Liz Truss Considers Cutting VAT to 15% to Ease UK Crisis: Telegraph

Liz Truss Considers Cutting VAT to 15% to Ease UK Crisis: Telegraph

by | Aug 27, 2022 | 2022

Global intangible low taxed income

Liz Truss is considering cutting Britain’s VAT sales tax by as much as 5 percentage points across the board, the Telegraph reported, a move that may head off criticism she lacks a plan to tackle the country’s cost of living crisis.

Author of the article:

global intangible low taxed income Bloomberg News

Bloomberg News

Susanne Barton

global intangible low taxed income Liz Truss, UK foreign secretary, speaks during a Conservative Party leadership hustings in Manchester, UK, on Friday, Aug. 19, 2022. The job of picking the ruling Conservative Party leader and British prime minister falls to about 175,000 grassroots Tory party members.
Liz Truss, UK foreign secretary, speaks during a Conservative Party leadership hustings in Manchester, UK, on Friday, Aug. 19, 2022. The job of picking the ruling Conservative Party leader and British prime minister falls to about 175,000 grassroots Tory party members. Photo by Anthony Devlin /Bloomberg

(Bloomberg) — Liz Truss is considering cutting Britain’s VAT sales tax by as much as 5 percentage points across the board, the Telegraph reported, a move that may head off criticism she lacks a plan to tackle the country’s cost of living crisis.

Advertisement 2

The potential reduction to 15%, flagged in a newspaper that has strongly backed her leadership campaign against Rishi Sunak, represents something of a change of tack by Truss. Hours earlier, a strongly worded editorial in the Sun newspaper called the government’s near silence on the crisis “a disgrace,” and urged Truss to abandon traditional Tory ideology. 

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

With the contest entering its final week — there’s one hustings remaining in London on Wednesday — Truss is favored to win the backing of Conservative Party members and become Britain’s prime minister.

The reduction in the value added tax headline rate would be the largest ever and may save the average household more than £1,300 a year, the Telegraph said. It could protect businesses from failing and may be accompanied by additional measures to help the most vulnerable pay their energy bills, which are set to almost triple this winter from a year earlier, the Telegraph said, citing officials. 

The Treasury will present the next prime minister with plans modeled on former Prime Minister Gordon Brown’s response to the 2008 financial crisis as part of a series of options to offset soaring energy bills, according to the Telegraph.

A 5-point cut would cost the taxpayer £38 billion to keep in place for one year, the Telegraph said, citing analysis by the Institute for Fiscal Studies. It may also reduce inflation temporarily by around 2 points.

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Will China’s bubble finally burst?

Will China’s bubble finally burst?

by | Aug 25, 2022 | 2022

State of U.S. Tariffs: September 4, 2025 Report

 

Yale’s Budget Lab (TBL) estimated the effects of all US tariffs and foreign retaliation implemented in 2025 through September 3 under two scenarios. 

In the baseline Sept 3, 2025 scenario, consumers can expect an average effective tariff rate of 17.4%, the highest since 1935. After shifts in consumption, the average tariff rate will be 16.4%, the highest since 1936. In scenario two, the invalidation of the IEEPA tariffs, consumers’ average effective tariff rate is 6.8%, the highest since 1969. Consumption shifts show the model maintaining at 6.8%.

Click here to get the full report content and download the excel data sheet.

 

Personal Finance Daily: Mortgage rates dip slightly due to cooling inflation data, but new construction slows and Inflation Reduction Act promises tax credits for new and used electric vehicles — here’s how to claim them

Personal Finance Daily: Mortgage rates dip slightly due to cooling inflation data, but new construction slows and Inflation Reduction Act promises tax credits for new and used electric vehicles — here’s how to claim them

by | Aug 18, 2022 | 2022

Us trust private client advisor

Hi, MarketWatchers. Don’t miss these top stories.

