Stuff New Zealand - News Article
We were very proud this week to have an article published in the New Zealand media site, Stuff. Whilst the article was written by FairFax Media, our aim is to inform those who are unaware of the filing requirements imposed on US citizens, and to rectify these issues whilst appropriate amnesty programs are available. The text of the article is copied below:
A blustery day is dawning in tax information reporting for Americans residing abroad. An unusually busy period beckons, too, for the firm in New Zealand that specialises in handling the flood of work that has already been spurred by the American legislation known as FATCA.
FATCA, or the Foreign Account Tax Compliance Act, which is now coming into full international force, presents complex challenges for financial institutions around the world. Not least, according to US Global Tax, for the estimated 50,000 US residents currently residing in New Zealand. The Auckland-based firm warns that the legislation, which was passed on the watch of President Barack Obama, also affects people with parents who were US citizens, people with green cards and those who are otherwise US tax residents.
FATCA's stated purpose is to improve compliance with American federal tax laws. In the parlance, it is intended to increase transparency for the Internal Revenue Service with respect to US persons almost anywhere in the world.
It also gives the United States the slightly dubious distinction of being the only country other than North Korea and Eritrea to aggressively pursue its offshore citizens for tax returns in addition to the ones they file in their host country.
And while estimates of its actual value in terms of new revenue for Washington wildly vary — from $1 billion to $800 billion, depending on which source one relies on — few dispute the burden it will place on millions living outside of the US.
Irrespective of where they reside, American citizens are required to file annual tax returns. Penalties for non-compliance are stiff. Non-compliers are looking at fines starting from $10,000 and upwards as well as criminal prosecution.
Part of the reason why the American federal government is confident it can ensure people comply is because FATCA imposes certain due diligence and reporting obligations on New Zealand institutions. The information to report US citizen or US tax-resident account holders. is vast and includes names, addresses and bank account details.
Many smaller entities, for example, appear to believe that the FATCA and common reporting standard legislation relates only to large traditional financial organisations with US investments — and therefore can be safely ignored — may also be in for a bit of a surprise.
Failure to comply with FATCA's requirements will expose local institutions handling finances for targeted people to a 30 per cent US withholding tax on payments to them from US sources. That's a strong incentive for local institutions to be diligent in passing on relevant details to their stateside overlords.
How then should people be proceeding? Much of the existing information is dense with caveats and instructions (not to mention acronyms).
Those coming to it for the first time will almost certainly be confused. But confusion itself is not a defence for filing the wrong forms or none at all.
Even if you think you have nothing to pay, you still need to file a return.
Get an expert to help. If you're unsure of your US tax or FATCA obligations, call US Global Tax today for a friendly discussion on (09) 373 2949 or visit https://usglobaltax.com/ to find out more.