Expanded Form 1099 Reporting Repealed
May 10, 2011
Types : Alerts
Expanded Form 1099 Reporting Repealed.
On April 14, 2011, the President signed into law a repeal of the expanded Form 1099 reporting requirements enacted in 2010. The 2010 law would have required businesses to submit a Form 1099 to any vendor of goods and services totaling more than $600 annually, beginning in 2012. Absent the repeal, payments to corporations and payments for property would have become reportable. The 2011 act also repealed the requirement that income from the rental of real estate be reported on Form 1099.
FBAR Filings Must Be Received by the IRS On or Before June 30
Report of Foreign Financial Accounts.
Any US person with a financial interest in or signature authority over one or more foreign financial accounts must file an FBAR if the value of the account(s) exceeded $10,000 at any time during the calendar year. The FBAR, Form TD F 90-22.1, is due on or before June 30 following the calendar year being reported.
FBAR Must Be Received by June 30.
The instructions to Form TD F 90-22.1 state that the form is not considered filed until it is received by the Department of the Treasury in Detroit, Michigan, and that there is no extension of the time to file. They state that if the FBAR is filed late, the filer is to attach a statement of the reason for the late filing. Presumably, the penalty for a failure “to properly file” would apply unless there is reasonable cause for the late filing.
New Guidance on Investment Funds.
Earlier guidance defined a foreign financial account requiring filing to include shares “in a mutual fund or similar pooled fund,” as well as a securities, brokerage, savings, demand, checking, deposit, time deposit, commodity futures or option account, or an insurance policy with a cash value or an annuity policy.
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European Fund Association Seeks Relief from US Foreign Account Law
Last year Congress enacted the Foreign Account Tax Compliance Act (called FATCA). FATCA generally requires, beginning in 2012, a foreign financial institution to enter into an agreement with the IRS to provide information about US accounts of specified US persons and US-owned foreign entities. If the institution does not enter into an agreement, any person having control of any “withholdable payment” to the institution must withhold tax at 30% on such payment.
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Second IRS Offshore Voluntary Disclosure Initiative
The IRS has provided a second voluntary disclosure initiative to invite those with undisclosed income in foreign accounts to come into compliance. This initiative ends August 31, 2011. Some 15,000 taxpayers participated in the first voluntary disclosure initiative. Under this second initiative, individuals pay a penalty equal to 25% of the amount in the foreign accounts in the year with the highest aggregate account balance in the 2003 through 2010 time period. The 25% penalty is in lieu of FBAR and information return penalties. The comparable penalty under the first initiative was 20%. The penalty may be reduced to 5% or 12.5% in certain cases. Taxpayers must file all original and amended returns and include payment for back taxes, interest and accuracy and/or delinquency penalties for eight years. Under the first initiative taxpayers filed and paid taxes, interest and penalties for six years.
Planning Point
This is an opportunity for individual taxpayers with unreported income from offshore accounts to come into compliance.