Let’s Take a Look Inside Serena Williams’ Smashing Homes

Tennis great Serena Williams recently announced her plans to retire from the sport. She’ll walk away with an amazing 23 Grand Slam singles titles, just one shy of the all-time record. Read More

‘Plunge in affordability’: Mortgage rates dip slightly due to cooling inflation data, but new construction slows

The 30-year fixed-rate mortgage averaged 5.13% as of Aug. 18, according to Freddie Mac. That’s a 9-basis-point drop from the previous week. Read More

Baby-formula shortage is finally easing, although some states are still seeing high out-of-stock rates

There were 25% more baby-formula products in stores and online compared to three months ago, according to the latest data. Read More

‘I grew up an only child’: My father wants me to inherit the family home, but my late mother also had a son from her first marriage. Are we doing the right thing?

‘My dad says the house will pass to me in a transfer-on-death deed, so it cannot be contested by my half-brother. Is that correct?’ Read More

Your next career or life move doesn’t have to be an ‘either-or’ choice. Give yourself a ‘both-and’ decision.

When facing a dilemma or conflict, here’s how to find a creative, ‘win-win’ solution. Read More

The LGBTQ+ community needs help meeting retirement and personal finance goals. Financial advisers have a huge opportunity to make a difference.

To attract clients in the LGBTQ+ community, advisers can signal their inclusiveness with these steps. Read More

Biden’s Inflation Reduction Act promises tax credits for new and used electric vehicles — here’s how to actually claim them

Here’s what to know about income caps, sticker-price limits, and rules around final assembly in North America. Read More

How this lawyer got $413,000 in student loans forgiven

As she watched her debt balloon, this legal director of a non-profit grappled with the Public Service Loan Forgiveness program to get the loans discharged Read More

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Energy & Environment — Manchin works on Sinema for climate, tax deal

Energy & Environment — Manchin works on Sinema for climate, tax deal

by | Aug 2, 2022 | 2022

Us inheritance tax for non us citizens

Sens. Joe Manchin (D-W.Va.) and Krysten Sinema (D-Ariz.) are in discussions over a climate and tax package, while the Biden administration is launching a pilot program dealing with rural wastewater.  

This is Overnight Energy & Environment, your source for the latest news focused on energy, the environment and beyond. For The Hill, we’re Rachel Frazin and Zack Budryk. Someone forward you this newsletter? Subscribe here. 

Us inheritance tax for non us citizens Manchin, Sinema discussing reconciliation 

Sen. Joe Manchin (D-W.Va.) says he is exchanging materials with Sen. Kyrsten Sinema (D-Ariz.) to help her better understand the broad tax reform and climate bill he negotiated with Senate Majority Leader Charles Schumer (D-N.Y.) and that he is open to her suggestions as Democrats seek 50 votes to put the bill on the floor.   

Manchin finally got a chance to speak to Sinema after lunch Tuesday, when she was scheduled to preside over the chamber.    

Manchin was tight-lipped about the details of the conversation but made clear that he’s willing to consider changes she might want to make to the deal, which would raise $739 billion in new revenue over the next decade and reduce the deficit by more than $300 billion. 

“We had a nice time. We had a nice time. Next?” Manchin said Tuesday when reporters pressed him for details of his chat with Sinema while she sat at the Senate dais.   

Asked again to shed any light on whether Sinema will vote for the bill, which would give President Biden the biggest legislative victory of this first two years in office, Manchin said his colleague would make her own decision.   

“We’re exchanging text back and forth,” he said, adding that Sinema is “extremely bright. She works hard. She makes good decisions based on facts. I’m reliant on that.” 

Manchin said Schumer is “working with all the caucus” to get buy-in to get the budget reconciliation bill to the floor later this week.   

Even though Sinema played a major role in negotiating the prescription drug reform component of the bill and set the broad parameters of the tax chapter, she learned about the deal at the same time as all of her colleagues and the general public — through a press release.   

Manchin said he’s open to considering changes suggested by Sinema, including on a proposal to close the carried interest tax loophole, one of his priorities.   

“We’re just basically exchanging back and forth whatever I have that she hasn’t seen. And our staffs are working together very closely,” he said, adding that he’s also exchanging materials relevant to the bill with other Democratic and Republican senators.   

Read more here from The Hill’s Alexander Bolton. 

