IRS Introduces Tax Relief Measures for Those Impacted by Covid-19

IRS Introduces Tax Relief Measures for Those Impacted by Covid-19

by | Nov 24, 2020 | Covid-19, 2020, Taxes, U.S.

IRS Introduces Tax Relief Measures for Those Impacted by Covid-19

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

IWTA Breaking Tax News: November 2, 2020

IRS Introduces Tax Relief Measures for Those Impacted by Covid-19

On November 2, 2020 the Internal Revenue Service announced changes designed to de-stress taxpayers filing late 2019 returns, and those that have fallen behind on previously-negotiated installment agreements or otherwise struggling to pay balances owed.

In short, any taxpayer struggling financially due to the pandemic can take comfort in and advantage of the second phase of tax relief, or what the IRS calls its “People First” initiative. These tax relief measures apply to small business owners too, who have been hurt badly by the pandemic-induced economic slowdown.  Many taxpayers requesting payment plans, including Installment Agreements, may apply online, using IRS.gov without ever having to talk to a representative.

Darren Guillot, the IRS Small Business/Self-Employed Deputy Commissioner for Collection and Operations Support, discussed the just-announced tax relief options in a new edition of the IRS blog, “A Closer Look.”

In addition to setting up payment plans and payment agreements, the IRS is offering expanded tax relief services in the following areas:

  • Temporarily Delaying CollectionIf the IRS determines the taxpayer is unable to pay, they may qualify.
  • Offer in CompromiseFor some taxpayers who are temporarily unable to meet the payment terms of an accepted offer in compromise, the IRS is offering more flexible arrangements.
  • Relief from PenaltiesThe IRS is offering reasonable cause assistance and first-time penalty abatement relief.

Specific tax relief options highlighted by the IRS are listed below. Note: these options are listed exactly as they appear on the IRS website:

  • Taxpayers who qualify for a short-term payment plan option may now have up to 180 days to resolve their tax liabilities instead of 120 days.
  • The IRS is offering flexibility for some taxpayers who are temporarily unable to meet the payment terms of an accepted Offer in Compromise.
  • The IRS will automatically add certain new tax balances to existing Installment Agreements, for individual and out of business taxpayers. This taxpayer-friendly approach will occur instead of defaulting the agreement, which can complicate matters for those trying to pay their taxes.
  • To reduce burden, certain qualified individual taxpayers who owe less than $250,000 may set up Installment Agreements without providing a financial statement or substantiation if their monthly payment proposal is sufficient.
  • Some individual taxpayers who only owe for the 2019 tax year and who owe less than $250,000 may qualify to set up an Installment Agreement without a notice of federal tax lien filed by the IRS.
  • Additionally, qualified taxpayers with existing Direct Debit Installment Agreements may now be able to use the Online Payment Agreement system to propose lower monthly payment amounts and change their payment due dates.

Disaster Tax Relief for Victims of Hurricanes and Wildfires

2020 has wrought a torrent of disasters down on the people of the USA. In addition to the devastating loss of life and livelihood due to Covid-19, many Americans on the West Coast have suffered all matter of damage to life and limb, business and property due to raging wildfires. Southern and mid-Atlantic states have suffered devastation due to a sequential series of hurricanes. Puerto Rico experienced an earthquake.

The IRS recognizes that tax relief is needed for the victims of 2020 natural disasters.   Use this page to access a complete listing of disaster tax relief by state and type. Many have been extended beyond the initial cutoff dates.

If you find yourself or your business in need of help in navigating the new tax relief measures, what you may qualify for, and expertise in negotiating with the IRS, don’t hesitate to contact us. Check the IWTA list of specialized services in cross-border tax, foreign trusts tax consulting, foreign investment tax issues, etc., for more ways we can help.

 

 

Are You FIRPTA Compliant? IRS Targets Foreign Holders of U.S. Real Estate

Are You FIRPTA Compliant? IRS Targets Foreign Holders of U.S. Real Estate

by | Oct 26, 2020 | Taxes, 2020, Business Investments, Compliance, International, Real Estate, U.S.

Are You FIRPTA Compliant? IRS Targets Foreign Holders of U.S. Real Estate

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

The IRS is Targeting Foreigners Selling U.S. Real Estate Interests

Individuals, investors, families and businesses have all found it necessary to pivot to a greater or lesser extent in light of the 2020 pandemic and ensuing economic crises. The IRS is no different.

