Q10What happens if I am an entity that entered into the FFI agreement contained in Revenue Procedure 2014-38 before January 1, 2017, but I do not renew my FFI agreement by July 31, 2017?

General Compliance

Q21. Is a beneficial owner withholding certificate invalid under  Treas. Reg. §1.1441-1T(e)(2)(ii)(B) (published on January 6, 2017, in TD 9808) during calendar year 2017 if it does not include a foreign TIN or date of birth for the beneficial owner identified on the certificate?

Q4. Section 1.01 of Rev. Proc. 2017-15 addresses the treatment of any home office (as defined in section 2.43 of Rev. Proc. 2017-15) or branch (whether or not a disregarded entity) that wants to be a QDD (each home office or branch, a prospective QDD).  Each prospective QDD must separately qualify, apply, and be approved for QDD status, including meeting the eligible entity requirements as if it were a separate entity.  If a prospective QI has a branch that is a prospective QDD, the branch may apply for QDD status even if the prospective QI (apart from such branch) is not an eligible entity.  A home office can apply for QDD status as part of the standard QI application.  In order to apply for QDD status for a branch on the QI System, the following steps must be taken:  

  1. The home office (or prospective QI) must complete and submit its QI application or renewal on the QI System (please refer to QI System User Guide for step-by-step instructions).  The application or renewal must include all relevant branch information for each branch that intends to act as a QI (including as a QDD).    
  2. Notwithstanding that the home office (or prospective QI) included all relevant branch information with its application or renewal, a separate QI application must be submitted for each branch (including branches that are disregarded entities) that is a prospective QDD.  Each home office or branch that is a prospective QDD must submit a separate application, even if located in the same country.  Therefore, if multiple branches located in the same country are prospective QDDs, a separate application must be submitted for each branch.  
  3. The process for the branch’s separate QI application will follow the QI System User Guide instruction for applying to become a QI (that is, the same process that the home office or prospective QI used), and the QI System will populate the application using the same answers as provided by the home office (or prospective QI), except for the following lines, which the branch will be required to complete:
    Part 1:
    1. Name of Applicant:  Enter the Home Office QI NAME with the following appended to the Home Office Name:

                         :-QDD-BRANCH-<Branch QDD COUNTRY (and branch identifier, if necessary)>
                         (EXAMPLE: ABC Bank-QDD-BRANCH-SINGAPORE (Disregarded Entity Name))
.

    1. Existing EIN, if any: Enter the home office QI EIN.  
      Note: A QDD branch will receive a message on their message board upon acceptance of its application, but the QDD branch will not be issued its own QI EIN.  
    2. Country / Jurisdiction of Organization:  Enter the country / jurisdiction of the branch.
    3. Indicate that the branch is applying for QDD status.
    4. Identify the applicable Know Your Customer Rules (KYC):  Select the jurisdiction, if any, whose KYC rules apply to the branch.
    5. Does the Applicant Maintain a branch in any Jurisdiction other than the home office:  Select “No.”
    6. Address of applicant:  Enter the address of the branch.
    7. Description of Business:  Preface the description by stating the application is for a branch applying for QDD status only.
    8. Responsible Officer: The applicant may identify the home office’s RO as its Responsible Officer
    9. Contact person: The applicant may identify the home office’s Contact Person as its Contact Person or any other person that meets the requirements of a Contact Person for the branch.

            Part II

    1. QI/WP/WT Information (Part 2):  Enter zeros for all account holder totals and amounts.  
    2. Will the applicant have any PAI agreements in effect: Select “No.”

            Part III

                    Complete all fields.

      Part IV

             Upload files for the QI/WP/WT application:  Select “SS-4.”  
             Upload a document, containing the corporate letter head of the home office, which states the branch is applying strictly for QDD status as a branch of a QI.  The statement should provide the name and 
             QI-EIN of the home office.

            Part V  

                    Complete, sign, and submit as directed.

