July 1, 2014 saw the Foreign Account Tax Compliance Act (FATCA) go into effect to help identify and collect tax from U.S. persons investing in assets through non-U.S. entities. Under FATCA, foreign financial institutions (FFIs) that fail to meet requirements will be subject to a 30% U.S. withholding tax on payments of U.S.-source interest, dividends, and investment income made to the FFI by U.S. withholding agents.
FFIs include not only depositary and custodial institutions, but also investment entities that function or hold themselves out as investment vehicles. This would include private equity funds and investment funds. FATCA’s reach is substantial as it is supported by agreements with nearly 100 nations.
With FATCA in full force, New York residents with unreported overseas income should also take advantage of NY State’s Voluntary Disclosure and Compliance program.
Questions? Contact your Berdon advisor or Saul Brenner at 212.331.7630 or firstname.lastname@example.org.