Given its current limitations in conducting larger-scale audits, the IRS has determined that its best play is to focus on “issue-based” non-compliance. In other words: catch bigger fish in the leaky loophole nets of the tax law.  There is much anecdotal evidence within international tax circles to know that FIRTPA is an area teeming with reporting and compliance errors—not just by foreign investors, but also by U.S. withholding agents. Thus, the campaign is underway.

Who or What is Subject to FIRTPA?

The U.S. Congress designed the Foreign Investment in Real Property Tax Act (FIRPTA) to collect tax on the sale of a U.S. property by a foreign person or business entity in order to ensure that foreign persons and entities paid tax on their U.S. source (situated) income (i.e., extract a type of capital gains tax that would normally not apply).

The U.S. Congress determined that the sale of a defined interest in U.S. real property (USRPI) is the same as receiving income from a U.S. trade or business, and therefore becomes a taxable capital gain. A USRPI can apply to many investments besides a direct ownership interest in U.S. real estate, so foreign investors that think they are in the clear from FIRTPA compliance could be in for a big surprise.

To get a better and more thorough understanding of who and what is subject to FIRTPA and how it applies to property-related investments, please see the IWTA Services page on U.S. Real Estate and Foreign Investments. 

Our section entitled “Navigating  Real Estate Structures for Non-Resident Aliens” on our Tax Planning for Non-Resident Aliens services page also has some useful FIRPTA pointers.

What you Need to Know Now

On October 5th 2020, the IRS Large Business & International Division (LB&I) issued a notice regarding their resumption of an enforcement campaign to target NRAs receiving rental income from USRPIs. Nonresident alien (NRA) and other non-US taxpayer rental property owners can be subject to a 30% withholding tax on the gross amount of collected rental income unless they elect to categorize the income as effectively connected with US trade or business activities.

The LB&I’s previous announcement on Sept 14, 2020 announced their campaign to aggressively enforce tax withholding and reporting obligations of foreign investors, including foreign trusts, of U.S. real property and property interests.

According to a report by Statista, foreign property investment by foreign nationals is a major source of investment in the United States.  Property sales to foreign buyers totaled a whopping 78 billion dollars in 2019.

“In recent years, the largest share of foreign residential buyers originated from China and Canada, followed by Mexico. Foreign buyers of U.S. real estate prefer properties in suburban areas to properties in small towns and central areas of major cities,” says Statista.

Is it any wonder that the IRS is putting some firepower behind FIRPTA enforcement?

Forewarned is forearmed. The international cross-border tax experts at IWTA will gird you, your family, your trust, or business against the coming FIRTPA onslaught and help you emerge in good financial shape.

Contact us here to set up a consultation.

Additional IWTA Articles on FIRPTA:

https://iwtas.com/top-tips-for-international-tax-clients-during-the-covid-19-crisis/

Any questions or comments on this article? We’d love to hear them! Email us

 

 

Finally- All the Most Frequently Asked Questions About Foreign Trusts in One Place!

Finally- All the Most Frequently Asked Questions About Foreign Trusts in One Place!

by | Jul 14, 2020 | FAQ, 2020, International, Taxes, U.S.

Finally- All the Most Frequently Asked Questions About Foreign Trusts in One Place!

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

Finally- All the Most Frequently Asked Questions About Foreign Trusts in One Place!

     BONUS: A Handy Yes/No Calculation Quiz to Determine:

  1. If Your Trust is a Foreign Trust
  2. Type of Trust

 

You asked, we answered. Click here to be a Foreign Trust know-it-all.

Foreign Trust tax reporting, tax management and filing of the infamous Form 3520 is all in a day’s work for a qualified international tax advisory and accountancy. For clients and financial professionals not-so-familiar with the international tax world, it is far from routine. Foreign Trusts are one of the most asked-about and misunderstood financial instruments. Questions abound in determining category, following legal compliance and fulfilling tax responsibilities.

We sympathize.

So, instead of paying for a lengthy and costly consultation by a legal or cross-border tax professional just to learn the basics, or scouring the Internet for bits and pieces of information, we thought we’d cut you some slack and give you the whole enchilada. Well, at least a healthy-sized serving.

