OVDP Penalty slashed to 5% from 1st July, 2014

7th July 2014,

Dear friends,

Good wishes.

As elaborated earlier US citizens, Green Card Holders, H1B Visa holders and all USA tax residents are required to report global income in their Federal tax return and Federal tax on such global income is payable subject to credit being granted for tax paid overseas.

US tax residents are also required to report maximum value of specified foreign financial assets to the US treasury on or before 30th June every year and since 2011 reporting of overseas financial assets has become mandatory if the maximum value of overseas assets exceeds US$ 50,000 as on 31st December or US$ 75,000 during the tax year and in case of married couple tax-payers filing US$ 100,000 and US$ 150,000 respectively in Form 8938 together with Federal Tax return in Form 1040.

Out of ignorance great majority of US tax residents had not disclosed their foreign income or assets but unfortunately ignorance of law not being an excuse such defaults were subject to civil and criminal penalties. To mitigate this difficulty IRS had offered Offshore Voluntary Disclosure Initiative (OVDI) and Offshore Voluntary Disclosure Program (OVDP) requiring tax residents to pay taxes for 8 years and file Foreign Bank Account Report (FBAR) returns for 8 years and also pay penalty of 25% / 27.5% penalty of maximum value of overseas assets during last 8 years.

The Internal Revenue Service of USA probably sensed that this penalty of 27.5% was a hurdle for defaulting US tax residents to opt for OVDP and therefore the IRS has extended a friendly gesture to the defaulting taxpayers by forgiving them for their genuine and bonafide negligence of not paying federal tax on such overseas income and not declaring overseas financial assets to the Treasury by reducing the penalty to a token 5% of the peak year end balance of the preceding six years and federal tax for previous three years only under the Streamlined Filing Compliance Procedures " (SFCP) being introduced recently on 18th June, 2014.

For availing the benefits of SFCP the tax payer should not be under audit or criminal investigation by the IRS. The tax payer is also required to certify under penalty of perjury that non compliance of US tax and reporting of Foreign Assets were " non willful ". Each case will be reviewed independently by the IRS and if the Financial Institutions is under investigation by IRS where in the US resident is maintaining a financial account offshore penalty will be 50% of maximum value of overseas financial assets. For such Financial Institutions wherein IRS is already investigating tax payers will have the option of buying peace of mind by paying miscellaneous offshore penalty of 50% of the value of overseas assets.

US tax payer residing outside USA has been granted exemption from the token 5% penalty too. As such they are required only to pay federal tax for preceding 3 years and file delinquent Foreign Bank Account Report (FBAR) returns for preceding 6 years together with appropriate applications.

The IRS has shown extreme leniency and granted total immunity from civil and criminal penalties by requiring innocent non-willful defaulter US tax payers to pay a token penalty and minimal tax . A back-of-the envelope calculation shows that the IRS leniency results in tax savings bonanza for a tax payer who could have skipped tax payment on overseas income for a period of 20 years and also results in substantial tax savings for tax payer defaulting for 10 years or more. Calculations for a US$ 1 mn deposit in an overseas account in 1994 show interesting results of interesting tax savings. Over 20 years US$ 1 mn would have grown to US$ 2 mn at nominal interest of 4% per year resulting in an income of US$ 1 mn . This overseas income of US$ 1 mn would have attracted tax liability of say US$ 0.30 mn .

Now under SFCP , only 5% penalty will be applicable to maximum balance over last 6 years say US$ 2 mn which amounts to US$ US$ 0.10 mn only. And the tax payer will be required to pay tax for previous three years - say US$ 40000 being 30% tax of US $ 0.135 mn . So the total payment will amount to US$ 0.14 mn and the SFCP results in tax savings of US$ 0.16 mn.

The relief from penalties is extended in case of non filing of FBAR returns too as even civil penalty for failure of FBAR filing is catastrophic. Penalty for non-willful FBAR filing failure is $10,000 for each year whereas if proved willful the penalties can be as high as $100,000 or 50% of the amount in the account for each violation. A taxpayer in Florida was penalised recently with 150% of his overseas account balance. Now under the SFCP a defaulting tax payer is required just to file FBAR returns for previous six years and the 5% penalty takes care of FBAR failures too.

Salient features of the SFCP are :

I. ELIGIBILITY :

.01 Only individual US tax payers are eligible to opt for SFCP.
.02 This would include US citizens, Green Card Holders, H1B visa holders covered by the definition of US tax residents and any of such tax residents residing abroad can also opt for SFCP.

