Gray's summary of U.S. taxes and the Green Card.
Gray International (Gray) is an international network of public accounting and consulting firms based in the U.S., Hong Kong, China and Europe. Gray was started over 10 years ago in the U.S. (via its predecessor) and took the form of Gray International in 2013 as the result of the networking of multiple independent practices and professionals.
Gray provides international accounting and compliance solutions in the U.S., Americas, Asia and Europe. Gray focuses on U.S. accounting, tax, and governmental compliance for multinational companies, investors, U.S. persons living overseas and foreign investors and companies investing in or moving to the U.S.
Gray also consults on compliance with U.S. laws for businesses and financial institutions overseas such as the Foreign Corrupt Practices Act (FCPA) and the Foreign Account Tax Compliance Act (FATCA), the IRS Offshore Voluntary Disclosure Program, and the Program for Non-Prosecution Agreements or Non-Target letters for Swiss Banks.
Grays principals, partners, and employees have served clients worldwide. Gray has offices in Geneva, Hong Kong, Seattle, Shanghai and plans to open an office in Singapore in late 2013.
Grays U.S. public accounting firm (Gray CPA, PC) is registered with the U.S. Public Company Accounting Oversight Board and is a member of the American Institute of Certified Public Accountants and the Center for Audit Quality.
For more information about us, please visit us at:
www.grayintl.com
3. WHO WE ARE
OUR
PROFILE
Gray
International
(“Gray”)
is
an
international
network
of
public
accounting
and
consulting
Iirms
based
in
the
U.S.,
Hong
Kong,
China
and
Europe.
Gray
was
started
over
10
years
ago
in
the
U.S.
(via
its
predecessor)
and
took
the
form
of
Gray
International
in
2013
as
the
result
of
the
networking
of
multiple
independent
practices
and
professionals.
Gray
provides
international
accounting
and
compliance
solutions
in
the
U.S.,
Americas,
Asia
and
Europe.
Gray
focuses
on
U.S.
accounting,
tax,
and
governmental
compliance
for
multinational
companies,
investors,
U.S.
persons
living
overseas
and
foreign
investors
and
companies
investing
in
or
moving
to
the
U.S.
Gray
also
consults
on
compliance
with
U.S.
laws
for
businesses
and
Iinancial
institutions
overseas
such
as
the
Foreign
Corrupt
Practices
Act
(FCPA)
and
the
Foreign
Account
Tax
Compliance
Act
(FATCA),
the
IRS
Offshore
Voluntary
Disclosure
Program,
and
the
Program
for
Non-‐Prosecution
Agreements
or
Non-‐Target
letters
for
Swiss
Banks.
Gray’s
principals,
partners,
and
employees
have
served
clients
worldwide.
Gray
has
ofIices
in
Geneva,
Hong
Kong,
Seattle,
Shanghai
and
plans
to
open
an
ofIice
in
Singapore
in
late
2013.
Gray’s
U.S.
public
accounting
Iirm
(Gray
CPA,
PC)
is
registered
with
the
U.S.
Public
Company
Accounting
Oversight
Board
and
is
a
member
of
the
American
Institute
of
CertiIied
Public
Accountants
and
the
Center
for
Audit
Quality.
For
more
information
about
us,
please
visit
us
at:
www.grayintl.com
International
Accounting &
Compliance
4. WHAT WE DO
OUR SERVICES
AUDIT AND ATTEST SERVICES
INTL. FORENSIC ACCOUNTING
U.S. TAX COMPLIANCE
U.S. FATCA COMPLIANCE
INTL. TAX STRUCTURING
U.S. FCPA COMPLIANCE
International
Accounting &
Compliance
5. WHAT WE DO
OUR
PRACTICE
AREAS
AUDIT
AND
ATTEST
SERVICES
INTL.
FORENSIC
ACCOUNTING
U.S.
TAX
COMPLIANCE
Our
experienced
auditors
provide
extensive
experience
auditing
public
and
private
companies
in
the
developed
and
developing
markets.
Let
us
put
our
extensive
experience
operating
in
the
U.S.,
Asia,
Europe
and
the
Americas
to
work
for
you.
