Glossary

A-C

A

Adjusted Gross Income
Gross income reduced by certain amounts, such as a deductible IRA contribution or student loan interest

AML Due Diligence
Customer due diligence procedures pursuant to anti-money laundering laws.

Asset
Any property included in the FFI quarterly balance sheet including off balance sheet transactions or positions.
If no financial statements are produced quarterly then the value of the assets will be determined by using the method used for the most recently issued financial statements.
Assets held in a custodial account of an FFI or applicable to grandfathered obligations will not be considered assets of an FFI.
Assets need to be translated into a single currency (which does not need to be USD) for the purposes of calculating the Pass-thru Payment Percentage (PPP).

Authorized IRS e-file Provider
A business authorized by the IRS to participate in the IRS e-file Program.
The business may be a sole proprietorship, a partnership, a corporation, or an organization.

B

Back Taxes
Taxes that have been unpaid in the year that they were due. Taxpayers can have unpaid back taxes at the federal, state and/or local levels. Back taxes accumulate interest and penalties on a regular basis.

Backup Withholding
Withholding Tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS)
will be able to receive income taxes owed to them from investors’ earnings.

Bad FFI
A non-participating FFI (NPFFI)

C

CFC
Controlled Foreign Corporation

Chapter 4
Chapter 4 of Subtitle A of the Internal Revenue Code. This Chapter contains the FATCA legislation.

Chapter 4 withholding
Refers to the 30% FATCA withholding.

CIP
Customer Identification Program

CIV
Collective Investment Vehicle if all holders of record of a direct interest in the FFI are PFFIs, DCFFIs or exempt beneficial owners.

Compulsory payroll tax
An automatic tax collected from employers and employees to finance specific programs.

Covered Expatriate
A covered expatriate is an individual who relinquishes their US citizenship or long term US residency after June 16, 2008 and who either: 1) has an average annual income tax liability of more than $162,000 (for 2017-amount is indexed for inflation yearly) for the five years preceding expatriation; 2) has a net worth equal to or greater than $2,000,000 on the date of expatriation or termination of permanent residency; or 3) have failed to provide certified compliance with US tax obligations for the five years prior to expatriation. An individual who meets one of these criteria is referred to as a “covered expatriate.”

Custodial Account
An account that holds any financial instrument or contract held for investment for the benefit of another person. Exclusions are: retirement and pension accounts and non-retirement savings accounts (must meet certain requirements in respect of tax treatment and type or amount of contributions). Also, excluded are accounts held solely by one or more beneficial owners or NPFFIs.

Did you Know?

  • Fact Seven

    Thanks to FATCA banks must disclose their American account holders to the IRS or local tax authority.
  • Fact Six

    The IRS is actively looking for non compliant US persons.
  • Fact Five

    It takes an average of 16 hours to do IRS Form 1040.
  • Fact Four

    There are over 500 IRS tax forms.
  • Fact Three

    Since 1916, illegal income has been taxable.
  • Fact Two

    US persons must file tax
    returns no matter where they live and work.
  • Text One

    7 million Americans abroad
    only 500,000 compliant

Here to Help

Here to Help

Contact one of our specialists

London
US Tax & Financial Services Ltd
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London E14 9GE
United Kingdom

T: +44 20 7357 8220

F: +44 20 7357 8225

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CH-8001 Zurich
Switzerland

T: +41 44 387 8070

F: +41 44 387 8079

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CH 1207
Geneva
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T: +41 22 700 2500

F: +41 22 700 2526

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Middle East, Asia and the Americas
US Tax & Financial Services GmbH
Löwenstrasse 28
PO Box 1367
CH-8021 Zurich
Switzerland

T: +41 44 387 8070

F: +41 44 387 8079

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Nordics
US Tax & Financial Services Ltd / MAJATTORNEY
Norra Skeppsbron 5B
SE 803 10, GAVLE
Sweden

T: +46 26 18 82 22

M: +46 70 61 88 016

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Celebrating 30 Years

 Celebrating 30 Years

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