Glossary

P-R

P

Pass-thru Payment
Any Withholdable Payment or other payment to the extent attributable to a Withholdable Payment.

Pass-thru Payment calculation
Divide the sum of the PPFI’s US assets held on each of the last 4 quarterly testing dates by the sum of the PPFI’s total assets held on each of the last 4 quarterly testing dates:
PPFI Total U.S. Assets held on last 4 quarters/PPFI Total Assets held on the last 4 quarters

Payment on Account (PoA)
Payments on account are normally required from any taxpayer who has a tax liability, in any amount, based on the preceding tax year. This is the case even if the assessment has not been made at the time the payments on account are due.

Permanent Resident Alien
This is a lawful permanent resident, also known as a Green Card holder. This is an individual who has been accorded the privilege of residing permanently in the USA.
These persons are taxed in the same manner as US citizens on worldwide income.

Personal exemption
Can be claimed for the taxpayer and spouse. Each personal exemption reduces the income subject to tax by the exemption amount.

Personal Identification Number (PIN)
Allow taxpayers to “sign” their tax returns electronically. The PIN, a five-digit self-selected number, ensures that electronically submitted tax returns are authentic.
Most taxpayers can qualify to use a PIN.

PFFI
Participating FFI – FFI that has entered into an FFI agreement under FATCA with the US Treasury.

PFIC
Passive Foreign Investment Company

Power of Attorney
A legal document that allows someone else to act on your behalf, in matters that you specify in the Power of Attorney document.

PPP
Passthru Payment Percentage – the ratio of a PFFI’s US assets to total assets

Pre-existing account
A customer account which pre-dates the commencement date of FATCA (i.e. an account opened prior to 1 January 2013 for United States Financial Institutions [USFIs] and/or an account opened prior to 1 January 2014 for FFIs).

Progressive tax
A tax that takes a larger percentage of income from high-income groups than from low-income groups.

Property taxes
Taxes on property, especially real estate, but also can be on boats, automobiles (often paid along with license fees), recreational vehicles, and business inventories.

Proportional tax
A tax that takes the same percentage of income from all income groups.

Protective tariff
A tax levied on imported goods with the purpose of reducing domestic consumption of foreign-produced goods.

Q

QFFI
A Qualifying FFI is one which has entered an agreement with the IRS under FATCA. Essentially the same as a PFFI

QI
Qualified Intermediary – An entity that is required to withhold and report to the IRS under the Qualified Intermediary (Q.I. Program)

Qualifying child
To be a qualifying child, the dependent must meet eight tests: (1) relationship, (2) age, (3) residence, (4) support,
(5) citizenship or residency, (6) joint return, (7) qualifying child of more than one person, and (8) dependent taxpayer.

Qualifying relative
There are tests that must be met to be a qualifying relative, they are: (1) not a qualifying child, (2) member of household or relationship, (3) citizenship or residency, (4) gross income,
(5) support, (6) joint return, and (7) dependent taxpayer.

Qualifying Widow(er) filing status
If your spouse died during the current tax year, you can use married filing jointly as your filing status for this year if you otherwise qualify to use that status.
The year of death is the last year for which you can file jointly with your deceased spouse.
You may be eligible to use qualifying widow(er) with dependent child as your filing status for two years following the year of death of your spouse.
For example, if your spouse died in 2009, and you have not remarried, you may be able to use this filing status for 2010 and 2011.
This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you do not itemize deductions). This status does not entitle you to file a joint return.

R

Resident Alien
You are considered a resident alien if you met one of the following two tests for the calendar year: 1) “green card test” or 2) “substantial presence test”.

Recalcitrant Account Holder
An account holder who fails to comply with reasonable requests for information in accordance with IRS mandated verification and due diligence procedures to identify US Accounts, to provide a name, address and TIN or fails to provide a bank secrecy waiver upon request.

Refundable credit
When the amount of a credit is greater than the tax owed, taxpayers can receive a “refund” for some of the unused credit.

Regressive tax
A tax that takes a larger percentage of income from low-income groups than from high-income groups.

Revenue tariff
A tax on imported goods levied primarily to generate revenue for the federal government.

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

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