Us inheritance tax for non us citizens EPA, USDA take on rural water sanitation 

The Biden administration announced plans on Tuesday to leverage financial and technical tools to ensure that historically underserved communities can access wastewater sanitation resources. 

The pilot initiative, a joint effort between the Environmental Protection Agency (EPA) and the U.S. Department of Agriculture (USDA), will focus on 11 rural communities across the country where residents lack basic wastewater management. 

“The America that we all believe in is a land of opportunity,” EPA Administrator Michael Regan said in a statement. “But, for historically marginalized communities from Alabama to Alaska, that opportunity is stolen when basic sanitation doesn’t work — exposing adults and children to backyard sewage and disease.” 

Through the Closing America’s Wastewater Access Gap Community Initiative, the EPA and USDA will be working with Mississippi, New Mexico, North Carolina, West Virginia and tribal nations to help communities take advantage of relevant federal funding opportunities. 

One such resource comes from last year’s bipartisan infrastructure bill, which provides $11.7 billion in loans and grants for water infrastructure initiatives, including wastewater management projects, the initiative’s partners said.  

“President Biden has been clear — we cannot leave any community behind as we rebuild America’s infrastructure with the Bipartisan Infrastructure Law,” White House infrastructure coordinator Mitch Landrieu said. 

“This includes rural and Tribal communities who for too long have felt forgotten,” he added. 

About 2.2 million people in the U.S. lack basic running water and indoor plumbing, while even more live with inadequate sewage infrastructure that endangers the health of residents, according to the groups. 

The new collaboration, the agencies said, will help communities access the financing and technical assistance that is available to improve wastewater infrastructure — aiming to “close the gap” for underserved populations. 

The 11 communities included in the pilot program are Bolivar County, Miss.; Doña Ana County, N.M.; Duplin County, N.C.; Greene County, Ala.; Halifax County, N.C.; Harlan County, Ky.; Lowndes County, Ala.; McDowell County, W.Va.; Raleigh County, W.Va.; San Carlos Apache Tribe, Ariz.; and Santo Domingo Pueblo, N.M. 

Read more here from The Hill’s Sharon Udasin

SENATORS AGREE TO PACT ACT VOTE 

Senate Republicans have reached an agreement to pass legislation expanding benefits for veterans who are suffering illnesses due to toxic exposures, after they blocked the bill last week and sparked outrage from the veteran community — and comedian Jon Stewart. 

“We expect to have an agreement on the PACT Act with amendments,” Senate Majority Leader Charles Schumer (D-N.Y.) said. “I believe it will pass and pass this evening. So, that’s very good news.”  

A vote on the measure is expected early Tuesday evening. 

Schumer said that the Senate will vote on three amendments to the bill, with 60 votes being needed to pass those bills. The upper chamber will then move to finally pass the bill.  

The deal will also allow the upper chamber to vote on Finland and Sweden joining NATO on Friday.  

The agreement comes as Republicans have been trying to find a way to end a standoff over the bill after blocking the measure by a vote of 55-42 last Wednesday. 

Read more here from The Hill’s Jordan Williams.  

A FLOOD OF NEWS 

High-tide flooding broke or tied records in three locations in U.S. coastal areas in the past year, according to data released Tuesday by the National Oceanic and Atmospheric Administration (NOAA).  

This type of flooding has become increasingly frequent across the country but will likely decline this year, according to NOAA. The administration attributed the decrease to the La Niña weather phenomenon.

The increases are likely to be concentrated along the East Coast and Gulf of Mexico, where NOAA is predicting a 150 percent increase from the year 2000.   

Since May of this year, three different NOAA-monitored locations have tied or broken previous records for number of high-tide flooding days. Reedy Point, Del., saw a new high of six events, while Kwajalein Island in the Pacific broke its 2021 record with four days. South Carolina’s Springmaid Pier saw 11 events, tying its 2021 high. 

High-tide flooding occurs when ocean water floods into low-lying areas during high-tide periods, usually following tides of between 1.75 and 2 feet above the daily average. In years past, these events have been limited to storms, but they have recently become common during prevailing-wind changes or even full moons.   