Entities that have already submitted an application or renewal that included a request for QDD status must update their submission to separately request QDD status for any branch that will act as a QDD by following these procedures and sending an email to *LB&I FI QIWPIssues.  The e-mail should indicate either that the entity has branches which intend to apply for QDD status and list those branches by country or that the entity has no such branches and the submission is ready to be processed by the IRS.

Added: 02-14-2017

Q5.  What information should be provided for question 19 of Part 1?

Part I, Question 19. Description of business of the Applicant
(If the Applicant is applying for QDD status, indicate which portions of the business description are applicable to the QDD status)

Provide a detailed description of your business including, but not limited to, the type of business, the approximate value of your total assets, and, in general, the source of income you expect to receive.  For businesses that may be involved in sale and leaseback type transactions, clearly state the structure of the transaction, including all the parties.  If the business is not yet in operation, explain how the business intends to obtain financing and the projected startup date.  If the Applicant is an investment fund, also describe the type of anticipated investments and state the term of the fund.

In addition, for each QDD applicant, indicate the business operated by the QDD applicant, list the types of potential section 871(m) transactions for which the QDD applicant makes payments, list the types of potential section 871(m) transactions and underlying securities for which the QDD applicant receives payments, and indicate which portion of the business relates to the QDD covered transactions and which portion of the business relates to the equity derivatives dealer business.

For each QDD applicant, indicate the QDD applicant’s entity classification for U.S. federal income tax purposes (such as a corporation, partnership, or disregarded entity) .  If the QDD applicant is a branch, also indicate the entity classification of its home office.

Added: 02-15-2017

Q6. What information should be provided for question 20 of Part 1?

Part I, Question 20. Description of new account opening procedures
(If the Applicant is a WP or WT, provide a description of the procedures for admitting a new partner, beneficiary, or owner)
(If the applicant is applying for QDD or QSL status, describe the Applicant’s procedures for collecting documentation from counterparties)

QI Applicants (including QDD and QSL Applicants):  Provide a detailed description of the account opening procedures.  List each type of document that is required for a new account opening and explain how each document is reviewed and validated.  For entities that facilitate opening new accounts online, describe the entire account opening process, including any uploading of documentation. 

WP/WT Applicants:  Describe the procedures for admitting a new partner, beneficiary, or owner.  If the Applicant is an investment fund, attach the pages of the fund’s subscription agreement or offering documents relating to investor documentation.
Added: 02-15-2017

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Q7. My application for renewal of QI/WP/WT status was not approved and was placed into incomplete status due to compliance issues.  What does this mean?
An incomplete status due to compliance issues on your application for renewal of QI/WP/WT status is caused by prior noncompliance as a QI/WP/WT, such as a failure to file a return or a failure to pay tax.

Added: 02-15-2017

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Q8. How does an applicant provide the description of the types of transactions for applications submitted in 2017?
The applicant should list the approximate value in U.S. dollars (using notional values for derivatives) of the stock in U.S. corporations and potential section 871(m) transactions of the home office or branch (as applicable).  In addition, it should separately list the value of the home office or branch’s potential section 871(m) transactions that are securities lending transactions/sale-repurchase transactions, notional principal contracts, futures/forwards, or other equity linked instruments in the appropriate place.  The securities lending transactions/sale-repurchase transactions, notional principal contracts, futures/forwards, and other equity linked instruments categories should not include values related to transactions that are not potential section 871(m) transactions.

For applications submitted in 2017, the applicant may indicate that the value of the transactions in the previous calendar year is zero when the applicant does not have the relevant information.  For those applications submitted in 2017 for which the applicant does not have the relevant information, the applicant must attach a statement indicating that the information is not available, briefly describing the types of transactions it has entered into, and providing an estimate (if possible) of the anticipated values for these types of transactions.

Added: 03-17-2017

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Q9. How does an applicant provide the approximate value of transactions by account holder type for applications submitted in 2017?
The applicant should list the approximate value in U.S. dollars (using notional values for derivatives) of potential section 871(m) transactions entered into with each counterparty type for the previous calendar year.  For applications submitted in 2017, the applicant may indicate that the value of transactions by counterparty type for the previous year is zero when the applicant does not have the relevant information.  For those applications in 2017 for which the applicant does not have the relevant information, the applicant must attach a statement indicating that the information is not available, briefly describing the types of counterparties with whom the applicant transacts, and providing an estimate (if possible) of the value of the transactions for each counterparty type.