.03 The tax payer must have filed tax returns for most recent preceding 3 years. i.e. Year 2011, 2012 and 2013.
.04 If the tax payer has sought extension for filing tax returns for the year 2013 then most recent preceding 3 years are year 2010, 2011 and 2012.

II. NON ELIGIBLE INDIVIDUALS :

.01 Tax payers in whose cases IRS has initiated civil examination of tax returns for any taxable year.
.02 It is not necessary that the examination results in undisclosed overseas assets or income.
.03 Tax payer under criminal investigation by IRS are also not eligible.
.04 Tax payers who have submitted applications under Overseas Voluntary Disclosure Program (OVDP) can also opt for SFCP.

III. PENALTY & TAX :

.01 Penalty will be computed at 5% of amount of highest value of overseas assets during the period over last 6 years.
.02 Federal Tax of hitherto undisclosed overseas income for last 3 years is to be paid.

IV. DEFAULTS COVERED :

.01 Failure of reporting overseas income and pay tax thereon under US tax laws.
.02 Failure to file FBAR reports. Earlier FBAR reporting was required to file on form TD F 90- 22.1 which is now replaced from the current year by form FinCEN 114 which be filed online and

.03 Failure to file in specified information regarding such overseas assets in various forms e.g. Form 3520 ; 8938 etc.
.04 Such failure of filing should be by way of "Non-willful conduct " which is defined to mean any conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law."

V. PRECONDITIONS :

.01 Tax payer opting for SFCP declaration should be a tax payer who has failed to fulfill statutory obligations as a result of "non willful conduct".
.02 Non willful conduct has been explained as. "Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law."
.03 Taxpayers who do not qualify for SFCP may opt for OVDP and pay 27.5 percent offshore penalty on the highest balance heed during previous eight years.
.04 However if the taxpayer has an undisclosed account at a bank listed on the IRS posted list the penalty is 50 percent.

.05 The SFCP does not guarantee that the IRS will not recommend criminal prosecution if rejected.

VI. PROCEDURES

.01 Tax payer must file amended US Tax Returns together with all required information for last 3 years.
.02 One should file delinquent FBAR (New Form FinCEN 114) of last 6 years for which due date has passed.
.03 One is required to pay tax, interest and 5% offshore penalty on aggregated highest balance of all foreign financial assets as at end of last 6 years.
.04 "Streamline Domestic Offshore Procedures" should be read in red at the top of the page of amended tax returns.

VII. CONCLUSION :

.01 Procedural compliance should be strictly adhered to by filing specified documents together with receipts of tax and penalty payment which are required to be physically submitted to the IRS office Austin , Texas. The tax payer will be free to opt for SFCP till the IRS declares closure of said scheme.
.02 The SFCP is once in a life time opportunity for defaulting tax payers who have not paid taxes on overseas income or not filed appropriate forms or provided information about overseas Financial assets.
.03 Besides the advantage of peace of mind and exemption from civil and criminal liabilities the tax payers actually saves on tax.
.04 Post SFCP tax payer can freely repatriate his overseas wealth into USA and enjoy the liquidity in USA.
.05 One can freely and legally enjoy the income and corpus of overseas financial assets in any place across the world too.

Society is structured around rules and regulations and citizens are expected to abide by the same. For easy enforcement of rules statutes provide for strict civil and criminal penalties for the law-breakers laws the rules. But when the law breaking is across the board and that too more out of ignorance it is pragmatic for a Government to offer immunity and give one time opportunity to citizens to revert back on the legal ways with lenient penalties. IRS has chosen to take this path breaking step of one time amnesty and it would therefore be appropriate for defaulting taxpayers to approach and take advice of an experienced Certified Public Accountant and also a Law Attorney and proceed ASAP.

with regards,
sincerely,

RAJESH H DHRUVA
Chief Executive
femaonline.com
Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944
email  rajesh@femaonline.com ; keynote@nribanks.com

 ___________________________________________________________________________________________________________________________________


Dear Friends,

Good wishes.

In our earlier e-mail of January & June-2013 we had appraised you about USA Authorities engaging with various countries including India for compliance of the provisions of Foreign Account Tax Compliance Act (FATCA) stating the salient features of FATCA ; initiatives of US Government with various countries and agreements entered with 8 countries including  UK , Spain , Switzerland , Germany .

