Foley Hoag LLP

SUMMARY

U.S. citizens, resident aliens and certain non-resident aliens who held “specified foreign financial assets” at any point during 2011 may be required to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their 2011 U.S. federal income tax returns. This new information reporting obligation – which is in addition to the Form TD F 90-22.1 (FBAR) that also must be filed annually – arose under the FATCA (Foreign Account Tax Compliance Act) provisions of the HIRE Act of 2010 for the purpose of enforcing higher tax compliance among U.S. taxpayers with foreign accounts and assets.  [more...]

SUMMARY

On February 8, 2012, the IRS and US Treasury released proposed regulations under the Foreign Account Tax Compliance Act (FATCA), which was enacted for the purpose of combating offshore tax evasion. To achieve this goal, beginning January 1, 2014, FATCA imposes a 30% withholding tax (FATCA withholding tax) on certain payments to “foreign financial institutions” (FFIs) and to non-US entities that are not FFIs, but that have substantial US ownership. [more...]

SUMMARY

In 2010, Congress enacted legislation which could provide investors who acquire qualified small business stock (“QSBS”) before the end of 2011 with a significant tax benefit. The law permits an exclusion of 100% of the gains realized on the sale of QSBS if the QSBS was acquired by the investor after September 27, 2010 and on or before December 31, 2011 and held for more than five years. Under the temporary total exclusion, excluded gains also are exempt from the alternative minimum tax. As a result, under this exclusion, the effective federal income tax rate on qualifying capital gains generally will be zero.  [more...]

SUMMARY

The Massachusetts Department of Revenue has circulated a draft Directive setting forth the standards the Department proposes to impose for determining whether a professionally-managed fund is a “trader” or “investor” for Massachusetts personal income tax purposes. The Department has invited comments on the draft Directive to be submitted by July 20, 2011.

SUMMARY

In a last-minute change, officers and employees of investment advisors that are registered with the Securities and Exchange Commission, who have signature of other authority over (but no financial interest in) a foreign financial account will have until June 30, 2012, to file FBARs for calendar year 2010 and prior years for which the filing deadline was previously deferred. See FinCEN Notice 2011-2. 

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SUMMARY

At an open meeting of the Securities and Exchange Commission (the “SEC”) held earlier today, the SEC adopted final rules relating to the implementation of the changes to the registration requirements contained within the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC also extended the deadline by which currently unregistered advisers will need to comply with the new registration requirements until March 30, 2012.

Additional information regarding the details of the new rules will follow.

SUMMARY

The Internal Revenue Service announced on June 16, 2011, that individuals with signature authority over (but no financial interest in) foreign financial accounts during the 2010 calendar year must file an annual report on Treasury Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, or “FBAR”) by the regular June 30, 2011, deadline. In the past, the IRS had granted repeated deferrals for such filings while it studied the matter; for prior years, these deferrals have now been further extended to November 1, 2011.

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SUMMARY

The Internal Revenue Service (IRS) has recently announced a new program designed to ease some of the burden imposed by its filing of Federal tax liens as a means of enforcing collection of delinquent taxes from both individuals and small businesses.

SUMMARY

The I.R.S. has recently issued its annual cost-of-living adjustments applicable in 2011 to qualified retirement (pension, profit-sharing, § 401(k), money purchase and stock bonus) plans. Generally, there has been such a low rate of inflation in the nation’s economy that many of these cost-of-living adjustments will remain unchanged.

SUMMARY

As the end of 2010 approaches and we receive numerous inquiries concerning developing hiring plans, I thought you might be especially interested to note some particulars about the Hiring Incentives to Restore Employment Act (the “HIRE Act”) which was enacted earlier this year to stimulate prompt hiring of workers by businesses.

SUMMARY

The Qualifying Therapeutic Discovery Project Tax Credit program was created by the Patient Protection and Affordable Care Act (PPACA), Pub. L. No. 111-148. This new, and temporary, program will be a valuable tool to incentivize industry to develop cutting edge drugs, diagnostics, biologics, and medical devices.  [continues... ]

SUMMARY

Last night, March 25, 2010, Congress passed a “reconciliation bill” that amends the Health Care Act signed by President Obama on March 23. The President is expected to sign the amended legislation next week. The amended legislation introduces a new 3.8 percent Medicare “contribution” payable by individuals, and some estates and trusts, on “net investment income.” The new tax will first apply in 2013.