Added: 03-17-2017

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Q10. What information must an applicant provide when describing why it is an eligible entity?
The applicant must identify whether the application is for the home office or branch, and why each home office or branch is an eligible entity.  See Treas. Reg. § 1.1441-1(e)(6)(ii) for an updated definition of an eligible entity.  For each home office or branch applying under the rule for a dealer, bank, bank holding company, or wholly-owned entity of a bank or bank holding company, the applicant must include the name and jurisdiction of the regulator, and whether each home office or branch is regulated by it as a dealer, bank, or bank holding company, as applicable.  The applicant should briefly describe the potential section 871(m) transactions that the home office or branch, as applicable, issues or anticipates issuing to customers and how it hedges or anticipates hedging those transactions, in each case, as a principal.  Each applicant must confirm that the application only describes transactions the QDD enters into as a principal that are recognized and attributable to the QDD for U.S. federal income tax purposes and not effectively connected with the QDD’s conduct of a trade or business in the United States.  For each applicant that is eligible to apply for QDD status because it is a bank, bank holding company, or wholly-owned entity of a bank or bank holding company, the applicant must confirm that it (1) issues potential section 871(m) transactions to customers and (2) receives dividends with respect to stock or dividend equivalent payments with respect to potential section 871(m) transactions that hedge potential section 871(m) transactions that it issued.  

Added: 03-17-2017

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Q11. What information is necessary to describe how an applicant determines which transactions are included of its QDD business?
The applicant should describe how it will determine which transactions are part of the QDD business of the home office or branch (as applicable) and how it will distinguish the home office and each branch’s QDD business from the QDD businesses of the home office and/or any other branches, as applicable, and from non-QDD businesses.  The applicant should briefly describe what systems or procedures it has in place to test, track, and report the transactions associated with the home office or branch’s QDD activities (including whether transactions are held in an equity derivatives dealer capacity or another capacity, and how net delta will be determined).  If the applicant submits the application in 2017 or 2018 and has not yet completed all of its systems or procedures, the applicant must include a brief description of the systems or procedures that have been completed as of the date of the application, and the systems or procedures that the applicant is developing.  For systems or procedures in the development stage at the time the application is submitted, please provide an estimated timeframe for the completion of those items.

Added: 03-17-2017

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Q12. When submitting an application in 2017, should the applicant address non-delta one transactions when completing section 3?
Yes.  Even though section 871(m) only applies to transactions with a delta of one in 2017, an applicant must complete section 3 by including a description of potential section 871(m) transactions for which section 871(m) will apply beginning in 2018.  For example, an applicant applying in 2017 should include responses relating to both delta one transactions and non-delta one transactions.

Added: 03-17-2017

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Q13.  Can a partnership apply to be a QDD?
Yes, a partnership can apply to be a QDD if the partnership qualifies as an eligible entity; however, the IRS may include additional terms that would apply in the case of an agreement entered into with a partnership.

Added: 03-17-2017

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Q14. Who may rely on the “Any other person otherwise acceptable to the IRS” QDD eligible entity category?
This limited category is intended to allow the IRS the discretion to treat an entity that is very similar to the specified categories of eligible entities but that does not satisfy the precise technical requirements in the definition as an eligible entity.  It is not intended to function as a significant expansion of the definition of eligible entity. If an applicant does not satisfy one of the specific categories, the applicant is encouraged to contact the Foreign Intermediaries Program at *LB&I FI QIWPIssues in advance of applying under this category.

Added: 03-17-2017

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Q15. What information must a renewing QI/WP/WT consider in response to Part 4 – Additional Information, Question 4 - Is the QI/WP/WT in compliance with all applicable withholding and reporting requirements, including the filing of the following forms (to the extent required for  calendar years for which the due date of the form (including extensions) has passed)*?