We looked through our client history, researched search engine queries and combed online forums to come up with the top ten frequently asked questions on foreign trusts.

They are….(drumroll, please):

  1. Who should file IRS Form 3520?
  2. What is a foreign trust?
  3. Are trust distributions taxable to the beneficiary?
  4. Do trust beneficiaries of a foreign trust pay taxes?
  5. What is a foreign grantor trust owner statement?
  6. Is a gift from a foreign person taxable?
  7. How to create an international trust?
  8. Is a TFSA considered a foreign Trust?
  9. What is the Schedule B compliance requirement for foreign accounts and trusts?
  10. What is the U.S. taxation of foreign trusts?

And as an added courtesy, our office math whizzes came up with a simple-to-use tool in the form of a very short yes/no quiz to determine, in less than a minute, if the instrument you are dealing with is a Foreign Trust or U.S. Trust, and the specific type. The type of trust will determine the nature of your/your beneficiaries’ tax filing requirements. How’s that for one-stop Q & A shopping?

Click here to read the answers to the IWTA Foreign Trust Top Ten FAQs and try our 30-second determination tool.

If you or your clients need help with the next steps of Foreign Trust reporting, management and tax filing, contact us and we’ll be glad to be of service.

We’d love to hear your feedback and comments! Email us at info@iwtas.com or editor@iwtas.com

 

China Tightens Tax Evasion Rules Amid Increased CRS Enforcement

China Tightens Tax Evasion Rules Amid Increased CRS Enforcement

by | Dec 29, 2019 | 2019, Compliance

China Tightens Tax Evasion Rules Amid Increased CRS Enforcement

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

As Beijing increases its efforts to prevent tax evasion, wealthy Chinese are facing a variety of new tax rules both at home and abroad. The increased focus on reporting comes as the country experiences a boom in wealth, with some experts reporting that personal wealth in China skyrocketed to $24 trillion and $1 trillion of that is held outside the country.

Increased global cooperation through the CRS
‍At the forefront of worldwide anti-tax evasion efforts is the introduction of a global financial disclosure system – the Common Reporting Standard, or CRS – through which participating jurisdictions automatically share annual reports detailing reportable accounts, their balances, and their beneficiaries. For example, if a Chinese tax resident opens a bank account in the U.K., the CRS requires British authorities to send the information to Beijing as part of their report, and vice versa.

The CRS casts a broad net, with any entity or individual who’s a resident of a CRS signatory state being considered a reportable person (although real estate is an excluded asset). The process has become so common that even several tax-favorable jurisdictions have agreed to sign up for CRS. Last year, China started sharing information with approximately 100 participating jurisdictions.

However, there are holdouts – most of which are unsuitable as tax havens due to political, economic or social instability. Another notable exception is the U.S., as the country chose to maintain its own framework, the Foreign Account Tax Compliance Act (FATCA), through 113 bilateral agreements.

Domestic regulations tightened following the CRS
‍In addition to participating in the CRS framework, China is continuing its efforts to close loopholes in the system. Previously, wealthy Chinese citizens were not required to pay taxes on overseas earnings by acquiring a foreign passport or green card while maintaining Chinese citizenship. However, China recently began taxing global income from all holders of “hukou” household registrations, regardless of whether they may be citizens elsewhere.
Additionally, the government has implemented the “Golden Tax System Phase III,” a new data platform that gives it a more complete picture of a taxpayer’s finances. The government is hoping to stem the loss of tax revenue through means such as underground banks that facilitate illegal foreign exchange transactions. Uncertainty over those new rules has led certain Chinese taxpayers to create overseas trusts. For example, in late 2018, four Chinese tycoons transferred more than $17 billion into family trusts with ownership structures involving entities solely in the British Virgin Islands.

Participation in CRS, changes to the “hukou” system, and the implementation of the Golden Tax System together signal the Chinese government is tightening its anti-tax evasion legislation and enforcement. Chinese taxpayers with investments or property overseas should be aware of the new disclosure requirements and seek professional advice.

