With origins derived from many domiciles, Bermuda residents today are a representative microcosm of a United Nations world fair.

Even early Bermuda settlers were an eclectic mix of peoples. Continuing into modern day, we still engage in long-term relationships with those not having Bermuda status or permanent residency, may possess more than one passport, own assets in various other jurisdictions, embrace more than one culture, speak more than one language, be related to citizens of other countries, be employed in more than one jurisdiction, and have both foreign and domestic beneficiaries.

This blending of cultures and citizenships has produced a polyglot of conflicting financial and tax information that most of us, in the past, may have felt was not particularly relevant to every day life.

However, "the times, they are a changin'." (Bob Dylan) and have been for some time. As stated in last week's article, United States Internal Revenue Service Commissioner, Douglas Schulman firmly emphasised that 'every US citizen or resident' is expected to pay his/her fair share of tax. The US Service, in collaboration, with other government's Revenue and Custom Agencies are stepping up their revenue collection efforts, using all tools at their disposal to ferret out those who are avoiding (or evading) their tax duty. Relentless is the message throughout this speech (see last week's article).

Financial planning, whether structurally formally with a licensed qualified professional, or informally on your own, is more important than ever. For those individuals with more than one passport or interests in foreign trusts, securities, real estate and businesses, the first phase of the planning process this year-end may clarify, once and for all, whether they do (or do not) have tax and reporting responsibilities to more than one jurisdiction.

Multi-national, multi-jurisdictional issues are complex; thus, the subject matter discussed here can only be general in nature. Any information contained in this article cannot be considered specific financial or tax advice for any particular individual or family situation. It is recommended that prior to making any decisions regarding complex tax or finance issues that you consult with internationally qualified experienced tax attorneys, tax practitioners and planners (see list below).

Are you a US citizen living abroad? Are you a dual citizen with the United States? Is yours a multi-national family?

Depending upon your individual circumstances, your career path, your family make-up and asset / estate structures, you may be required to report on various international transactions. Here are brief summaries of some (but nowhere near all) of the United States IRS tax and reporting forms that are often required in connection with foreign investments, foreign trusts, foreign earnings, or foreign business interests.

Form 1040 — Income tax return for US citizens and residents meeting certain filing thresholds. Form 2555 — Foreign Earned Income Exclusion

Form 3520 — Creation of, and Transfers to, a Foreign Trust

Form 3520-A The annual Return of Foreign Trust with US Beneficiaries

Form — 8621 Information return for Passive Foreign Investment Company

Form 709 — US Gift Tax return — you must file a gift tax return (whether or not any tax is ultimately due) in the following situations: if you gave gifts to someone in 2008 totalling more than $12,000 (other than to your US spouse). If your spouse is a Non-Resident Alien the gift threshold is higher, but generally, in multi-national families, appropriate tax planning should be prioritised first before transfers are made.

Form TD F 90-22.1 — Information Return for Foreign Financial Accounts This is the most ubiquitous, and possibly the most important information return in the US Internal Revenue Service arsenal 'tool kit.'

On Form 1040-B, Part III — there is a small box that asks the following questions. At any time during 2008, did you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account? If "Yes," enter the name of the foreign country.

During 2008, did you receive a distribution from, or were you the granter of, or transferor to, a foreign trust? If "Yes," you may have to file Form 3520.

Form TD F 90-22.1 states at the bottom of the first page (in the newly revised more comprehensive form). This form should be used to report a financial interest in, signature authority, or other authority over one or more financial accounts in foreign countries, as required by the Department of the Treasury Regulations (31 CFR 103).

No report is required if the aggregate value of the accounts did not exceed $10,000. The principal purpose for collecting the information is to assure maintenance of reports where such reports or records have a high degree of usefulness in criminal, tax, or regulatory investigations or proceedings.

The information collected may be provided to those officers and employees of any constituent unit of the Department of the Treasury who have a need for the records in the performance of their duties. The records may be referred to any other department or agency of the United States upon the request of the head of such department or agency for use in a criminal, tax, or regulatory investigation or proceeding.

The information collected may also be provided to appropriate state, local, and foreign law enforcement and regulatory personnel in the performance of their official duties. Disclosure of this information is mandatory.

Civil and criminal penalties, including in certain circumstances a fine of not more than $500,000 and imprisonment of not more than five years, are provided for failure to file a report, supply information, and for filing a false or fraudulent report. Disclosure of the Social Security number is mandatory. The authority to collect is 31 CFR 103. The Social Security number will be used as a means to identify the individual who files the report. It is estimated that there are more than four million US citizens (or duals) living abroad, yet the statistics from the IRS for Form TD F 90-22.1 for the 2006 years indicates that only 300,000 individuals filed this form.

Do you think the IRS is serious? You bet. If you think you should be filing a US tax return, you are probably right. If you think ignoring these issues will make them go away, you are probably wrong. Year-end is always a good time to put your financial affairs in order.

Source: US Internal Revenue Service website http://www.irs.gov/formspubs/index.html

Disclaimer: This article is for general information purposes only and is not to be used as specific tax advice for any individual situation. For your personal tax queries, you are advised to seek the services of professionally qualified and licensed internationally experienced tax and financial planning practitioners. International professionally qualified Tax and Financial Planner firms in Bermuda: Ernst & Young; Chris Larkin, Tax Manager; KPMG; Deloitte; PricewaterhouseCoopers; Patterson Partners.

IRS Circular 230 Notice: Pursuant to recently enacted US Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax information (or advice) expressed above was neither written, nor intended by the author to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed under US tax law.

Martha Harris Myron CPA -NH1929, CFP® -67184 (US licenses) TEP — Society of Trust and Estate Practitioners. She is a Senior Wealth Manager at Argus Financial Limited, specializing in comprehensive financial solutions and investment advisory services for individual private clients and their families, business owners, endowments and trusts. DirectLine: 294 5709 Confidential email can be directed to mmyron@argusfinancial.bm The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/ sell any investment product. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.