Form 945 * Yes/No/NA
Form 1042 * Yes/No/NA
Form 1042-S * Yes/No/NA
Form 1099 * Yes/No/NA
Form 8966 * Yes/No/NA

The renewing QI/WP/WT (Applicant) should answer this question based on currently available information with respect to each form that Applicant was required to file for the calendar years covered by the most recent QI, WP, or WT agreement that Applicant is renewing:

(1) Answer “Yes” if the Applicant filed the form and the form was correct, and the Applicant has complied with its withholding requirements with respect to such form (if applicable).  

(2) Answer “No” if the Applicant did not file the form or the Applicant filed the form but has failed to pay the amount of tax due with respect to the form (if applicable).

(3) Answer “NA” if the Applicant is not required to file the form for all tax years covered by the QI, WP, or WT agreement.  

Added: 03-31-2017

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Q16. Can a request for renewal of a Qualified Intermediary (QI), Withholding Foreign Partnership (WP) or a Withholding Foreign Trust (WT) agreement submitted after the renewal due date of 3/31/17 still be granted an Effective Date of 1/1/17.  Also, can an application for a new QI agreement that also contains a request for qualified derivatives dealer (QDD) status submitted after 3/31/17 be granted an Effective Date of 1/1/17?
A: The deadline of 3/31/17 for submitting a QI, WP or WT request for renewal as well as for submitting a new application is fast approaching.

In order to allow time for these entities to become better acquainted with the new Qualified Intermediary, Withholding Foreign Partnership, and Withholding Foreign Trust Application and Account Management System (QI/WP/WT System), as well as to gather all information necessary to prepare and submit a renewal application, the Internal Revenue Service will grant an Effective Date of 1/1/17 for all properly submitted and approved renewal applications, including renewals containing a request for QDD status, submitted by 5/31/17.  

Additionally, because a QDD is a new entity type, all  new QI Applications  that also contain a request for QDD status submitted  by 5/31/17 that are approved will be granted an Effective Date of 1/1/17.

For new withholding foreign partnerships, new withholding foreign trusts, and new QIs that are not applying for QDD status, the 3/31/17 new application deadline for a 1/1/17 Effective Date is still in effect.  

Added: 03-31-2017

Q8I am an entity that is registered on the FATCA registration system and that has been issued a GIIN. Do I need to renew my FFI agreement?
The answer depends on your FATCA classification. Not all entities are required to enter into an FFI agreement in order to receive a GIIN. If you are an entity that is required to enter into an FFI agreement and did so before January 1, 2017, you must renew your FFI agreement by July 31, 2017, in the FATCA FFI Registration System if you want to remain on the FFI List. The table below provides a general overview of the types of entities that are required to renew their FFI agreement. For additional guidance, see Sections 4 and 6 of Revenue Procedure 2017-16, the Treasury regulations, or an applicable intergovernmental agreement (IGA).

Renewal of FFI Agreement
Financial Institution's FATCA Classification in its Country/Jurisdiction of Tax Residence Type of Entity FFI Agreement Renewal Required?
Participating Financial Institution not covered by an IGA; or a Reporting Financial Institution under a Model 2 IGA Participating FFI not covered by an IGA Yes
Reporting Model 2 FFI Yes
Registered Deemed-Compliant Financial Institution (including a Reporting Financial Institution under a Model 1 IGA) Reporting Model 1 FFI operating branches outside of Model 1 jurisdictions Yes, on behalf of branches operating outside of Model 1 jurisdictions (other than related branches *)
Reporting Model 1 FFI that is not operating branches outside of Model 1 jurisdictions No
Registered deemed-compliant FFI (regardless of location) No
None of the above Sponsoring entity No
Direct reporting NFFE No
Trustee of Trustee-Documented Trust No

* Related branches means branches that are treated as nonparticipating FFIs under Article 4(5) of the Model 1 IGA.

