Foodman CPAs and Advisors

blue banner for website

[vc_row][vc_column][vc_tta_accordion active_section=”1″][vc_tta_section title=”FATCA” tab_id=”1461957342454-6635dd8d-85c3″][vc_column_text]Case

Foreign Financial Institution (FFI) in an IGA (Intergovernmental Agreement ) 1 jurisdiction was treating their professionally managed Trusts, Investment Funds and Trustee Documented Trusts as Non-Financial Foreign Entities (NFFE) with respect to their Foreign Account Tax Compliance Act (FATCA) Due Diligence Documentation and Reporting.

 Solution

Foodman provided detailed training workshops on the FATCA Regulation regarding the definition of Entity Accounts and how to determine whether to classify them as Foreign Financial Institutions (FFIs) or NFFEs. Annex II of the IGA 1 in the jurisdiction of the FFI was also reviewed to include the special treatment given to Trustee Documented Trusts in IGA 1 jurisdictions. A further exercise was undertaken to reclassify all the accounts that had to be treated as FFIs and/or Trustee Documented Trusts under the IGA 1. Foodman recommended that the FFI take all the necessary steps to “re-document” the entities with the correct Chapter 4 classifications, and obtain the new sponsoring Global Intermediary Identification Numbers (GIINs) needed to properly Sponsor and or Report (in the case of Trustee Documented Trusts) the related entities.

Outcome

The FFI client is now operating in full compliance with the FATCA regulation and their jurisdictions IGA 1 in relation to how they have classified their Entity and Financial Institution Clients. They completed their FATCA 2015 reports submitting their identified US Specified Owners under 3 separate GIINs:

  1. Under their first original GIIN they reported substantial U.S. owners of their direct accounts,
  2. The second and third GIINs they obtained as sponsors were used to report the US owners of:
    1. The FFI clients they had agreed to Sponsor under FATCA
    2. The Trustee Documented Trusts (as specified under their IGA 1),
  3. The FFI is now in the process of registering “under its sponsoring account with the IRS” the individual FFI accounts they are Sponsoring so that they can be issued their separate GIINs.

[/vc_column_text][vc_column_text]Case

A U.S. Financial Institution (USFI) was aware that their “Pre-FATCA” due diligence and documentation account opening procedures implemented to identify U.S. versus Non Resident Alien (NRA) account ownership was not as thorough as they needed to be, and did not fully comply with the NRA Withholding and Documentation Responsibilities under Chapter 3 and 4 of the Internal Revenue Code. They asked Foodman to review their existing processes, provide subject matter training and recommend “Post FATCA” compliant account opening procedures and Best Practices.

 Solution

Foodman provided detailed training workshops on the FATCA / NRA Regulation, Enhanced Due Diligence Best Practices (including the introduction of some of the FATCA Indicia which USFIs are incorporating as a Best Practice) and the new Withholding Certificates. Changes were recommended and made to the Account Opening Procedures and Enhanced Due Diligence was initiated.

Outcome

During the Enhanced Due Diligence, the USFI was able to call upon Foodman’s FATCA Help Desk for guidance on specific cases where U.S. Indicia had to be resolved and documented satisfactorily for NRA clients. Clients that had previously been certified as NRA’s were also identified and documented as U.S. clients based on the enhanced due diligence. All the old Pre-FATCA withholding certificates were replaced with the FATCA compliant ones which allowed for the:

  • Identification of Passive NFFEs with U.S. Substantial Owners for FATCA 8966 reporting; and
  • The collection of NRA Foreign Fiscal IDs for inclusion in the new required IRS form 1042s reporting.

[/vc_column_text][/vc_tta_section][vc_tta_section title=”Qualified Intermediary (QI)” tab_id=”1462203356816-c4f1d27f-031f”][vc_column_text]Case

A fully participating FATCA FFI in an IGA 1 country was acting as a Non Qualifed Intermediary (NQI) and offering its clients Foreign Investment opportunities through a local in country clearing custodian who was also licensed as a Qualified Intermediary (QI) with the IRS. The local custodian QI decided it could no longer offer International Investment Services to local NQIs and issued a 3 month deadline. The NQI’s could either become QIs themselves, or close the international investment accounts of their clients.