Said agreements required financial institutions like Banks, Insurance Companies, Mutual Funds , Depositories and Brokerage Firms to report details of accounts of US Citizens and US Addressees if the balance in their account exceeded US$ 50,000 as on 31st December , 2013 or if the said account was closed during the year 2013 to Internal Revenue Service (IRS) in USA.

Since then the IRS and US Treasury have postponed the reporting requirements by 6 months and accordingly effective from 1st July, 2014  financial institutions will be now report accounts of  US Citizens and US Addressees to the IRS if balance in their accounts exceeds US$ 50,000 as on 30th June, 2014 or if such accounts were closed in the year prior to 30th June, 2014. These amended provisions are reflected in agreements recently concluded by USA with France ; Cayman Islands & Costa Rica .

IRS notice regarding revised time frame and other relevant factors can be viewed at http://www.irs.gov/pub/irs-drop/n-13-43.pdf. If you have any queries, we will be happy to address the same to the best of our ability. 

In the meanwhile we wish you a wonderful  Christmas & joyous New Year 2014 to you and family.

with regards,
sincerely,

RAJESH H DHRUVA
Chief Executive
femaonline.com
Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944
email  rajesh@femaonline.com ; keynote@nribanks.com


______________________________________________________________________________________________________________________________________
 

Dear Friends,         

Good wishes.  

A couple of important  reporting requirements  are introduced  in USA being submission of details of foreign accounts and  filing of return for the same and in view of  far-reaching effect to almost all overseas Indians who have investments in India  we have thought it proper to inform you about the same.  These regulations are :- 

I(A).  FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA) :-

1.   Foreign Account Tax Compliance Act (FATCA) - Form 8938, is introduced  from calendar year 2011 with an intention to improve tax compliance of foreign income assets.  

2.   The report is to be file in Form 8938 and attached to the Federal Income Tax return. 

3.   FATCA applies to a US citizen ; resident alien and a Non-Resident alien who elects to be treated as resident alien if his interest in foreign financial assets exceeds US$50,000 as on 31st December or US$75,000 during the tax year. 

4.   In case of married couple tax-payers, these limits are raised to US$100,000 and US$150,000 respectively ; whereas for tax-payers living abroad, these limits are raised to US$200,000 and US$ 300,000 respectively for individuals and US$400,000 and US$600,000 for joint returns. 

5.  Specified Foreign Financial Assets  :-

.01   Specified Foreign Financial Assets would include  overseas bank accounts ; mutual fund investments ; investments in stocks and securities and all other overseas assets held for investments not being  trade or business. 

.02 This will also include investment in shares of private limited company ; insurance  policies ; interest in partnership firms  and / or trusts.

.03  This would include earstwhile investments in India retained prior to migration to USA as also any assets recieved by way of inheritance or partition of family assets. 

6. The link to IRS website is :- http://www.irs.gov/Businesses/Corporations/Summary-of-Key-FATCA-Provisions 

I(B).  FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA) FOR FOREIGN FINANCIAL INSTITUTIONS:-

1.    The IRS also proposes to enter into agreement with banks and financial institutions outside USA to provide the detailed investment of US citizens or resident aliens maintaining their account / investment with such banks / financial institutions from 30th June 2013.

http://www.irs.gov/uac/Treasury-and-IRS-Issue-Guidance-Outlining-Phased-Implementation-of-FATCA-Beginning-in-2013 

2.    The bank / institutions have been required to provide information of US citizens or US investors who have provided US address. 

3.    The link to IRS website is :- http://www.irs.gov/uac/Treasury,-IRS-Issue-Proposed-Regulations-for-FATCA-Implementation


II.    REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNTS (FBAR):-

1.   Since Non-Resident Indian (NRI) Dr. Arvind Ahuja's ; Mr. Ashwin Desai's and others indictments for conspiracy to defraud the IRS and not filing Report of Foreign Bank and Financial Accounts (FBARs) for non-disclosure of income arising from deposits held with HSBC Bank, India and also non-filing of Form TD-F90-22.1 of FBAR  for said investments, the issue of non-filing of FBAR has been hovering on almost every NRI's mind and attention. 

2.   Brief details and links of IRS websites as regards FBARs are :-

.01 A US citizen or resident of USA as also a USA partnership firm ; a Limited Liability Company (LLC) or trust who has financial interest and signatory authority in overseas financial investments valued at  US $ 10,000  more during a calendar year.This would include earstwhile investments in India retained prior to migration to USA as also any assets recieved by way of inheritance or partition of family assets.