Added: 07-03-2017

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Q9. I have determined based on the chart above that I am not required to renew an FFI agreement. The “Renew FFI Agreement” link asks if I and/or my branches are required to renew the FFI agreement. Am I required to select “No”? What happens if I do not select either “Yes” or “No”? Will I lose my GIIN?
If you are an entity that is not required to renew, you do not need to take any action with respect to your registration. You are not required to answer “No.” You will remain in “Approved Status,” and you will remain on the FFI list.

Note: entities that are located in a Model 1 jurisdiction that entered into an FFI agreement on behalf of certain branches, described in the table above, must renew the FFI agreement on behalf of those branches.

Added: 07-03-2017

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Q10. What happens if I am an entity that entered into the FFI agreement contained in Revenue Procedure 2014-38 before January 1, 2017, but I do not renew my FFI agreement by July 31, 2017?
The FFI agreement contained in Rev. Proc. 2014-38 terminated on December 31, 2016. Therefore, if you do not renew your FFI agreement (contained in Revenue Procedure 2017-16) by July 31, 2017, you will be considered a nonparticipating FFI as of January 1, 2017, and you will be removed from the FFI list.

Added: 07-03-2017

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Q11. I am an entity that must renew the FFI agreement. What if I incorrectly selected “No” when asked whether I am required to renew the FFI agreement?
If you must renew your FFI agreement but incorrectly selected “No,” you may return to your FATCA FFI Registration system home page, click on the “Renew FFI Agreement” link, and select “Yes” to complete your renewal before the July 31, 2017, deadline.

Added: 07-03-2017

Q11. Has a Form W-8 that has been completed and signed by a payee, scanned into an image or portable document format (PDF), and uploaded to a third-party repository been scanned and received electronically by a withholding agent for purposes of sections 1.1441-1(e)(4)(iv)(C) and 1.1471-3(c)(6)(iv) if the payee, upon request from the withholding agent for a Form W-8 to document its status for purposes of chapters 3 and 4, sends the withholding agent an email with a link to the third-party repository site that allows the withholding agent to download the image or PDF of the form that is stored on the repository for such purpose (or the payee otherwise authorizes the withholding agent to access the specific form from the third-party repository in a similar manner).
Yes. The Form W-8 will be considered to have been scanned and received electronically by the withholding agent, provided that the withholding agent does not know that the email containing the link to the third-party repository has been transmitted by someone other than the payee or an agent of the payee.  Also, because the withholding agent has obtained the form at the payee’s direction, the form will be treated as having been furnished by/provided by the payee (see sections 1.1441-1(e)(1)(ii)(A)(1) and 1.1471-3(c)(1)).  A withholding agent is still required to determine whether the form is valid and may be relied upon for purposes of chapter 3 or 4 and whether a change in circumstances affects its continuing reliance on the form.

This FAQ has been superseded by Treasury Regulations Section 1.1441-1(e)(iv)(E).

Updated: 02-13-2017

Q20. Under what circumstances is a withholding agent required to collect a foreign TIN or date of birth on a beneficial owner withholding certificate?
A withholding agent must obtain a foreign TIN on a beneficial owner withholding certificate in the following circumstances:

(1) For a foreign person claiming a reduced rate of withholding under an income tax treaty if the foreign person does not provide a U.S. TIN and the income is a type to which the TIN requirement apples (see Treas. Reg. § 1.1441-6); and

(2) Except as otherwise provided in  Treas. Reg. §1.1441-1T(e)(2)(ii)(B), for a foreign person that is an account holder (as defined in Treas. Reg. § 1.1471-5(a)(3)) of a financial account (as defined in Treas. Reg. §1.1471-5(b)) maintained at a U.S. branch or office of the withholding agent, but only if the withholding agent is a financial institution (as defined in Treas. Reg. § 1.1441-1(b)(50)).

Added: 04-06-2017

Q21. Is a beneficial owner withholding certificate invalid under  Treas. Reg. §1.1441-1T(e)(2)(ii)(B) (published on January 6, 2017, in TD 9808) during calendar year 2017 if it does not include a foreign TIN or date of birth for the beneficial owner identified on the certificate?
For calendar year 2017, a withholding agent is not required to treat an otherwise valid beneficial owner withholding certificate as invalid when it does not include a foreign TIN because, in the absence of actual knowledge otherwise, the withholding agent may assume that the foreign person does not have a foreign TIN.