Our
forensic
accounting
services
are
designed
to
providing
vigilance
before
the
fact,
reconstructing
and
tracing
records
after
the
fact,
and
preparing
for
trial
once
the
Iindings
are
made.
Our
team
of
experts
are
available
for
worldwide
engagement.
U.S.
FATCA
COMPLIANCE
INTL.
TAX
STRUCTURING
Gray
provides
extensive
U.S.
tax
compliance
solutions
to
clients
worldwide.
We
work
with
individuals,
family
ofIices,
investors,
Iinancial
institutions,
multinational
companies
and
domestic
(U.S.)
businesses.
Let
us
guide
you
through
the
maze
of
complex
U.S.
tax
compliance.
No
single
piece
of
U.S.
legislation
will
have
a
larger
impact
on
foreign
Iinancial
institutions
and
intermediaries
in
the
next
5
years
as
FATCA.
Let
us
help
you
assess
how
this
will
impact
your
organization
and
how
to
implement
a
practical,
affordable
solution.
In
today’s
global
landscape
international
tax
structuring
and
planning
has
never
been
more
important.
From
transfer
pricing,
treaty
compliance,
withholding
minimization,
estate
planning
and
domiciliation,
to
pre-‐residency
tax
planning
Gray
is
ready
to
help
you
navigate
this
difIicult
terrain.
U.S.
FCPA
COMPLIANCE
Widespread
globalization
brings
increased
risks
of
corrupt
practices,
and
correspondingly,
an
increase
in
FCPA
enforcement,
penalties
and
prosecutions.
Let
Gray
help
you
prepare
and
implement
appropriate
controls
to
protect
your
organization
from
violations.
International
Accounting &
Compliance
6. WHERE WE WORK
GEOGRAPHIC AREAS OF EXPERIENCE
Greenland
Alaska
Iceland
Canada
USA
Bahamas
Mexico
Belize
Guatemala
El
Salvador
Cuba
Honduras
Nikaragua
Dom.
Rep.
Jamaica
Venezuela
Costa
Rica
Guyana
Panama
Columbia
Suriname
Fr.
Guyana
Ecuador
Brazil
Peru
Norway
Sweden
Russia
Great
Germany
Belarus
Ireland
Britain
Poland
Ukraine
Kazazhstan
France
Mongolia
Romania
Uzbekistan
Kyrgysistan
Italy
North
Korea
Spain
Portugal
Turkey
Tajikistan
Japan
Greece
Syria
Turkmenistan
China
South
Korea
Tunisia
Lebanon
Iraq
Iran
Afghanistan
Morocco
Bhutan
Israel
Nepal
Qatar
Algeria
Libya
Pakistan
Saudi
Westsahara
Taiwan
Egypt
Myanmar
Arabia
U.A.E
India
Laos
Eritrea
Oman
Mauritania
Bangladesh
Mali
Niger
Vietnam
Chad
Senegal
Yemen
Sudan
Cambodia
Burkina
Guinea
Philippines
Nigeria
Thailand
Ethiopia
Sierra
Leone
C.A.R.
Kamerun
Somalia
Malaysia
Liberia
Togo
Uganda
Ghana
Cote
d‘Ivoire
Gabun
D.
R.
Kenya
Congo
Indonesia
Tanzania
R.
Congo
Angola
Bolivia
Paraguay
Finland
Namibia
Zambia
Papua
New
Guinea
Mozambique
Zimbabwe
Botswana
Madagascar
Australia
Swaziland
South
Africa
Chile
Uruguay
Argenena
Lesotho
New
Zealand
International
Accounting &
Compliance
7. I AM GETTING MY GREEN CARD
NOW WHAT ABOUT TAXES?
International
Accounting &
Compliance
8. WELCOME TO U.S. WORLDWIDE INCOME TAX
U.S.
taxpayers
are
required
to
report
and
pay
taxes
in
the
U.S.
on
their
worldwide
income,
regardless
of
where
it
was
earned,
where
they
lived
and
even
if
they
already
paid
taxes
to
another
country.
In
general
these
types
of
income
include
compensation
income,
interests,
dividends,
and
other
investment
income,
business
income,
capital
gains,
rental
income
and
pension
income.
