Archive for January, 2012

The International Law Group of the Bridgewater-based law firm Norris McLaughlin & Marcus, P.A., represented Lombard Risk Management plc in its acquisition of the regulatory reporting business of banking consultancy SOFGEN Holdings Limited for $4.25 million in cash, loan notes and equity. Robert C. Gabrielski, a Member of the firm and Chair of its Business and International Law Groups, led the team of attorneys that worked on the deal, including Wendy Z. Greenwood, corporate; Charles A. Bruder, employee benefits; Jeffrey M. Casaletto, environmental; and Jeanne Hamburg, intellectual property.

Lombard Risk, a leading provider of integrated collateral management and liquidity, regulatory and MIS reporting solutions for the financial services industry, already had a major business in regulatory reporting through its existing REPORTER product, which is used globally, including in the United States. The main part of the business acquired is the U.S. and Canada regulatory reporting product REG-Reporter, which is used by Bank of America and Royal Bank of Canada, among others. The acquisition catapults the risk specialist into the top three providers, along with FIS and Jack Henry, of regulatory reporting for U.S. domestic banks, and offers those banks improved risk management through the combination of both companies’ reporting products. The deal gives Lombard over 250 clients around the world for bank regulatory reporting.

John Wisbey, CEO of Lombard Risk, says: “This is an important strategic breakthrough for us, as it gives critical mass in the North American market place, both for foreign and domestic banks in the United States. We already had this for collateral management, but we now have it for regulatory reporting.”

Norris McLaughlin Represents Lombard Risk $4.25 Million Acquisition of SOFGEN Regulatory Reporting Business

On January 9, New Jersey joined 46 other states in adopting its version of the Uniform Trade Secrets Act. Previously, businesses in New Jersey had to rely on common law remedies to protect their trade secrets from misappropriation.

The Act defines a “trade secret” as “information, held by one or more people, without regard to form, including a formula, pattern, business data compilation, program, device, method, technique, design, diagram, drawing, invention, plan, procedure, prototype or process that (1) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

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With websites like Wikipedia and Reddit and and major online gaming sites prepared for a 24-hour shut down starting at midnight on Wednesday the 18th in protest of pending SOPA legislation (HR 3261 scheduled for hearing in the House Judiciary Committee), President Obama joined the battle stating that he will not support the legislation. However, a similar bill, the Protect IP Act (a/k/a in long-winded Washington parlance as the “Enforcing and Protecting American Rights against Sites Intent on Theft and Exploitation Act”) continues to wind its way through the Senate and is scheduled for hearing on January 24th.

Which side are you on – Hollywood and the Entertainment Software Association which back the bills or the internet community at large led by Wikipedia who find the legislation chilling to free communication and sharing? Stay tuned as the legislation will likely go back to the drawing board for detuning in an effort to garner acceptance to by Obama administration.

The IRS recently announced that it has reopened its offshore voluntary disclosure program “to help people hiding offshore accounts get current with their taxes…following strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs.”  The announcement stated that the “third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.”

The specific provisions of the offshore voluntary disclosure program (“OVDP”) will be released by the IRS within a month.  On its website, the IRS will update its Frequently Asked Questions about offshore accounts and provide specific details about the new program.

IRS Commissioner Doug Shulman released a few details about the OVDP, including the three-level penalty structure based on the highest foreign bank account/foreign asset value for the eight years prior to the disclosure times 5% (limited situations), 12.5% (smaller accounts), and 27.5% (for most accounts); and the need to file back tax returns for eight years and pay accuracy-related and/or delinquency penalties.  The 27.5% penalty rate is up from the 20% and 25% rates used for the 2009 and 2011 programs, respectively.  There is no specific deadline for submissions.

If you are considering applying for the reopened OVDP, contact your tax advisor as soon as possible to discuss whether participating in the OVDP makes sense based on your particular circumstances.

The U.S. Tax Court recently held in Osvaldo and Ana M. Rodriguez v. Commissioner, 137 T.C. No. 14 (2011), that amounts included in gross income under the controlled foreign corporation (CFC) rules of Code Sections 951 and 956 are not eligible for the reduced tax rate (typically 15%) available to “qualified dividends” under Code Section 1(h)(11). The case involved a situation where the taxpayers, who were Mexican citizens and permanent residents of the U.S., owned all of the stock of a Mexican corporation that had U.S. holdings. The taxpayers reported on their U.S. tax return the earnings of the Mexican company that were invested in U.S. property (as is required by Code Sections 951 and 956). However, the taxpayers took the position that the earnings were dividends from the Mexican corporation and eligible for the reduced tax rate available to qualified dividends.

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As a result of ongoing investigations into allegations of facilitating tax evasion, U.S. officials have extended an offer to 11 Swiss banks, including Credit Suisse, Julius Baer, HSBC Switzerland, and Basler Kantonalbank, to end the investigations in exchange for a fine to be paid by each bank and the disclosure of U.S. client data.

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The IRS recently issued an important Fact Sheet (FS-2011-13) that applies to U.S. citizens and dual citizens residing outside of the U.S., many of whom are not aware that they are required to file U.S. income tax returns and, where applicable, the FBAR form (Form TD F 90.22-1, Report of Foreign Bank and Financial Accounts) to report foreign financial accounts. The Fact Sheet provides some important information for these taxpayers, particularly with respect to the possible elimination of penalties for taxpayers who now want to come into compliance.

In many cases, U.S. citizens and dual citizens residing abroad file returns and pay income taxes in their country of residence, but they fail to file U.S. income tax returns. In addition, these taxpayers are often unaware of the requirement to file an FBAR to report financial accounts in excess of $10,000.

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If so, you may need to file Form 8938, “Statement of Specified Foreign Financial Assets.” The IRS explains who needs to file in a new article, Do I Need to File Form 8938, “Statement of Specified Foreign Financial Assets”?

Certain U.S. taxpayers holding specified foreign financial assets with an aggregate value exceeding $50,000 will report information about those assets on new Form 8938, which must be attached to the taxpayer’s annual income tax return. Higher asset thresholds apply to U.S. taxpayers who file a joint tax return or who reside abroad.

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