For beneficial owner withholding certificates obtained by a withholding agent on or after January 1, 2017, the withholding agent must collect a date of birth on a beneficial owner withholding certificate for an individual beneficial owner.  However, if the withholding agent has the beneficial owner’s date of birth in its files, it may use that information for reporting purposes and will not be required to treat a Form W-8BEN as invalid because it did not include a date of birth.

Added: 04-06-2017

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Q22. How is a withholding agent permitted to obtain  a foreign beneficial owner’s foreign TIN that is not included on an otherwise valid beneficial owner withholding certificate for purposes of satisfying the requirements of Treas. Reg. §1.1441-1T(e)(2)(ii)(B)? 
In such a case, a withholding agent is permitted to obtain the foreign beneficial owner’s foreign TIN on a written statement provided by the beneficial owner (including a written statement transmitted by email) that indicates that the foreign TIN is to be associated with the beneficial owner withholding certificate.  A withholding agent is similarly permitted to obtain the reasonable explanation for the absence of a foreign TIN referred to in Treas. Reg. §1.1441-1T(e)(2)(ii)(B) in this manner.

Added: 04-06-2017

July 15, 2017 in GATCA | Permalink | Comments (0)

Friday, July 14, 2017

New head appointed for OECD tax treaty unit

Sophie Chatel has been appointed Head of the Tax Treaty Unit in the Centre for Tax Policy and Administration. She will take up her duties on 6 September 2017. Sophie-chatel-220px

A Canadian national, Sophie has been working at Canada’s Department of Finance since 2008, where she served as Associate Chief – Tax Treaties and International Tax.  In this capacity she has played a key role in the international tax policy work of the Canadian government. 

Sophie has also worked at the Canada Revenue Agency, most recently in 2015-16 as Director, International Tax, Financial Sector and GST Division, where she supervised the resolution of Canada’s tax disputes with multinational enterprises in complex international tax cases. From 2002 to 2008 she was a Senior Officer and then Senior Advisor at the CRA, where her experience included negotiating tax treaties, reviewing Canada’s model tax treaty, and working on advance rulings on international tax matters. Earlier in her career she spent six years as a tax advisor in the private sector.

Sophie holds a law degree from the University of Montreal and a master’s degree in taxation from the University of Sherbrooke. She is also a member of the Chartered Professional Accountants of Canada.

She has been a participant in the work of the OECD, the UN Committee of Experts on International Taxation, and as a tax policy and capacity building expert she has also worked with the IMF and the Inter-American Center of Tax Administrations (CIAT).

July 14, 2017 in OECD | Permalink | Comments (0)

IRS Releases Partnerships, Withholding on Foreign Recipients of U.S. Income, Tax Year 2014

Treasury-Dept.-Seal-of-the-IRSPartnerships, Withholding on Foreign Recipients of U.S. Income, Tax Year 2014—One new table presenting data from Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, is now available on SOI’s Tax Stats Web page. The table provides U.S. income and tax withheld as reported on Form 8805, by country of residence for Tax Year 2014, and includes the number of returns, total income, income, loss, and tax withheld.

July 14, 2017 in Tax Compliance | Permalink | Comments (0)

Thursday, July 13, 2017

Former President Lula of Brazil Found Guilty, Sentenced to Nearly 10 Years for Corruption. Will Lula Cut A Deal for Duma and Temer?

French Court Finds Google Does Not Have a French Permanent Establishment. Spares $1.2 Billion Tax Bill.

La société irlandaise Google Ireland Limited (GIL), filiale du groupe américain Google Inc., commercialise, en France notamment, un service payant d’insertion d’annonces publicitaires en ligne, « AdWords », corrélé au moteur de recherche Google.

La société française Google France (GF), également contrôlée par Google Inc., fournit, aux termes d’un contrat conclu avec GIL, assistance commerciale et conseil à la clientèle française de GIL, constituée d’annonceurs ayant souscrit à son service « AdWords ».