A
Lawful
Permanent
Resident
(“LPR”)
becomes
a
U.S.
resident
and
U.S.
taxpayer
when
they
receive
their
alien
registration
card
(or
“Green
Card”)
for
immigration
purposes.
Tax
residency
begins
in
the
year,
and
in
most
cases
on
the
Iirst
day,
that
the
LPR
is
present
in
the
U.S[1],
and
the
Iirst
day
of
the
year
following
the
receipt
of
the
Green
Card
regardless
of
whether
the
LPR
ever
comes
to
the
U.S.
Residency
then
continues
until
(a)
the
LPR
status
has
been
revoked
or
(b)
it
has
been
administratively
or
judicially
determined
to
have
been
abandoned
or
(c)
the
U.S.
residence
status
is
affected
by
an
international
tax
treaty
whereby
the
LPR
is
not
subject
to
double
taxation.
Once
residency
has
been
established
it
is
irrelevant
if
the
LPR
remains
present
in
the
U.S.
and
they
will
remain
subject
to
all
of
the
same
tax
rules
applicable
to
U.S.
citizens
unless
they
lose
their
LPR
status.
[1]
For
those
who
meet
the
requirements
of
the
physical
presence
test,
tax
residency
may
begin
prior
to
receiving
their
Green
Card.
International
Accounting &
Compliance
9. WHAT ARE MY REPORTING OBLIGATIONS?
While
the
scope
of
this
presentation
is
not
large
enough
to
encompass
all
of
the
potential
reporting
obligations
of
a
U.S.
Taxpayer,
below
you
will
Iind
some
common
examples
of
reporting
obligations
for
resident
aliens:
§ You
are
required
to
report
your
worldwide
income
annually.
This
includes
income
(for
example
dividends,
rents,
foreign
currency
gains
or
interest)
that
is
received
and
kept
offshore.
This
is
generally
done
on
IRS
form
1040
U.S.
Individual
Income
Tax
Return.
§
You
are
required
to
report
all
of
your
offshore
Iinancial
accounts
to
the
United
States
Treasury
on
an
annual
basis
if
the
aggregate
value
exceeds
$10,000
at
any
time
during
the
year.
These
include
those
beneIicially
owned
by
you
in
any
way,
and
also
accounts
to
which
you
are
a
signatory
(such
as
business
and
trust
accounts).
This
is
done
on
Treasury
Department
Form
TD
F
90-‐22.1.
§
You
are
required
to
report
beneIicial
ownership
of
speciIied
foreign
Iinancial
assets
which
includes
any
Iinancial
account,
stock
or
securities
issued
by
someone
who
is
not
a
U.S.
person,
any
interest
in
a
foreign
entity,
any
Iinancial
instrument
or
contract
with
an
issuer
or
counterparty
that
is
not
a
U.S.
person.
This
obligation
begins
when
(if
Iiling
single
or
separately)
the
foreign
Iinancial
assets
exceeds
(1)
$50,000
on
the
last
day
of
the
year,
or
(2)
$75,000
on
any
day
during
the
tax
year,
for
married
couples
the
threshold
is
(1)
$100,000
on
the
last
day
of
the
tax
year,
or
(2)
$150,000
on
any
day
during
the
tax
year
[1].
This
is
done
in
IRS
Form
8938,
Statement
of
SpeciIied
Foreign
Financial
Assets.
[1]
There
are
additional
reporting
obligations
and
foreign
assets
which
require
or
do
not
require
disclosure,
such
additional
detail
is
in
excess
of
the
scope
of
the
subject
matter
of
this
presentation.
International
Accounting &
Compliance
10. WHAT ARE THE U.S. TAX RATES?
In
the
U.S.
tax
is
imposed
by
the
Federal
Government,
most
states
and
in
some
cases
local
governments.
Basic
U.S.
federal
income
tax
rates
are
listed
below:
§ Individual
income
tax
rates
are
marginal,
in
that
they
increase
as
taxable
income
increases.
Tax
rates
begin
at
10%
once
$8,925
in
taxable
income
is
earned
(for
single
and
married
Iiling
separately
taxpayers,
married
Iiled
jointly
amount
begins
at
$17,850)
and
increase
until
they
reach
the
highest
rate
of
39.6%
(at
approximately
$400,001
in
income
for
a
single
and
married
Iiling
separately
taxpayers,
and
$450,001
for
married
Iiling
jointly
taxpayers).