.02 Financial investments are defined to  include mutual funds; bank deposits; bank accounts; equity investments , other listed securities; stocks and  debentures;  deposits and like.

.03 Financial interest in foreign accounts will include ownership as a holder or joint-holder ; proprietorship ; overseas partnership having profit sharing exceeding 50% or more ; 50% of the capital ; overseas corporation wherein more than 50% of stock value or voting power is held ; trust wherein more than 50% beneficial interest is held or any other entity wherein more than 50% interest or investment or voting power is held or wherein one holds the signing authority of say bank accounts or a power of attorney.

.04 Appropriate prescribed Information regarding foreign financial accounts is to be filed in form in TD-F90-22.1 before 30th June for preceding calendar year ended on 31st December . 

3.   Details can be viewed on IRS website at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-%28FBAR%29  whereas the form can be downloaded from the link http://www.irs.gov/pub/irs-pdf/f90221.pdf 

4.   Investment in private equity funds and hedge funds are excluded

We have also thought it proper to also inform about existing Laws of re-opening of Disclosure scheme of overseas assets and existing Laws of Report of Global income of US citizens and resident aliens being taxed in USA and Passive Foreign Investment Company (PFIC). 
 

III.    U.S. OFFSHORE VOLUNTARY DISCLOSURE PROGRAMME (OVDP) :- 

1.   The Internal Revenue Service (IRS) having offered Offshore Voluntary Disclosure Initiatives (OVDIs) in 2009 and 2011 has once again given an opportunity for voluntary disclosure of overseas assets and income thereon under the Offshore Voluntary Disclosure Programme(OVDP).

2.   The OVDP is quite similar to the OVDI. 

.02  Under the OVDP, tax-payers are required to pay tax on hitherto undisclosed income of earlier 8 full tax years together with  interest thereon. 

.03 Tax-payers are also required to pay penalty of 27.5% of the highest balance of  hitherto undisclosed  foreign bank accounts and / or value of foreign assets.

3. The link to IRS website is :- http://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program

4. Recent information states that IRS has collected an amount of US$5bn in back taxes, interest and penalties from 33000 tax-payers who have opted for OVDP which amounts to average disclosure of app. US$ half a million each.


IV.    GLOBAL INCOME OF US CITIZENS AND RESIDENT ALIENS BEING TAXED IN USA:-

1.  A U.S. citizen or resident of USA [ resident alien ] is required to pay tax  in USA on his / her worldwide income.

2.  However the taxability of such global income is not covered by US tax laws alone. Tax payers can opt applicability of USA India Tax Treaty or other country's Tax Treaty if income arises from such other country if the provisions of Tax Treaty are beneficial.

3.  IRS Weblink:  http://www.irs.gov/uac/IRS-Offers-Tax-Tips-for-Taxpayers-with-Foreign-Income
 

V.    PASSIVE FOREIGN INVESTMENT COMPANY (PFIC):- 

1.  A US citizen and / or US resident is required to pay tax on passive investments as income at normal rates.

2.   Income from passive investments will  include capital gains; dividend; interest etc.

3.   PFIC rules have an option of computation and payment of tax on notional income i.e. Net Asset Value (NAV) as at the end of the year. 

4.   IRS Weblink: PFIC form link - http://www.irs.gov/pub/irs-pdf/f8621.pdf   whereas PFIC instruction can be viewed at http://www.irs.gov/instructions/i8621/ch01.html 

We hope the contents are found useful and we will be happy to provide assistance in case of doubts but it would be appropriate that a professional CPA or an Attorney is contacted for clarifications. 

with regards,
sincerely,

RAJESH H DHRUVA
Chief Executive
femaonline.com
Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944
email  rajesh@femaonline.com ; keynote@nribanks.com


______________________________________________________________________________________________________________________________________
 

Dear Friends, 

Good wishes.  

As you are aware US Tax Laws require US Citizens and Green Card Holders to report their worldwide income in US tax return and also file details of overseas institutional financial investments with the US Treasury  if the same exceeds US$ 10,000 under Foreign Bank Account Reporting [ FBAR ] and since 2011 report all overseas financial assets if the same exceed US$ 50,000 in Form 8938 under Foreign Account Tax Compliance Act [ FATCA ] together with Federal Tax Return. 

