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Malta Retirement Plans: IRS Proposed Regulations, Penalties and Sanctions, Foreign Information Return Reporting

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, October 3, 2023

Recorded event now available

or call 1-800-926-7926

This webinar will discuss the proposed (and possibly final) IRS regulations, how to comply with them (including the applicability of voluntary disclosure programs), and tips, tricks, and best practices related to reporting foreign pensions. The webinar will also offer a general update on the U.S. taxation of foreign pensions.

Description

On June 26, 2023, the IRS released proposed regulations on Qualified Recognized Overseas Pension Schemes in Malta (Malta QROPs). Concurrently, the IRS Criminal Investigations Unit opened investigations into certain U.S. taxpayers that hold financial interests in these Malta QROPs, as well as many of their advisers, promoters, CPAs, attorneys, and tax preparers. Many of these individuals have already been contacted, and some have even been served a Summons by the IRS Criminal Investigations Unit. More are sure to follow.

A public hearing on the proposed IRS regulations will be held on Sept. 21, 2023. Once that hearing concludes, the IRS should issue final regulations. These regulations are likely to include a laundry list of additional filings that individuals with financial interests in Malta QROPs will have to complete, such as Form 8886 (Reportable Transaction Disclosure), Form 8918 (Material Advisor Disclosure), Forms 3520 and 3520-A (Foreign Grantor Trust), Form 8621 (Passive Foreign Investment Company), and potentially others. Failure to submit these forms will carry significant penalties that can range from $10,000 to $100,000, or even more.

Listen as our international income tax expert discuss complying with the latest IRS regulations and best practices for reporting foreign pensions.

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Outline

  1. US Taxation of Foreign Pensions – General Rules
  2. Rev. Proc. 2020-17 – General Overview
  3. Malta Qualified Recognized Overseas Pensions Schemes (QROPs)
    1. Background and History – Malta Retirement Pensions Act of 2011
    2. 2008 US-Malta Tax Treaty
    3. Competent Authority Arrangement (CAA) – I.R.B. 2021-52
    4. IRS Dirty Dozen List Addition in 2021
  4. 2023 Proposed regulations REG-106228-22 – Malta Personal Retirement Schemes
    1. Tax Avoidance Transactions
      1. Listed Transactions – IRS Form 8886
      2. Material Adviser Disclosure Statement – IRS Form 8918
    2. Examples of Promotor Schemes
    3. Rollover Pension Exception
    4. Future Enforcement for other QROPs Jurisdictions
    5. Future Enforcement for other Improper Treaty Use
    6. Best practices when dealing with a client that has a Malta Pension
      1. 7216 Disclosure
      2. When to refer to a criminal tax attorney?  Applicability of a Kovel Letter?
      3. IRS Form 2848
      4. Options for dealing with IRS Form 8886 Reporting
      5. Options for dealing with International Informational Reporting and Unreported Income
  5. International Informational Reporting for Foreign Pensions classified as Foreign Grantor Trusts
    1. IRS Forms 3520/3520-A/SS-4/8082/Schedule B, Part III, Q8
    2. IRS Form(s) 8621
    3. FinCEN Form 114 (FBAR)
    4. IRS Form 8938
  6. Best practices for reporting foreign pension plans

Benefits

The speaker will review these and other critical issues:

  • The key components of the recently released proposed regulations on Malta QROPs
  • The current status of IRS criminal investigations into Malta pension plans
  • Additional filings required under the proposed regulations
  • Best practices for complying with U.S. reporting requirements for foreign pension plans

Faculty

Santa, Mishkin
Mishkin Santa, JD, LLM, TEP
Principal, Director of International Tax
The Wolf Group

Mr. Santa focuses his practice on repatriation tax, as well as individual income tax compliance, estate, gift &...  |  Read More

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