Read more here.  

WHAT WE’RE READING

  • EPA whistleblowers provide new evidence of ongoing failure to assess dangerous chemicals (The Intercept) 
  • Sewage sludge contaminated with toxic forever chemicals spread on thousands of acres of Chicago-area farmland (Chicago Tribune) 
  • How corn fields are about to make the Midwest unbearably humid (The Washington Post) 
  • Power Companies Enter Peak Hurricane Season Lacking Enough Transformers (The Wall Street Journal) 
  • BLM agrees to reconsider grazing at sensitive Ariz. site (E&E News) 

That’s it for today, thanks for reading. Check out The Hill’s Energy & Environment page for the latest news and coverage. We’ll see you tomorrow.  

VIEW FULL VERSION HERE

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

‘A stain on the tax code’: Hedge fund legend Bill Ackman urges Biden to close the loophole that helped make him billions

‘A stain on the tax code’: Hedge fund legend Bill Ackman urges Biden to close the loophole that helped make him billions

by | Jul 29, 2022 | 2022

Cross border tax advice

William Ackman isn’t known for his political takes. Typically, the billionaire hedge fund manager spends his time dissecting corporate financials, looking for his next high-profile investment or activist play.

But this week, the CEO of Pershing Square Capital Management found himself in the middle of a heated debate over the carried interest “loophole”—which allows private equity and hedge fund managers to reduce their tax burden on profits from fund investments. It’s a key part of the tax code that has helped make so many hedge fund managers like Ackman billionaires in the first place.

Democrats have been working to close the carried interest loophole as part of the proposed $739 billion Inflation Reduction Act of 2022, and many hedge fund managers have come out in opposition—but not Ackman.

“The carried interest loophole is a stain on the tax code,” Ackman said in a Thursday tweet. 

While a billionaire hedge fund manager may seem like an unlikely backer of the Dems’ fight against tax loopholes, Ackman has actually been arguing for the closure of the carried interest loophole for a decade now.

But before jumping into the billionaire’s beef with carried interest, it’s best to define some key terms.

Cross border tax advice Carried interest: A ‘loophole’ or an entrepreneur’s best friend?

Private equity and hedge funds earn money in two key ways. First, they charge a base management fee on the total amount of money a client has invested. Second, they earn a share of the profits from their fund’s investments if they achieve a minimum return known as the hurdle rate. Any profits earned by managers above the hurdle rate are called carried interest.

The carried interest provision allows fund managers to pay a capital gains tax rate (roughly 20%) on these earnings, instead of the much higher regular income tax rate (37% for single filers’ taxable income above $539,900). 

This tax treatment, or “loophole,” depending on who you ask, is supposed to incentivize money managers to earn better returns for their investors. But Ackman questioned this purported purpose on Friday in a Twitter thread.

“The daily activity of investment management does not need the additional incentive of lower carried interest taxation to drive behavior,” he said. “Put simply, there should be no difference in the tax rate on the management fee income investment managers receive compared to the incentive fees they receive as they are simply fees in various forms…They don’t need the extra boost from lower rates to motivate them to work better or harder for their clients. The fees are sufficient to motivate their behavior.”

Ackman isn’t the only big name on Wall Street that has spoken out against the carried interest loophole. Berkshire Hathaway CEO Warren Buffett has argued for closing the loophole for over a decade. 

 “If you believe in taxing people who earn income on their occupation, I think you should tax people on carried interest,” he said at a congressional hearing in 2010.

Still, proponents of the current carried interest tax treatment argue that changes to the tax code will hurt entrepreneurs.

“Increasing taxes on carried interest means many entrepreneurial firms and small businesses across sectors will not have access to the capital they need to compete, scale, innovate, and navigate challenging economic conditions,” the Small Business and Entrepreneurship Council said in a Friday statement.  “This will only hurt local economies and workers, and more broadly undermine U.S. competitiveness.” 

Drew Maloney, the CEO of the American Investment Council, also rebuked attempts to close the carried interest tax treatment in a Thursday statement.