§
§
Capital
gains
(gains
from
the
sale
of
capital
assets
such
as
stocks
and
investment
real
estate)
are
taxed
based
on
the
holding
period
of
the
asset
which
is
sold
and
the
type
of
asset.
In
general,
if
the
asset
was
held
for
less
than
one
year,
they
are
taxed
at
the
same
rate
as
income
in
number
1
above.
If
the
asset
was
held
for
more
than
one
year
they
are
taxed
at
a
rate
of
15%.
Sales
of
collectibles
are
taxed
at
higher
rates.
U.S.
federal
corporate
tax
rates
are
also
marginal
and
generally
begin
at
15%
and
can
be
as
high
as
40%.
[1]
There
are
additional
reporting
obligations
and
foreign
assets
which
require
or
do
not
require
disclosure,
such
additional
detail
is
in
excess
of
the
scope
of
the
subject
matter
of
this
presentation.
International
Accounting &
Compliance
11. WHAT HAPPENS IF I DON’T COMPLY?
PENALTIES AND RISKS ARE HIGH
Non-‐compliance
with
the
U.S.
tax
laws
are
severe
and
can
include
criminal
liability.
While
the
scope
of
this
presentation
is
not
large
enough
to
encompass
all
of
the
potential
penalties
for
not
meeting
Iiling
obligations,
here
are
some
common
penalties
that
an
LPR
can
face:
•
Failure
to
Iile
a
U.S.
tax
return
–
penalties
are
5%
of
the
balance
due
plus
and
additional
5%
per
month,
up
to
a
maximum
of
25%
of
the
tax
due.
•
Failure
to
pay
taxes
when
due
–
a
penalty
of
.5%
of
the
amount
of
the
unpaid
tax
per
month
up
to
a
maximum
of
25%.
•
Accuracy
related
penalties
–
If
the
amounts
reported
on
an
income
tax
return
are
later
adjusted
by
the
IRS
and
a
tax
increase
results,
an
additional
penalty
may
be
assessed
of
20%
-‐
40%
of
the
increase
of
the
taxes
due
in
some
cases.
•
Fraud
penalties
–
if
you
fail
to
Iile
a
return
or
pay
tax
due
and
the
IRS
can
demonstrate
fraud,
you
can
be
liable
to
penalties
that
amount
to
75%
of
the
unpaid
tax,
and
criminal
prosecution.
•
Taxpayers
who
are
shareholders
of
corporations
which
are
controlled
by
U.S.
persons
(controlled
foreign
corporations)
are
required
to
Iile
and
annual
disclosure
statement.
If
such
form
is
not
timely
Iiled
penalties
can
be
assessed
at
$10,00
to
$50,000
per
form.
•
Failure
to
Iile
Statement
of
SpeciIied
Foreign
Financial
Assets
–
up
to
$10,000
for
failure
to
disclose
and
an
additional
$10,000
for
each
30
days
of
non-‐Iiling
after
IRS
notice
for
a
failure
to
disclose;
for
a
potential
maximum
penalty
of
$60,000;
criminal
penalties
many
also
apply.
•
Failure
to
disclose
foreign
bank
and
Iinancial
accounts
can
carry
(among
other
penalties)
the
greater
of
$100,000
or
50%
of
the
account
balances,
interest,
and
also
criminal
penalties
which
may
include
arrest
and
prosecution
(in
the
case
of
an
LPR
likely
removal/deportation).
International
Accounting &
Compliance
12. POTENTIAL CRIMINAL LIABILITY
U.S. TAX AND REPORTING VIOLATIONS CAN CARRY CRIMINAL PENALTIES
Possible
criminal
charges
related
to
tax
returns
include
tax
evasion
(26
U.S.C.
§
7201),
Iiling
a
false
return
(26
U.S.C.
§
7206(1))
and
failure
to
Iile
an
income
tax
return
(26
U.S.C.
§
7203).
Willfully
failing
to
Iile
an
FBAR
and
willfully
Iiling
a
false
FBAR
are
both
violations
that
are
subject
to
criminal
penalties
under
31
U.S.C.
§
5322.
