President Obama’s 2016 Budget: International Provisions

President Obama’s 2016 Budget: International Provisions

President Obama has submitted his Administration’s Fiscal Year 2016 Budget (“2016 Budget”) to the U.S. Congress. The 2016 Budget includes proposals for changes to the provisions of the Internal Revenue Code (“IRC”) with respect to tax administration and compliance.

Significant international tax proposals in Obama’s 2016 Budget

Providing for reciprocal reporting of information in connection with the implementation of FATCA (Foreign Account Tax Compliance Act) by:
  • Requiring certain financial institutions to report to the Internal Revenue Service (“IRS”) and to foreign account holders the balance in financial accounts maintained at a U.S. office, including the cash/surrender value of an insurance contract or annuity contract.
  • Expanding the current reporting required with respect to U.S. source income paid to accounts held by foreign persons to include similar information on non-U.S. source payments.
  • Authorizing the Treasury Department to issue regulations to require financial institutions to report:
    • the gross proceeds from the sale or redemption of property held in, or with respect to, a financial account;
    • information on financial accounts held by certain passive entities with substantial foreign owners; and
    • other relevant information.
  • Requiring financial institutions that report information on financial accounts to the IRS under FATCA or the current proposal to provide the account holders with a copy of the information, with an exemption for financial institutions in Model 2 IGA jurisdictions (i.e. jurisdictions that report FATCA information directly to the IRS).
  • Requiring all entities formed in a U.S. state or a U.S. territory (“U.S. entities”) to obtain an employer identification number and allowing the IRS to share information about beneficial ownership information of U.S. entities with law enforcement without a court order for purposes of anti-money laundering and counter-terrorism financing and combating other financial crimes.

If you have any questions regarding the international provisions in Obama’s 2016 Budget, please contact your WithumSmith+Brown professional, a member of WS+B’s International Services Group or email us at [email protected].

Kimberlee Phelan, CPA, MBA, Partner
609-520-1188
[email protected]

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