“Over 74% of private equity investment went to small businesses last year,” he said. “As small-business owners face rising costs and our economy faces serious headwinds, Washington should not move forward with a new tax on the private capital that is helping local employers survive and grow.”

The Commercial Real Estate Development Association also argues that closing the carried interest will “disproportionately impact the real estate industry since real estate partnerships comprise a large number of partnerships and many use a carried interest component in structuring development ventures.”

And even Ackman noted on Friday that carried interest has value for entrepreneurs, allowing them to have favorable tax treatment as a sort of payment for the risks they take that can drive economic growth.

“This system has driven enormous job and wealth creation and is the biggest driver of our economy. It, therefore, needs to be preserved at all costs,” he wrote. “Giving favorable tax treatment for entrepreneurs who build businesses, develop real estate, drill for gas, sequester carbon, etc. creates powerful incentives that drive these high-risk activities and presents investment opportunities for passive investors who don’t have these capabilities.”

But when it comes to private equity and hedge fund managers, Ackman said the carried interest loophole doesn’t add any value.

“It does not help small businesses, pension funds, other investors in hedge funds or private equity, and everyone in the industry knows it. It is an embarrassment, and it should end now,” he said.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Is your crypto exchange prepared to issue 1099-Bs? Here’s how to do it easily

Is your crypto exchange prepared to issue 1099-Bs? Here’s how to do it easily

by | Jul 23, 2022 | 2022

Us totalization agreements

” alt=”us totalization agreements Is your crypto exchange prepared to issue 1099-Bs? Here’s how to do it easily” data-src=”https://cryptoslate.com/wp-content/themes/cryptoslate-2020/imgresize/timthumb.php?src=https://cryptoslate.com/wp-content/uploads/2022/07/crypto-exchange-tax.jpg&w=70&h=37&q=75″ data-srcset=”https://cryptoslate.com/wp-content/themes/cryptoslate-2020/imgresize/timthumb.php?src=https://cryptoslate.com/wp-content/uploads/2022/07/crypto-exchange-tax.jpg&w=105&h=55&q=75 1.5x, https://cryptoslate.com/wp-content/themes/cryptoslate-2020/imgresize/timthumb.php?src=https://cryptoslate.com/wp-content/uploads/2022/07/crypto-exchange-tax.jpg&w=140&h=74&q=75 2x” />Is your crypto exchange prepared to issue 1099-Bs? Here’s how to do it easilyTrent Bigelow ·6 hours ago· 4 min read

In order to be prepared for this change, you need to know what exactly is coming quickly down the road for crypto exchanges and wallets, what kind of reporting will be required of you, and why it might not be a good idea to build those capabilities in-house.

us totalization agreements Is your crypto exchange prepared to issue 1099-Bs? Here’s how to do it easily

Cover art/illustration via CryptoSlate

Taxes are one of the few certainties in life, and big tax changes are coming for crypto exchanges and wallets very soon. Will you be ready for them?

While cryptocurrency owners have been required to report their crypto gains and losses on their income taxes for a few years now, crypto exchanges and wallets haven’t needed to provide information to the IRS on their customers and their transactions. But that’s all changing, as new federal regulations will require crypto exchanges and wallets to provide tax documents in the form of a 1099-B to their customers. And it’s not going to be an easy process.

In order to be prepared for this change, you need to know what exactly is coming quickly down the road for crypto exchanges and wallets, what kind of reporting will be required of you, and why it might not be a good idea to build those capabilities in-house.

Us totalization agreements  What’s on the Horizon for Tax Reporting

Despite cryptocurrency’s intention to be decentralized, federal tax regulations have caught up to crypto owners, who must report their crypto holdings as property and pay any capital gains taxes associated with it. However, unlike brokerage or barter exchanges, crypto exchanges and wallets haven’t had to report customer information, transactions, and gains or losses to the IRS, and issue a form to customers for their own tax purpose.

However, that has changed with the Infrastructure Investment and Jobs Act, also known as the Infrastructure Bill, on November 15, 2021. The Bill expands required tax reporting for crypto transactions and starting in 2023, crypto exchanges and wallets will be required by law to generate and issue 1099-B forms — or something like it — to their customers, the Federal government, and each state that requires reporting. And with nearly 600 crypto exchanges out there — with the largest one running a $15.9 billion volume — there’s a lot of work ahead of them.

