Tax lawyer touts new partnership

With local financial institutions bracing for the impact of the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) reporting requirements, a recent partnership between a tax law firm and financial information services firm could well increase the ease of reporting for U.S. citizens living in The Bahamas.

Steven Cantor, managing partner of Cantor & Webb P.A., told Guardian Business that the new partnership between the tax lawyers and Markit CTI Tax Solutions would promote greater transparency by expanding its FATCA and CRS compliance offerings, as a greater number of Bahamas-based U.S. citizens realize that “there isn’t that much sand left for people to put their heads in”.

“[Markit CTI Tax Solutions] is probably the premier [firm] in both software solutions to FATCA and CRS reporting and also in outsourcing with regard to handling all of that beyond just doing the software itself. It’s sort of the feather in the cap of our law firm to have those resources now at our disposal with regard to FATCA compliance to begin with.

“You’ve got a massive number of dual citizens here, some of which have gotten religion and understand reporting requirements, some of whom still live in denial or have their heads in the sand. As this world moves from what it used to be to a world of tax transparency, there isn’t that much sand left for people to put their heads in to see change go by and not be affected by it,” Cantor stated.

FATCA is intended to ensure that the U.S. obtains account information held abroad at foreign financial institutions by U.S. persons. The Bahamas and the U.S. have an intergovernmental agreement in place which requires the Bahamian government to serve as an intermediary between local financial institutions and the U.S. government for information sharing and compliance purposes.

Cantor & Webb last year formed CW Tax Services – an affiliate company designed to provide tax-planning services to dual citizens and U.S. citizens living in The Bahamas – which is regulated by the Securities Commission of The Bahamas. Cantor said the venture was formed to sensitize U.S. citizens to the fact that “being in denial” about tax reporting is no longer an option.
“Generally speaking I think there’s a significant level of awareness… I would be hard-pressed to believe most people of any level of sophistication if they come forward and say ‘Yes, I’m a U.S. person but I had no idea that I needed to file.’ That said, we’ve found in several instances of persons who didn’t know that they were U.S. citizens.

“There are a lot of things that can be done to minimize things, but sticking your head in the sand is not one of them,” Cantor said.

Although Bahamian financial institutions were initially expected to begin FATCA reporting to the United States’ Internal Revenue Service in September 2015, that deadline has been extended until 2016. Through the Organisation for Economic Co-operation and Development (OECD), The Bahamas has also committed to providing automatic exchange via the CRS by 2017.

Despite the growing pains associated with growing international reporting requirements, Cantor believes that firms will quickly adapt to the shifting regulatory environment.

“If you fast-forward five years, a lot of what we’re going through now in this choppy transitional period will probably have gone away,” he said.