The Devil Is in the Details
By Orlando Gotay
The smoke from the election is not yet dissipating, and we are trying to understand what a Trump administration will mean. Tax, of course, is near and dear to me and perhaps (!) you. This is a developing situation, and the pieces are by no means even remotely in place. There are some good starting points to intelligently speculate on what may happen and could end up affecting you. Also, there are some things that are virtually certain not to change. I urge you to pull out your calendar and mark some things down.
It seems reasonable to me that the incoming administration will attempt to pass fast-track “tax relief” with provisions that will sweep in tax benefits for those in upper income brackets. I have identified repeal of the estate tax, as well as beneficial treatment of capital gains, interest, dividends, and royalties. For most of us, perhaps a “flattening” of income tax rates (with special “caps” for small businesses and sole proprietorships) will be presented as the centerpiece of this effort, that being palatable to the masses.
Many in the worldwide US expat community had pinned hopes for repeal of FATCA, the law that requires reporting specified “foreign financial assets” held by US persons. I am willing to take bets that it will not be repealed; I hope I lose. Around the world, the “police” ship has sailed on efforts to detect unreported assets and income by individuals. Pioneered by the US, now taken on by close to one hundred other countries, I expect no elimination or meaningful change. Besides, it brings in needed revenue to pay for other goodies.
I also would not expect proposed corporate tax modifications (to a “territorial” basis system) somehow spilling over to individual tax. The administration’s effort will be based on encouraging corporate money to come stateside, creating jobs, and funding infrastructure. Unlike unreported accounts, corporate money is legitimately parked offshore. As of this writing, there is no Treasury Secretary or an Assistant Secretary for Tax Policy. Details are still in the air.
Pull out your calendar: The 2017 deadline for federal individual income tax returns is April 17. The Foreign Bank Account Report deadline was moved up to April 15 from June 30. Did you notice the two-day gap? Good. I know it’s going to burn some people. There will be a new mechanism to request FBAR filing extensions, but no one knows yet what it is. Foreign trust form 3520-A is due on March 15. Stay tuned.
Orlando Gotay is a California-licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the tax matters of US expats in Mexico. He can be reached at firstname.lastname@example.org. This is solely informational, not legal advice; consult your advisor.