A
person
convicted
of
tax
evasion
is
subject
to
a
prison
term
of
up
to
Iive
years
and
a
Iine
of
up
to
$250,000.
Filing
a
false
return
subjects
a
person
to
a
prison
term
of
up
to
three
years
and
a
Iine
of
up
to
$250,000.
A
person
who
fails
to
Iile
a
tax
return
is
subject
to
a
prison
term
of
up
to
one
year
and
a
Iine
of
up
to
$100,000.
Failing
to
Iile
an
FBAR
subjects
a
person
to
a
prison
term
of
up
to
ten
years
and
criminal
penalties
of
up
to
$500,000.
International
Accounting &
Compliance
13. IMPLICATIONS FOR FOREIGN BUSINESS OWNERS
Foreign
business
owners
are
in
a
unique
position
to
take
advantage
of
pre-‐residency
planning
to
structure
their
affairs
to
reduce
the
tax
impact
of
their
residency
decision.
The
greatest
opportunity
for
planning
and
structuring
is
prior
to
when
the
foreign
business
owner
obtains
LPR
status
or
tax
residency.
When
a
foreign
business
owner
becomes
a
U.S.
resident,
they
then
become
subject
to
the
U.S.
tax
system.
This
means
that
dividends,
payments
for
directorships
and
salary
payments
to
the
LPR
become
subject
to
U.S.
taxation,
even
in
not
received
or
paid
in
or
to
the
U.S.
Foreign
corporations
owned
by
LPRs
are
subject
to
special
reporting,
and
may
be
subject
to
the
payment
of
U.S.
taxes.
In
extreme
cases
there
can
be
circumstances
when
a
foreign
corporation,
which
is
owned
by
a
U.S.
taxpayer,
can
be
subject
to
taxes
in
the
local
jurisdiction,
also
be
subject
to
taxation
in
the
U.S.,
and
then
subject
to
U.S.
taxation
to
the
LPR
when
dividends
are
distributed,
resulting
in
triple
taxation.
Pre-‐residency
planning
and
structuring
can
have
signiIicant
implications
on
how
earnings
are
taxed
and
in
many
cases
can
dramatically
reduce
the
amount
of
taxes
which
would
otherwise
have
been
due
without
planning.
International
Accounting &
Compliance
14. PRE-RESIDENCY PLANNING
A UNIQUE OPPORTUNITY NOT AFFORDED TO U.S. CITIZENS
U.S.
residency
brings
with
it
a
complicated
array
of
tax
and
legal
consequences,
many
of
which
are
not
obvious
or
apparent
when
making
the
decision
to
make
the
U.S.
your
home.
Any
foreign
national
who
anticipates
becoming
a
U.S.
resident
should
seek
tax
counsel
prior
to
becoming
a
U.S.
resident
to
make
sure
that
the
potential
adverse
tax
consequences
are
addressed
in
advance.
Gray’s
pre-‐residency
planning
enables
you
to
understand
the
tax
consequences
of
your
decision,
and
structure
your
affairs
prior
to
becoming
a
U.S.
taxpayer.
Gray’s
pre-‐residency
tax
planning
is
especially
impactful
for
foreign
business
owners
and
those
who
will
still
receive
foreign
income
and
maintain
foreign
assets
after
becoming
a
U.S.
resident.
Effective
tax
planning
has
the
potential
to
yield
signiIicant
tax
savings,
paying
for
itself
many
times
over.
Gray’s
pre-‐residency
tax
planning
begins
with
a
comprehensive
evaluation
of
your
situation,
speciIic
recommendations
for
your
unique
situation,
and
the
coordination
and
implementation
of
the
plan.
International
Accounting &
Compliance
15. CONTACT US
Gray
welcomes
your
questions,
comments
and
inquiries
and
would
like
the
opportunity
to
serve
you.
Address:
U.S.
International
OfIice
(Handling
U.S.
Tax
and
Compliance
for
International
Business)
Attn:
Jeremy
Stobie,
CPA,
CFE
th
Street
10900
NE
8
Suite
1000
Bellevue,
WA
98004
Phone:
+
001
425.999.3685
xt
10
Website:
www.grayintl.com
E-mail:
info@grayintl.com
International
Accounting &
Compliance