A 1099-B — like other 1099 forms — is used to report non-W2 income earned over $600 and are records of freelance or gig work, interest received, dividend payouts, and more. Even certain purchases using crypto coins can trigger a taxable event applying to the $600 threshold. A 1099-B form is specifically issued by brokerage firms and barter exchanges and contains a record of all transactions made, the instrument used, gains or losses, and more. The message here is clear: The IRS is viewing your exchange like a brokerage firm or barter exchange. And as such, you have to track and provide a record of all crypto transactions per customer made on your platform. You may also have to report on existing tax obligations like backup withholdings as well.

Because this is required by law, you don’t have an option to do nothing — or you can and face the penalty. You need to build out your capability to handle this massive amount of data collection and tracking, so that come next year. But how will you do that?

Us totalization agreements How to Prepare Your Exchange

Crypto exchanges and wallets need to prepare for this new tax regulation end-to-end, from collecting customer information to tracking and attributing transactions to generating a form that complies with the tax law. What kind of information does a typical 1099-B contain? You can find a customer’s name, address, and social security number — and SSNs require their own process to collect and verify before 1099-B issuance can begin. It also contains a list of every transaction made, including what was sold, the date sold, the quantity, the gain or loss, and other important information.

It’s a lot of data to track and a lot of reporting to get correct. Your first thought may be to build these capabilities in-house, but you’ll be facing a number of hurdles to doing so, like:

  • Compliance: There are a number of challenges to building in-house. The first is compliance and making sure that how you’re gathering and reporting information adheres to this new tax law. And you can be sure that the IRS will keep an eye on crypto exchanges and wallets to ensure they’re getting it right.
  • Speed: Another challenge will be the speed at which you can design, develop, and deploy these new capabilities — especially when they need to be ready by the end of the year. Do you have the resources and budget to immediately turn your attention to solving this problem?
  • Cost: Cost is another challenge if you build in-house. Consider the research, design, sourcing, development, testing, and maintenance costs of building, running, and maintaining the backend infrastructure of this capability. Does your exchange have the engineering resources to prioritize this as well?
  • Maintenance: Finally, are you prepared to commit to the ongoing work to run this tax process year after year and maintain the underlying infrastructure? Who will be making the software updates to keep up with evolving tax laws? What team will own this?

Us totalization agreements Use Custom APIs

You don’t have to build your solution yourself. The best approach to get you up and running quickly and easily is to use APIs to track and generate your 1099-Bs. Instead of building all those capabilities in-house, APIs will integrate with your system and easily pull all that data to generate the forms you need. Plus, custom-built APIs from a knowledgeable vendor will ensure that you’re not only keeping compliant with tax law but that you’re keeping up with any changes and ongoing maintenance of the API. Ultimately, going with API integration will save you time, money, and resources and prepare you for the new laws to take effect.

Us totalization agreements Tax Changes for Crypto Exchanges

An old adage says that there are only two things certain in life, and one of them is taxes. Crypto exchanges and wallets are facing an inevitable future of compliance when it comes to transaction reporting to the IRS — and possibly even more expanded reporting, including the taxability of staking. However, another old adage says that a stitch in time saves nine, so if crypto exchanges and wallets begin to build out their capabilities today, they won’t be scrambling when the IRS comes calling.

Guest post by Trent Bigelow from Abound

Trent Bigelow is co-founder and CEO of Abound. The company’s APIs enable those serving or paying independent workers (1099ers) to quickly and effortlessly embed benefits into their products, automatically setting aside enough to cover taxes, retirement, healthcare, insurance, PTO, and more. Trent leads the company’s strategy to increase wealth and wellness for 68 million self-employed Americans, unlocking access to independent benefits in an easy, affordable, and compliant way that works for everyone.