La société GIL contestait les redressements fiscaux dont elle avait fait l’objet en matière d’impôt sur les sociétés, retenue à la source, TVA, cotisation minimale de taxe professionnelle et cotisation sur la valeur ajoutée des entreprises, à raison des prestations de publicité qu’elle facture à ses clients français.

Le tribunal administratif a donné raison à la société GIL en prononçant la décharge des impositions contestées.

S’agissant de l’impôt sur les sociétés et de la retenue à la source, l’administration fiscale s’était fondée sur l’alinéa 9-c de l’article 2 de la convention fiscale franco-irlandaise qui prévoit l’imposition en cas de présence d’un établissement stable en France. Le tribunal a jugé que GIL ne disposait pas en France, en la personne morale de GF, d’un tel établissement stable. En effet, l’existence d’un tel établissement stable est subordonnée à deux conditions cumulatives : la dépendance de GF vis-à-vis de GIL et le pouvoir de GF d’engager juridiquement GIL. Or,  le tribunal a estimé que GF ne pouvait engager juridiquement GIL car les salariés de GF ne pouvaient procéder eux-mêmes à la mise en ligne des annonces publicitaires commandées par les clients français, toute commande devant en dernier ressort faire l’objet d’une validation de GIL.

S’agissant de la TVA, la jurisprudence communautaire soumet l’imposition à l’existence d’une structure apte, du point de vue de l'équipement humain et technique, à réaliser des prestations de manière autonome. Le tribunal a jugé que tel n’était pas le cas de GF, qui ne disposait ni des moyens humains (le personnel de GF n’a pas le pouvoir de mettre en ligne les annonces publicitaires commandées par les clients français), ni des moyens techniques (absence, notamment, de serveurs en France) la rendant à même de réaliser les prestations de publicité en cause.

S’agissant de la cotisation minimale de taxe professionnelle et de la cotisation sur la valeur ajoutée des entreprises, le tribunal a jugé que GIL ne disposait en France d’aucune immobilisation corporelle placée sous son contrôle, utilisable matériellement pour la réalisation des prestations de publicité litigieuses. Il a, en effet, estimé que les locaux de GF étaient utilisés pour les besoins de sa propre activité d’assistance et de conseil et que son matériel informatique ne permettait pas à lui seul la réalisation des prestations publicitaires de GIL en France.

French Revenue Official Statement:  Download French Revenue Authority statement

see Google, France Tax Raid, and Texas Hold'em

Court webpage

      > Lire le jugement n°1505113/1-1  du 12 juillet 2017 

      > Lire le jugement n°1505126/1-1  du 12 juillet 2017

     > Lire le jugement n°1505147/1-1 du 12 juillet 2017                                                    

      > Lire le jugement n°1505165/1-1  du 12 juillet 2017

      > Lire le jugement n°1505178/1-1  du 12 juillet 2017

  1. Download 1505113 RS
  2. Download 1505126 CVAE
  3. Download 1505147 CMTP
  4. Download 1505165 TVA
  5. Download 1505178 IS

ZDNET analysis (best of the media)

Bloomberg analysis

Guardian analysis

 

 

July 13, 2017 in BEPS, Tax Compliance | Permalink | Comments (0)

IRS Releases Tax Stats for High-Income Tax Returns, Tax Year 2014

High-Income Tax Returns, Tax Year 2014—This annual study provides detailed data on returns with adjusted gross income or expanded income greater than $200,000. The study Treasury-Dept.-Seal-of-the-IRS also looks at high-income, nontaxable returns (HINTs) and the reason for nontaxability. For Tax Year 2014, there were almost 6.3 million individual income tax returns with an expanded income of $200,000 or more, accounting for 4.2 percent of all returns for the year. Of these returns, 9,692 had no worldwide income tax liability. This was a 24.2-percent decline from the number of returns with no worldwide income tax liability in 2013, and the fifth decrease in a row since the all-time high of 19,551 HINTs in 2009.