In beginning of  the year we had sent an email regarding USA engaging with India and other countries for compliance of FATCA. Since than US Government has taken serious initiatives in this regards and entered into agreements with the Government of  UK, Denmark, Switzerland, Norway, Mexico, Ireland, Spain and Germany whereby each country's Banks, Insurance Companies, Mutual Funds , Depositories   and Brokerage Firms etc will be reporting accounts of US Citizens or USA addressee directly to the Internal Revenue Service (IRS). And initiatives for said Agreements with about 40 other countries including India are in advance stage. 

As for India US Treasury Secretary Timothy Geithner and US Federal Reserve Chairman Ben Bernanke had met Finance Minister P Chidambaram in New Delhi to discuss ways to prevent offshore tax evasion between the two countries. [ http://www.financialexpress.com/news/india-reforms-agenda-tim-geithner-ben-bernanke-to-meet-pm-manmohan-singh-today/1014166

Indian Government has sought suggestions of various concerned parties and Reserve Bank of India and Securities and Exchange Board of India are in advance stage of finalising the India-USA agreement.  

A study of these seven Agreements signed shows that the provisions are almost similar as regards requirements of domestic financial Institutions reporting to Internal Revenue Service (IRS). Agreement between USA and UK can be viewed at 

http://www.femaonline.com/nri-corner.php?id=15    

While awaiting the final draft of USA-India agreement important aspects of Agreements already signed by USA with above named countries are posted herein for perusal .     

REPORTING REQUIREMENTS :

1.   INDIVIDUALS COVERED :-  US Citizens ; Green Card Holders  and resident aliens residing in USA or any place in the world will be reported based on their US citizenship or USA address  recorded in their accounts held with overseas financial institution , e.g. Indian Bank account having US citizenship or USA address linked to the bank account. [ Annex - 1 ]  

2.   FINANCIAL INSTITUTIONS REQD TO REPORT :- All financial institutions including Banks, Insurance Companies, Mutual Funds  , Depositories  and Brokerage Firms etc.[ Annex - 2 ]  

3.    THRESHOLD LIMIT FOR REPORTING :- Preexisting Individual account with balance exceeding US$ 50,000 as on 31st December 2013 and  Accounts closed during the year 2013  . [ Annex - 3 ]  

4.    DUE DATE FOR REPORTING :-  Information to be reported from 1st January 2014 latest by by 30th September, 2015  for reporting  accounts as on 31st December  2013 and nine months from the end of the year for subsequent years. [Annex - 4]  

5.   ACCOUNTS TO BE REPORTED :-  Bank accounts ; Mutual Fund investments ; investments in stocks and securities ; Brokerage accounts ; Notes, bonds or debentures ; Swaps ; Options or other derivative instruments of any currency, commodity or any other kind  and all other overseas assets held for investments not being  trade or business. [ Annex - 5 ]  

6.  REPORTING CLOSED ACCOUNTS :-  Accounts closed during the year 2013 are to be reported. The Agreements are silent about threshold balance requirements regarding closed accounts. [ Annex - 6 ]  

We hope the contents are found useful and  we will be happy to provide assistance in case of doubts but it would be appropriate that  a professional CPA or a US Attorney is contacted for compliance . 

with regards,
sincerely,

RAJESH H DHRUVA
Chief Executive
femaonline.com
Tel. No. : 0091 281 245 3367 (four lines) / 245 9613
Cell : 0091 98240 49944
email  rajesh@femaonline.com ; keynote@nribanks.com

 

 

ANNEX – 1 INDIVIDUALS COVERED 

The term “U.S. Person” means a U.S. citizen or resident individual, a partnership or corporation organized in the United States or under the laws of the United States or any State thereof, a trust if (i) a court within the United States would have authority under applicable law to render orders or judgments concerning substantially all issues regarding administration of the trust, and (ii) one or more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a decedent that is a citizen or resident of the United States. This subparagraph 1(ff) shall be interpreted in accordance with the U.S. 

Internal Revenue Code. 

ARTICLE 2   

Obligations to Obtain and Exchange Information with Respect to Reportable Accounts   

1. Subject to the provisions of Article 3, each Party shall obtain the information 

specified in paragraph 2 of this Article with respect to all Reportable Accounts and shall annually exchange this information with the other Party on an automatic basis pursuant to the provisions of Article 27 of the Convention.  