 Solution

Foodman provided a detailed training workshop to the FFI on the Requirements for becoming a QI and supported the FFI throughout its application preparation process to the IRS, and the preparation and submission of its first QI 1042/1042s QI reporting.

Outcome

The FFI is now an approved QI and this is facilitating their ability to deal directly with US Custodians and International Banks, which in turn is enhancing the investment products they can offer their clients. They were able to achieve this within a very short time frame, and without any disruption on the service provided to their clients.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Common Reporting Standard (CRS)” tab_id=”1461700956547-98629e3d-7ab9″][vc_column_text]Case

A financial institution in Colombia (a country in the Early Adopters Group), became nervous when realizing that as of 1/1/2016, the financial institution already had CRS responsibilities. The financial institution was overwhelmed with FATCA compliance, and had not made any provisions in terms of staff and time for CRS.

Solution

Foodman reassured the financial institution that they could implement the CRS project parallel to their FATCA initiative. Since most of the staff at the financial institution was Spanish speaking, Foodman proceeded to summarize into a 45 page presentation; the CRS Handbook in Spanish. The presentation in Spanish, including all the graphs, was easily understood, and provided the right road map for the financial institution. Foodman was able to train the staff to recycle already FATCA implemented processes to comply with CRS.

Outcome

The financial institution was able to implement the new account procedures to record tax residency as of 1/1/16, and plans to have all the due diligence done for its high value accounts by 12/31/16.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Federal Tax Evasion” tab_id=”1458161794271-4ed3216b-1fae”][vc_column_text]Case

A criminal tax defense attorney was attempting to defend his client on charges of failing to truthfully report the receipt of more than $2 million in income.

Solution

After an in-depth review and debriefing of the client, regarding his business, we determined that the client had in fact over-reported income in earlier years and was deducting the over-reported income for the years under investigation as allowed by the Internal Revenue Code.

Outcome

The client was acquitted of all charges.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Criminal Defense” tab_id=”1458162069388-64c0bd88-01be”][vc_column_text]Case

Criminal defense attorney Bruce Fleisher was attempting to defend his client John Connolly, a former FBI agent, against charges that Connolly took money in exchange for information that led to murder.

Solution

  • We examined each and every one of the more than 120,000 discovery documents provided by the State. We created a financial history of John Connolly’s life from 1980 through 1991 from those 120,000 documents. We assisted the legal team with their depositions of the State’s only financial expert witness, an IRS special agent.
  • We provided questions designed to leave no escape routes for her.We attended her deposition to assist them with issues not anticipated during our deposition preparation.
  • We attended her direct and cross examination at trial. We were able to point out when the exhibits used by the State in support of her testimony were patently inaccurate and misleading; almost resulting in a mistrial.

Outcome

Because of what we uncovered in our examination of the 120,000 discovery documents, Stanley Foodman, as expert witness was able to provide irrefutable direct and cross examination testimony at trial; proving to the satisfaction of the jury that the Defendant John Connolly never took a bribe from the gangsters recruited by the State to testify against him in exchange for reduced sentences.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Divorce” tab_id=”1458161794214-dd19ac58-776d”][vc_column_text]Case

A divorce attorney in the U.S. Virgin Islands was attempting to win a fair and equitable financial distribution for his client, the wife. Her husband was the principal of a paving company registered under the Economic Development Company statute in the U.S. Virgin Islands. The company was filing as an S corporation there.

Solution

Through our financial investigation, we found that the only other shareholder was a foreign individual, a violation of U.S. Virgin Islands S corporation regulations. We also found that the husband was hiding cash flow from his wife by transferring it to his foreign partner as prohibited shareholder distributions. He was hiding assets from his wife by investing corporate funds into the construction of a large home in the name of the company.

Outcome

The attorney for the wife was able to negotiate a pre-trial $2 million settlement for the wife that consisted of transferring the corporate home to the wife and the payment of $ 1 million.[/vc_column_text][vc_separator color=”black”][vc_column_text]Case

A divorce attorney was attempting to win a fair and equitable financial and time-sharing agreement for his client, a wife and mother of one. Her husband, a contractor, was paid large sums of money in cash, making his income difficult to quantify.