SUMMARY

Late yesterday afternoon, the U.S. House of Representatives passed legislation that would tax carried interest income (sometimes called “performance allocations” or “incentive allocations”) at ordinary-income rates beginning in 2010. The legislation (H.R. 4213, the “Tax Extenders Act of 2009”) also provides that carried interest income will be subject to self-employment taxes, regardless of certain exceptions previously available.

We will monitor the bill's progress in the Senate and Conference Committee and provide more detail as the bill moves closer to enactment.

SUMMARY

Insider trading cases often have focused on “the CEO’s brother-in-law” or similarly situated individuals who used a tidbit passed along at Thanksgiving dinner to make a quick and easy personal profit.  Today, hedge funds have joined “the CEO’s brother-in-law” as the target of insider trading cases.  In the hedge fund context, charges are being based on a hedge fund employee’s collection of information as part of the employee’s job in trading the hedge fund’s assets, unlike the classic cases based upon receipt of an isolated “tip” outside of the work setting that will be used to generate profit for an individual.

SUMMARY

On October 27, 2009, the U.S. House of Representatives Financial Services Committee (the “Committee”) voted 67-1 to approve the Private Fund Investment Advisers Registration Act (the “Bill”), sponsored by Representative Paul E. Kanjorski (D-PA). The Bill would require advisers to private funds (which would include advisers to hedge funds and private equity funds as defined by the SEC, but not advisers to venture capital funds) to register as investment advisers with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended.

SUMMARY

On October 1, 2009, Representative Paul E. Kanjorski (D-PA), Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, released discussion draft bills of the Investor Protection Act and the Private Fund Investment Advisers Registration Act.  These bills are part of the financial regulatory reform movement in Congress in response to the recent economic crisis.  In conjunction with the release of the draft bills, on October 6, 2009, the House Financial Services Committee has scheduled a hearing to discuss the creation of a national insurance office, improving investor protections and the regulation of private pools of capital.

SUMMARY

On July 2, 2009 the United States Bankruptcy Court for the Southern District of New York issued an order establishing September 22, 2009 as the deadline for filing proofs of claims against Lehman Brothers Holdings Inc. or any of its debtor affiliates (the “Order”). The Order provides that any holder of a claim against the Debtors who fails to file a proof of claim before the September 22, 2009 deadline will be forever barred from asserting such claim thereafter. The Order also establishes certain procedures that must be followed when filing proofs of claims, and sets forth additional requirements for claims based on either a derivative contract or an obligation that was guaranteed by one of the Debtors.

SUMMARY

On Friday August 7, the IRS further extended the deadline to file Treasury Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an “FBAR”) for (i) persons who have only signature authority over a foreign financial account, but no financial interest in the account; and (ii) persons who have financial interests in “commingled funds,” including offshore hedge funds, private equity funds and mutual funds. The extended deadline is June 30, 2010, and applies to FBARs for 2008 and earlier years. The extension does not apply to persons who have financial interests in traditional financial accounts such as bank and brokerage accounts.

The IRS made the announcement in Notice 2009-62 [.pdf]. The IRS also announced that it is studying these questions and has solicited comments from interested parties, with a view to issuing regulations clarifying the requirements.

SUMMARY

On July 15, 2009, the Obama administration delivered to Congress the Private Fund Investment Advisers Registration Act of 2009 [.pdf] (the “Legislation”). The Legislation would seek to regulate private investment funds, such as hedge funds, private equity funds and venture capital funds, through mandatory federal registration, risk monitoring and disclosure requirements for private investment fund advisers managing assets valued at more than $30 million.

SUMMARY

As a follow up to our June 18, 2009 Foley Adviser, we note that the Internal Revenue Service (the “IRS”) has announced an extension to the previously announced deadline for the Treasury Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an “FBAR”) from June 30, 2009 to September 23, 2009 (without penalty) for filers who have paid all taxes and reported all income for 2008.