The Hiring Incentives to Restore Employment (HIRE) Act (Pub. L. No. 111-14) was signed into law on March 18, 2010. The centerpiece of the Act is the creation of tax breaks for businesses hiring new workers and extending higher expensing limits for small businesses that make capital investments. To pay for these tax breaks, however, the Act incorporates provisions of the Foreign Account Tax Compliance Act of 2009, which has far-reaching implications for foreign financial institutions that may have U.S. clients. A summary of some of the provisions that we believe would be of interest to our individual clients and their advisors is set forth below:
A. Withholding Tax Provisions
There are withholding taxes to enforce new reporting requirements on specified foreign accounts owned by specified U.S. persons or by U.S.-owned foreign entities.
Every foreign financial institution is encouraged to enter into an agreement with the United States that would require it to:
Those foreign financial institutions that refuse to enter into such an agreement are subject to withholding of 30 percent on all payments to them of U.S. source dividends, interest and similar investment income, and on the gross proceeds of all sales of U.S. securities and other assets that produce interest or dividends.
These rules are in addition to the existing Qualified Intermediary rules and are effective for payments made after December 31, 2012.
B. Foreign Trust Provisions
The provisions regarding foreign trusts have been amended to broaden the U.S. grantor trust rules as applied to a U.S. grantor of a foreign trust, tax U.S. beneficiaries on uncompensated use of trust property, and tighten the foreign trust reporting rules applicable to U.S. grantors and beneficiaries alike.
These rules are effective on the date of enactment and for transfers made or uses of property after the date of enactment, or taxable years beginning after the date of enactment, as the case may be.
C. Other Provisions of Interest
These rules are effective for taxable years beginning after the date of enactment, except for the PFIC reporting which is effective on the date of enactment.
On November 16, Alexis Gettier will be participating in a GenSpring Family Office panel called, "Avoid Art Ache: Planning & Communication, Considerations For Collections."
Carl Merino co-authored an article, "Tax Planning for Foreign Couples Buying U.S. Homes: Ownership Through Foreign and Domestic Trusts," for Bloomberg BNA’s Daily Tax Report.
On November 9, Darren Wallace will be speaking on a panel at Private Asset Management's Breakfast Briefing at the Lambs Club in New York City.
Carl Merino co-authored an article, "Tax Planning for Foreign Couples Buying U.S. Homes: Ownership Through Foreign Corporations and Partnerships," for Bloomberg BNA’s Daily Tax Report.
On November 3, Warren Whitaker gave a presentation about international estate planning for domestic estate practitioners at an Institute held by the Florida Fellows Institute of the American College of Trust and Estate Counsel.
Stephen Ziobrowski was quoted in an article, "How Bermudians can be exposed to US taxes," in The Royal Gazette. The article is a recap of an International Tax and Planning Seminar at an AFL Investment sponsored event held in May 2016, in which Ziobrowski participated.
Darren Wallace and Ed Krzanowski were quoted in an article, "Valuation discounts: what could the IRS’ new proposal mean for families?" in Private Asset Management Magazine. In the article, Wallace and Krzanowski discuss the recently issued proposed regulations under Internal Revenue Code Section 2704 that, if finalized, would curtail or eliminate valuation discounts for gift and estate tax purposes
Ed Krzanowski was quoted in an article, "IRS Estate-Transfer Proposal Meets Rare Repeal Bill," in Law360.
Angela Titus McEwan was mentioned in an article, "Executive Moves: Who hired whom this week," in NJBIZ. Titus McEwan recently joined Day Pitney as a partner in the trusts and estates practice in the Parsippany office.
Leiha Macauley was quoted in an article, "As Women Gain Earning Power, A New Focus on Finances," in Banker & Tradesman. The article is about how saving for retirement is a salient issue for women because they tend to outlive their spouses, make less money over the course of their lives, are more likely to act as caregivers for elderly parents and are also likely to inherit more money.