Solution

We were able to determine the husband’s income based on an in-depth investigation of his style of living. Our professionals found that the husband’s income was at least $200,000 per year.

Outcome

The attorney was able to win an equitable settlement for the wife, including the alimony, child support and time-sharing arrangement she was seeking.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Internal Analysis/Internal Controls” tab_id=”1458162182080-a077c215-c65d”][vc_column_text]Case

A major foreign embassy was concerned about financial security and potential violations of U.S. banking laws.

Solution

Our team of professionals conducted a thorough analysis of the financial systems in place, identified weaknesses.

Outcome

We developed internal controls to help prevent waste and potential fraud and ensure compliance with U.S. banking laws.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Civil Litigation” tab_id=”1466177216314-35974453-f559″][vc_column_text]Case

Two partners owned a retail business for over 25 years. They agreed to sell their business to a third party. During the due diligence process performed by the potential buyer, the partners were notified that there was inventory missing. After an initial investigation, it was concluded that one of the partners was conducting a side business by misappropriating and selling inventory. The fraudulent activity placed the potential sale to the third party in jeopardy and litigation ensued between the partners alleging misappropriation of assets.

Solution

We were retained to assess the business damage caused by the misappropriation of assets. Our research and reports demonstrated that the partner defendant had in fact committed the misappropriation, had harmed the partner plaintiff, and caused damage to the business.

Outcome

We were able to quantify the losses and damages to the partner plaintiff, recovery was made and the business was successfully sold.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Offshore Voluntary Disclosure Program” tab_id=”1466177342584-89fcf63b-500f”][vc_column_text]Case

A U.S. Taxpayer residing in an offshore jurisdiction was holding undisclosed foreign accounts and financial assets (personally and through undisclosed foreign entities) and willfully had not reported the accounts and the assets.

Solution

The recommendation for the U.S. Taxpayer was to enter into Offshore Voluntary Disclosure enabling him to become compliant, pay civil penalties, and eliminate the risk of criminal prosecution for all issues relating to tax noncompliance and the failure to file FBARs. The Offshore Voluntary Disclosure Program (OVDP) is a voluntary disclosure program specifically designed for Taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. OVDP is designed to provide protection to the Taxpayer from criminal liability and terms for resolving their civil tax and penalty obligations.

Outcome

The Taxpayer was able to resolve all civil tax and penalty obligations, avoid incarceration and resume sleeping well.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Offshore Streamlined Filing Compliance Procedures” tab_id=”1466177438126-e3ccb508-9228″][vc_column_text]Case

A U.S. person living in Costa Rica for the past 7 years had not filed U.S. Federal Tax Returns for the last five of the seven years. He was current and compliant with all his Costa Rica taxes. He owned property and had bank accounts and investments in Costa Rica. He became concerned when his banker in Costa Rica brought to his attention the fact that he could be out of US Tax compliance.

Solution

The banker in Costa Rica referred the client to us. We determined that he was out of US Tax compliance. We further determined that he qualified to make a Streamlined submission to IRS, as his non-compliance was non-willful, he was not under an IRS examination, and had a valid U.S. Tax ID number.

Outcome

The taxpayer was able to certify under penalties of perjury, that his failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on his part. All required returns were filed, and the unpaid U.S. taxes plus interest were paid. He is now current and fully tax compliant.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Foreign Bank Account Report (FBAR)” tab_id=”1466177515918-bcaf9620-0a3c”][vc_column_text]Case

A U.S. Expatriate living in Bogota, Colombia had filed U.S. Tax Returns on all worldwide income, but had failed to file FBARs. The explanation given by the Expatriate indicated that he was not aware of his obligation to report his bank foreign account, and as a result did not submit his FBARs.

Solution

Because the Expatriate was not under investigation by the IRS, and had not been contacted by the IRS about the delinquent FBARs, we were able to file electronically at FinCEN, and include a statement as to why the FBARs were filed late.

Outcome

The Expatriate did not have to pay a penalty. IRS will not impose a penalty for the failure to file delinquent FBARs if the Taxpayer has properly reported on their U.S. tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs.[/vc_column_text][/vc_tta_section][/vc_tta_accordion][/vc_column][/vc_row]