J U N E E D V E N S ON , A M E R IC A N A T T OR N E Y

E D V E N S ON C ON S U LT IN G

Americans abroad: Taxes & Rising Global Financial

Accountability

A presentation for the Fireside Forum, American Women’s Club of Oslo,Norway

April 23, 2012

Rising Global Financial Accountability

Problem Individuals and companies try to reduce their tax

burden at a time when governments need the funds

for necessary services, infrastructure and investment.

Needs A ’level playing field’ for global financial accountability

Greater transparency of transactions across borders

Regulations that reduce the risk of advantage-seeking

behaviors

Rising Global Financial Accountability

Goals

To share the burden of taxation

For the benefit of the public

For use for public and social causes.

Directions

To reduce bribery and corruption

Brought about by lack of transparency

In financial transactions

Of all types and stripes.

Financial Accountability in the News

a few recent examples . . .

1. Swiss banks and UBS case

2. SWIFT system and Iranian trade sanctions

3. Greece, internal fraud and corruption

4. Italy, internal fraud and corruption

5. Multi-lateral pressures for internal control, transparency and accountability

Accountability & Americans abroad

Impact Americans must report their foreign income and taxes (and

U.S. Income) to the U.S. Internal Revenue Service (IRS)

More recent requirements include sharing information on the balance in foreign bank accounts & foreign securities

Effects vary in different countries In Norway, our high tax rate means we usually would not owe

tax to the U.S. after reporting.

Ex: In France, their lower tax

rate affects Americans who

may owe tax to the U.S.

American Reactions

Anger: Why me?

Confusion: What must I do? Am I in trouble?

Resentment: I shouldn’t owe the U.S; I don’t live there.

Other Responses: Ex: Renunciation of U.S. citizenship

Ex: Advice by the Taxpayer Advocate Service

Lobbying

Options (2): Comply or revoke your citizenship

American Filing Requirements

IRS Personal Income Tax Forms American citizenship

Dual citizenship would not affect the duty to file

American citizenship requires one to file with the IRS

If a person is behind, file the 3 prior years plus the current year

Minimum income that requires filing personal income forms:

Single: (2011): Under 65, $9,500; over 65: $10,950

Married filing separately (2011): $3,700

(Convert 2011 NOK to dollars by dividing by 5.6022)

Resources:

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Bank Information Filing Requirements

FBAR – Report of Foreign Bank and Financial Accounts

Form TDF 90-22.1: http://www.irs.gov/pub/irs-

pdf/f90221.pdf

Form 8938 – Statement of Specified Foreign Financial Assets

http://www.irs.gov/pub/irs-pdf/f8938.pdf

http://www.irs.gov/pub/irs-pdf/i8938.pdf

FBAR Process and Goals

Who must file? You send this to Dept. of Treasury if you have the equivalent of at

least a total of $10,000 in a foreign bank account that year. This includes control or rights to access that account. It also includes options, funds, annuities, securities and insurances.

What information must one file? For each account: The name and address of your bank/security/other financial

institution The account number and name(s) on the account The highest balance in the account in the given year

Form 8938 Process and Goals

Who must file? You only file it if (1) you have to file an income tax return for that

year, even if your foreign assets meet the minimum amount to be reported on the form, and (2) your assets total are over the amount at end of year: For 2011: $200,000 single or married filing separate, and $400,000 married filing jointly.

What information must one file? This goes with your income tax return to the IRS. It includes: For each account: The name and address of your bank/security/other financial

institution The account number and name(s) on the account The balance ’range’ in the account in the given year

Two Americans with foreign assets

The slacker, an example:

Lives in Miami

Makes money in the U.S. he can send abroad

Sends it to a Cayman Islands bank.

Does not declare it in the U.S. for tax

The honest hard-worker:

Lives & works in Norway

Pays large income taxes to Norway

Reports to the IRS

Does not owe tax to the U.S.

Looking to the future

Positive Consequences

Larger tax collections from persons who should pay tax

Less avoidance of tax liability among ex-pats

Creates a model for other nations to follow

Begins to level the playing field and close gaps in accountability caused by national borders

Unavoidable Results

Americans overseas experience a seemingly unfair reporting burden:

Difficult forms

Scary deadlines

Lack of ease to understand

Forces those with no resulting payment obligation to produce time-consuming reports to the U.S. government

Making the right decision

Ethics in a shrinking world Cosmopolitanism – making the world better for all.

Justice and re-distribution of wealth

Works to reduce financial market burdens on the poor

Globalization means a more equitable distribution of wealth.

The role of personal responsibility Consequentialism: What is the result?

’Doing the right thing’: Following the law.

Virtue ethics: Being a ’good’ person.