Loading...
Tax News
Updated SIFMA Tax Positions Paper and National Taxpayer Advocate Comment on FATCA Duplicate Reporting
May 01, 2015
Miscellaneous
In the past, the financial industry has had its share of headliner scandals which has spurred various regulatory proposals to rein an alleged behavior often portrayed in the press as “everything that is wrong with America.” It also seems that these days the financial industry is a favorite target for every politician that is ready and able to tackle Federal tax reform.  Whether it is closing tax loopholes, simplifying rules, or chasing criminals, you bet, your fund manager, accredited investor, or broker-dealer, will likely be the intended (and sometimes unintended) recipient to these winds of change.

SIFMA, which is the organization that represents the U.S. securities industry, recently updated its Tax Positions paper that summarizes its members’ views on various tax reform proposals that can potentially impact the securities and investment industry. Among others, SIFMA discusses Obama’s Bank Tax proposal, various proposals that limit the deductibility of interest, Dave Camp’s mark-to-market proposal, and Wyden’s 2015 financial products proposal. The paper highlights various policy issues, and in usual SIFMA fashion, illustrates the negative impact the proposals could have on the securities and investment industries. Here is a complete list of the topics addressed by SIFMA:
 
  • Unintended Consequences of a Tax on Bank Lending (Bank Tax)
  • Tax Treatment of Debt and Equity
  • Taxation of Securities Transactions
  • International Tax Reform
  • Federal Tax Exemption for Municipal Bond Interest
  • Tax Incentives for Retirement Savings
  • Capital Gains and Dividends
  • Tax Classification of Independent Contractors
  • Financial Transaction Tax (FTT)

The paper could be found here.

In an unrelated comment, the National Taxpayer Advocate raised its concerns regarding duplicate FATCA reporting. We have been covering this here since the first introduction of Form 8938, nicknamed in the industry as the “shadow FBAR.” As NAT puts the problem, the FBAR and the shadow FBAR are significantly duplicative, which increases confusion and adds to the compliance burden of taxpayers. In an attempt to resolve these problems, NAT proposes that Treasury should amend Temporary Regulation § 1.6038D-7T(a) and Treasury Regulation § 1.1471-5(b)(2). Interestingly, one of the proposals is to exclude from the specified foreign financial assets required to be reported on the Form 8938, financial accounts maintained by a financial institution organized under the laws of the country of which the U.S. person is a bona fide resident.  Also, the proposal calls for excluding these assets from FATCA reporting.  If adopted, this last proposal will certainly make a lot of U.S. citizens who reside offshore happy, but we would not hold our breath. The NAT comment could be found here.
Leave a Reply
You must be logged in to post a comment.
Tags: SIFMA tax paper, NAT FBAR