2. The information to be obtained and exchanged is: 

a) In the case of the United Kingdom with respect to each U.S. Reportable 

Account of each Reporting United Kingdom Financial Institution: 

(1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and, in the case of a Non-U.S. Entity that, after application of the due diligence procedures set forth in Annex I, is identified as having one or more Controlling Persons that is a Specified U.S. Person, the 

name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person; 

ANNEX – 2 FINANCIAL INSTITUTIONS REQD TO REPORT  

g) The term “Financial Institution” means a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company.  

h) The term “Custodial Institution” means any entity that holds, as a substantial portion of its business, financial assets for the account of others. An entity holds financial assets for the account of others as a substantial portion of its business if the entity’s gross income attributable to the holding of financial assets and related financial services equals or exceeds 20 percent of the entity’s gross income during the shorter of: (i) the three-year period that ends on December 31 (or the final day of a non-calendar year accounting period) prior to the year in which the determination is being made; or (ii) the period during which the entity has been in existence.  

i) The term “Depository Institution” means any entity that accepts deposits in the ordinary course of a banking or similar business.  

j) The term “Investment Entity” means any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer: 

(1)trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading;  

(2) individual and collective portfolio management; or  

(3) otherwise investing, administering, or managing funds or money on behalf of other persons.  

This subparagraph 1(j) shall be interpreted in a manner consistent with similar language set forth in the definition of “financial institution” in the Financial Action Task Force Recommendations.
 

k) The term “Specified Insurance Company” means any entity that is an insurance company (or the holding company of an insurance company) that issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract
 

ANNEX – 3 THRESHOLD LIMIT FOR REPORTING
 

II. Preexisting Individual Accounts. The following rules and procedures apply for identifying U.S. Reportable Accounts among Preexisting Accounts held by individuals (“Preexisting Individual Accounts”). 

A. Accounts Not Required to Be Reviewed, Identified or Reported. Unless the Reporting United Kingdom Financial Institution elects otherwise, where the emplementing rules in the United Kingdom provide for such an election, the following accounts are not required to be reviewed, identified, or reported as U.S. 

Reportable Accounts: 

1. Subject to subparagraph E (2) of this section, Preexisting Individual Accounts with a balance or value that does not exceed $50,000 as of  December 31, 2013. 

ANNEX – 4 DUE DATE FOR REPORTING 

Subject to paragraphs 3 and 4 of this Article, the information described in Article 2 shall be exchanged within nine months after the end of the calendar year to which the information relates. Notwithstanding the foregoing, the information that relates to calendar year 2013 shall be exchanged no later than September 30, 2015.

ANNEX – 5  ACCOUNTS TO BE REPORTED 

S  The term “Financial Account” means an account maintained by a Financial Institution, and    includes: 

(1) in the case of an entity that is a Financial Institution solely because it is an Investment Entity, any equity or debt interest (other than interests that are regularly traded on an established securities market) in the Financial Institution;  

(2) in the case of a Financial Institution not described in subparagraph 1(s)(1) above, any equity or debt interest in the Financial Institution (other than interests that are regularly traded on an established securities market), if (i) the value of the debt or equity interest is determined, directly or indirectly, primarily by reference to assets that give rise to U.S. Source Withholdable Payments, and (ii) the class of interests was established with a purpose of avoiding reporting in accordance with this Agreement; and  

(3) any Cash Value Insurance Contract and any Annuity Contract issued or maintained by a Financial Institution, other than a noninvestment-linked, nontransferable immediate life annuity that is issued to an individual and monetizes a pension or disability benefit provided under an account, product, or arrangement identified as excluded from the definition of Financial Account in Annex II. Notwithstanding the foregoing, the term “Financial Account” does not include any account, product, or arrangement identified as excluded from the definition of Financial Account in Annex II.  

t) The term “Depository Account” includes any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a Financial Institution in the ordinary course of a banking or similar business. A Depository Account also generally includes an amount held by an insurance company under an agreement to pay or credit interest thereon.  

u) The term “Custodial Account” means an account (other than an Insurance Contract or Annuity Contract) for the benefit of another person that holds any financial instrument or contract held for investment (including, but not limited to, a share or stock in a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based upon a nonfinancial index, a notional principal contract, anInsurance Contract or Annuity Contract, and any option or other derivative instrument).
 

ANNEX – 6  REPORTING CLOSED ACCOUNTS

Obligations to Obtain and Exchange Information with Respect to Reportable Accounts

(4 ) the account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, immediately before closure;
 

 

 

INDIAN BANKS to PROVIDE INFO of NRI A/Cs. to IRS

INDIAN BANKs : MFs ; INSURANCE COs. & BROKERAGEs registered under FATCA of USA

 

alttag