 

July 13, 2017 in Tax Compliance | Permalink | Comments (0)

FTC Halts Low Rate Loan Search Provider That Unlawfully Shared and Sold Consumers’ Personal and Financial Data and Social Security Numbers

Lead generation firm earned millions by falsely promising to match consumers with low-rate loans

The operators of a lead generation business have agreed to settle charges brought by the Federal Trade Commission that the company misled consumers into filling out loan applications and sold those applications – including consumers’ sensitive data – to virtually anyone willing to pay for the leads.

In its complaint, the FTC alleges that Blue Global Media, LLC and its CEO Christopher Kay operated dozens of websites that enticed consumers to complete loan applications that the defendants then sold as “leads” to a variety of entities without regard for how the information would be used or whether it would remain secure.

The websites, which operated under such names as 100dayloans.com1hour-advance.comcashmojo.com and clickloans.net, offered services to consumers seeking a variety of loans, including payday and auto loans. The company claimed it would search a network of 100 or more lenders, and connect each loan applicant to the lender that would offer them the best terms. The FTC charged that, in reality, the defendants:

  • sold very few of the loan applications to lenders;
  • did not match applications based on loan rates or terms; and
  • sold the loan applications to the first buyer willing to pay for them.

The company also promised to protect and secure the sensitive information consumers provided, such as Social Security numbers and bank account numbers, claiming the information was only provided to “trusted lending partners.” The FTC alleges, however, that the company provided the complete loan application data submitted by consumers to any potential buyer without conditions and with little regard to how it would be used. The complaint further alleges that this sensitive personal and financial information was shared and sold indiscriminately without consumers’ knowledge or consent. When consumers complained that their information was being misused, Kay and his company did not investigate or take preventative action, the FTC alleges. 

As part of the settlement with the FTC, the defendants are prohibited from misrepresenting that they can assist in providing loans on favorable rates and terms, that they will protect and secure personal information collected from consumers, and the types of businesses with which they share consumers’ personal information. Under the stipulated order, the defendants also are required to investigate and verify the identity of businesses to which they disclose consumers’ sensitive information, and must obtain consumers’ express, informed consent for such disclosures.

The settlement includes a judgment for more than $104 million, which represents the revenue defendants obtained by selling consumers’ loan applications as leads. The judgment is suspended based on defendants’ inability to pay.

Some scammers build and market websites that claim to offer loan-matching services. The sites convince people to share personal information, but instead of delivering help, the operators scoop up people’s information and sell it for their own profit. The FTC settled with one online operation that followed this pattern. Blue Global, LLChosted dozens of “loan matching” websites that invited people to give detailed personal and financial information to be matched with a lender. The websites claimed to offer a secure online application, but the FTC says the websites didn’t protect information as promised. The sites also said the business would search for the lowest interest rate based on the person’s request. Instead, each loan application was sold to the first buyer, even if the buyer wasn’t even a lender, according to the FTC. In one period, the websites took 15 million applications, and only 2% were matched to a lender — and many of those people didn’t get a loan.

The company agreed to:

  • stop making misleading claims about its services, and
  • share a person’s sensitive information only after it checked-out a buyer and the person has given consent to have the information shared.

The FTC and the company also agreed to a court order restricting what the company tells consumers about its services, and who may receive loan applications.

If you get calls or emails from companies you don’t know, it might be because someone sold information you provided online. Before you fill out an online form or application, check out the company. You can search online for the company name plus the words “complaint” or “review.” Does the company explain how it will protect your information? Find out who will get your information before you share your Social Security number or financial details. If you’re thinking about an online payday loan, shop and compare offers from other kinds of lenders first. If you have trouble with business or your information and has been misused, tell the FTC.

July 13, 2017 in AML | Permalink | Comments (0)

Wednesday, July 12, 2017

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William Byrnes: Presentation about Innovation and Pedagogy

Presentation about Innovation and Pedagogy (on YouTube)

India on April 22, 2017 broadcast on LiveStream 

 

 

July 12, 2017 in Academia, Education | Permalink | Comments (0)