On April 17, the Internal Revenue Service (IRS) issued final regulations (T.D. 9584) regarding the reporting to the IRS of U.S. bank deposit interest earned by nonresident aliens. These regulations, which go into effect January 1, 2013, are consistent with the recent trend by the IRS to gather more tax-related information that it can exchange with other jurisdictions.
Nonresident alien individuals are generally not subject to U.S. taxation on interest income from deposits maintained at U.S. offices of certain financial institutions (U.S. bank deposit interest) unless the interest is "effectively connected" with the conduct of a U.S. trade or business. These financial institutions include banks and certain savings institutions and insurance companies.
The new regulations do not change the way the interest income of nonresident alien individuals is taxed--they affect only the reporting to the IRS of U.S. bank deposit interest earned by these individuals. Whereas such interest was previously not reported to the IRS, the new regulations now require U.S. financial institutions to report annually to the IRS any U.S. bank deposit interest earned by nonresident aliens beginning January 1, 2013.
The regulations apply only to nonresident alien individuals who are residents of the 80 countries that have tax information sharing agreements with the United States, as listed in Rev. Proc. 2012-24, also issued on April 17.
The revenue procedure divides the listing into two categories. In the first category are countries to which the United States is not obligated to, but may, provide the information obtained as a result of the new regulations. In evaluating whether to provide these countries with such information, the IRS will evaluate the requesting country's current practices with respect to information confidentiality and then require the requesting country both to explain how it intends to use that information and to justify how that information is pertinent to the intended permitted use.
In the second category is one country--Canada--with which the United States has already entered into an agreement to exchange deposit interest information automatically. Though only Canada currently has an automatic information exchange agreement in place, the U.S. Treasury Department announced in February that it is currently negotiating similar agreements with France, Germany, Italy, Spain and the United Kingdom.
On March 27, Warren Whitaker will be speaking on "Passing Down Your Prized Possessions: How to Avoid Fights and Fees In Your Estate," a seminar hosted by the New-York Historical Society's Planned Giving Advisory Council and held at the Robert H. Smith Auditorium in New York City.
Warren Whitaker will be serving as chair of the 15th Annual International Estate Planning Institute, hosted by the New York State Bar Association and The Society of Trust and Estate Practitioners USA (STEP USA).
Von Sanborn co-authored an article, "The New Hampshire Foundation Act: A Solid Foundation for Wealth Management on a Global Scale," published by the Bloomberg BNA Tax Management Estates, Gifts and Trusts Journal.
On February 20, Von Sanborn will be presenting on "Passionate Collecting, Thoughtful Ownership: Collecting, Owning and Selling Art" at a STEP Southwest Florida Chapter event.
On January 16, Carl Merino and Warren Whitaker participated in "Estate Planning Across Borders: A Guide for the Perplexed," a program at the annual meeting of the New York State Bar Association presented by the Trusts and Estates Law Section.
Von Sanborn was featured in an article, "Tax Screw-Ups and People Problems: Experts Reveal Biggest Blunders of Rich Families," published by Bloomberg.
Von Sanborn was quoted in an article, "U.S. Family Offices Face Increasing Competition from Foreign Families," published by Private Asset Management.
International tax partner Von Sanborn was quoted in an article, "Six Family Offices Themes Likely to Set the Agenda in 2019," published by Fund Intelligence.
Day Pitney Press Release
Day Pitney Press Release