Daily Tax Update - July 28, 2016: FinCEN Expand Reach of Real Estates GTOs Beyond Manhattan and Miami

FinCEN Expands Reach of Real Estate GTOs Beyond Manhattan and Miami:  Yesterday the Financial Crimes Enforcement Network (FinCEN) announced Geographic Targeting Orders (GTOs) that will temporarily require US title insurance companies to identify the natural persons behind shell companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas.  

FinCEN first issued GTOs for the borough of Manhattan in New York City and for Miami-Dade County, Florida in January of this year.  The GTOs announced yesterday include (1) all boroughs of New York City; (2) Miami-Dade County, Broward County, and Palm Beach County in Florida; (3) Los Angeles County, California; (4) three counties comprising part of the San Francisco area (San Francisco, San Mateo, and Santa Clara counties); (5) San Diego County, California; and (6) the county that includes San Antonio, Texas (Bexar County).  The monetary thresholds for each geographic area range from $500,000 for Bexar County to $3 million for the borough of Manhattan. 

FinCEN also released a sample GTO, which becomes effective for 180 days beginning on August 28. 

OECD Releases Discussion Draft on Approaches to Address BEPS Involving Interest in the Banking and Insurance Sectors:  The OECD released a discussion draft dealing with approaches to address base erosion and profit shifting (BEPS) involving interest in the banking and insurance sectors under Action 4 (Limiting Base Erosion Involving Interest Deductions and Other Financial Payments) of the BEPS Action Plan.  The report on Action 4, released in October 2015, established a common approach to tackling BEPS involving interest, but highlighted a number of factors which suggested that a different approach may be needed to address risks posed by entities in the banking and insurance sectors.  The discussion draft focuses on (1) the risks posed by banking and insurance groups to be addressed under Action 4; (2) approaches to address risks posed by banks and insurance companies; and (3) approaches to address risks posed by entities in a group with a bank or insurance company.  Interested parties are invited to provide comments by September 8, 2016.