FAQ: IWTA’s Founder Jack Brister Answers “The Four Questions”

FAQ: IWTA’s Founder Jack Brister Answers “The Four Questions”

by | Nov 22, 2019 | 2019, FAQ, U.S. Economic System

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International Wealth Tax Advisors’ (IWTA) clients come from every corner of the world. Despite differences in language, home governments, profession and cultural norms, there are four questions we get asked over and over. These questions revolve around the general principles and philosophies that have informed U.S. laws and tax laws, defined citizenship and set the stage for the world’s greatest free economy. If you have found our website, chances are that you too are seeking answers to the “Four Questions”.

To that end, IWTA’s founder Jack Brister has written four blog posts addressing the Four Questions, which are:

Q1:  How is it that when the U.S. financial markets crash, and the U.S. economy tanks, Americans never give up?  They get up, brush themselves off and move forward looking for the next opportunity.

Q2:  Why does the U.S. employ a system of worldwide taxation and not a territorial system like the rest of the world?

Q3:  Why does the U.S. employ a “substance over form” tax system?

Q4:  Why does the U.S. tax system require so much disclosure?  What is the cost for failure to Disclose?

We hope you will find IWTA’s blog posts on the Four Questions helpful, and look forward to your comments.

–The IWTA Blog Team

Israeli Court Ruling Opens Door for Real Estate Transfers Into Trusts

Israeli Court Ruling Opens Door for Real Estate Transfers Into Trusts

by | Aug 30, 2019 | 2019, Finance, Real Estate

Israeli Court Ruling Opens Door for Real Estate Transfers Into Trusts

Jack Brister s p 500

Jack Brister

Founder, International Wealth Tax Advisors

Jack Brister, Founder of International Wealth Tax Advisors, is a noted international tax expert, with over 25 years of experience. Jack specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures. Jack is a frequent featured speaker at numerous international financial conferences and has been named a Citywealth Top 100 U.S. Wealth Advisor.

Contact IWTA

To schedule an introductory phone conference with IWTA  founder Jack Brister simply click here. Email IWTA at bloginquiries@iwtas.com Or call the IWTA New York City office at 212-256-1142

A July 24 ruling from an Israeli court concerning the tax consequences for transferring real estate assets into trusts could ease the burden on taxpayers, including those with overseas assets or who are beneficiaries of foreign trusts. ‍ The decision could exempt the transfer of real estate into trusts from accruing capital gains taxes. The ruling from the Tel Aviv District Court spares individuals who create trusts in Israel, as well as any Israeli beneficiaries of trusts created by relatives abroad from such taxes. ‍ The verdict contradicts a long-standing policy from the Israel Tax Authority that says the transfer of real estate into trusts is a taxable event. In its decision, the court noted that the country’s existing trust law does not specifically refer to the treatment of real estate and admonished the authority for filling that regulatory gap with taxes. In effect, the court held, the agency essentially created the legislation for those taxes without proper authority. ‍ The ruling, which was in response to an appeal of a Tax Authority decision by a Canadian couple who disputed a capital gains tax assessment on the transfer of two Israeli properties into a trust, sets a precedent that has the potential to alter trust formation and how domestic and overseas assets are included. ‍ The Tax Authority argued that even though the transfer of assets into a trust isn’t normally taxable, Israel’s separate law on real estate taxation should take precedence over trust law. According to the Tax Authority, the transfer should be considered a taxable event upon which capital gains tax was due. The court disagreed with that argument and cited Section 75 of the Israel Tax Ordinance, which governs trusts but does not specifically mention real estate. Section 75 includes a special provision that determines the granting of an asset to a trustee does not constitute a sale and, according to the court’s ruling, “overrides the general provision in the Real Estate Law.” The court also said in its ruling that this means the granting of a real estate asset will not be considered a “sale” for purposes of the Real Estate Law. ‍ The decision could have a significant impact on the way tax professionals offer advice to clients with assets in Israel. Since the country doesn’t have an inheritance tax, trusts are not as common in Israel as they are in other nations. However, the recent expiration of a 10-year tax and reporting exemption for new immigrants, as well as a growing number of citizens becoming beneficiaries of trusts created by foreign family members, could see them begin to rise in popularity. The decision is being lauded by some experts, but it isn’t binding quite yet, as the Tax Authority is expected to appeal the decision, which will then bring the case before Israel’s supreme court. ‍ Does the outcome of this ruling have an impact on your financial picture? Talk to a qualified tax professional today to find out if these potential changes could have a bearing on your current or future plans.