Learn more →

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

Yellen says US aims to move ahead with global minimum corporate tax despite setback

Yellen says US aims to move ahead with global minimum corporate tax despite setback

by | Jul 16, 2022 | 2022

Us inheritance tax for non us citizens

us inheritance tax for non us citizens US Secretary of Treasury Janet Yellen arrives at the meeting room during the G20 Finance Ministers Meeting in Nusa Dua, Bali, July 15, 2022. — Reuters pic

US Secretary of Treasury Janet Yellen arrives at the meeting room during the G20 Finance Ministers Meeting in Nusa Dua, Bali, July 15, 2022. — Reuters pic

Follow us on Instagram, subscribe to our Telegram channel and browser alerts for the latest news you need to know.

Saturday, 16 Jul 2022 11:53 PM MYT

NUSA DUA, Indonesia, July 16 — The United States will look for every opportunity to move ahead and enact a global minimum corporate tax agreement despite the opposition of a key Democratic senator, Joe Manchin, to raising corporate taxes, US Treasury Secretary Janet Yellen said.

Yellen told reporters today that finance officials from the Group of 20 major economies reached strong consensus about many issues, including the need to address a worsening food security crisis, despite differences over Russia’s war in Ukraine that prevented the leaders from issuing a joint statement.

Manchin, who holds the pivotal vote in the evenly divided Senate, this week said he would not support a Democratic proposal for new climate change spending and higher taxes for corporations and wealthier Americans.

His opposition could imperil passage of legislation that would commit the United States to a 15 per cent global minimum corporate tax, a key part of an agreement that Yellen helped negotiate with nearly 140 countries last year.

“We are very committed to moving ahead with this. This is a truly important global initiative,” she said on the second day of a two-day G20 meeting in Bali. “I can tell you that we will continue to look for every possible opportunity that we have to move this forward.”

She said the United States had a strong incentive to move forward because as other countries enacted the tax agreement, they would be taxing the foreign profits of US companies, while the United States would be leaving “that tax revenue on the table rather than capturing it ourselves.”

Yellen said it was important that Manchin did signal support for legislation to reduce prescription drug prices for seniors and extending subsidies that help keep health insurance costs lower.

On his opposition to climate change provisions, Yellen said Treasury would support US President Joe Biden’s plans to use executive action, and would continue initiatives under the Financial Stability Oversight Council to evaluate the risks posed by climate change to financial institutions.

She also addressed the recent strong appreciation of the US dollar and said it was due to strong economic growth, moves by the Fed to raise interest rates, and capital inflows.

“The US position is that we believe in market-determined exchange rates” and it is very rarely appropriate to intervene, Yellen said, adding “I do not see this as one of these occasions.” — Reuters

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.

What Are Three Essential Tax Laws Foreign Owners of U.S. Real Estate Need to Know?

What Are Three Essential Tax Laws Foreign Owners of U.S. Real Estate Need to Know?

by | Jul 15, 2022 | Real Estate, 2022, Taxes

What Are Three Essential Tax Laws Foreign Owners of U.S. Real Estate Need to Know?

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

What Do Foreign Owners of U.S. Real Estate Need to Know?

 

Real estate is a popular investment choice for non-U.S. investors, but foreign investors need to take careful considerations when looking to invest. These considerations include income, business structure and the property value, to name a few. With no one-size-fits-all, investors need proper planning and advice to avoid possible tax and penalty complications. 

 What is the U.S. Estate Tax Exemption?

While U.S. citizens and persons who are deemed to be domiciled can enjoy an estate tax exemption in 2022 of $12,060,000, that figure does not apply to nonresident aliens. The exemption amount for a nonresident alien decedent is actually only $60,000, and any amount that exceeds that figure is subject to estate tax that ranges anywhere from 26% – 40% . The estate tax exemption applies to all assets, not just real estate. Real estate property falls under the blanket estate tax exemption if the property is an asset in a decedent’s estate.

 What Taxes are Nonresident Aliens Responsible For?

If a business entity or revocable trust holds U.S. properties they may be required to file annual federal and possibly state tax returns. 

  • Lessors of U.S. property or recipients of rental income of that property must file a Form 1040-NR U.S. Nonresident Income Tax Return for the income.
  • State and city taxes may also be levied.
  • Reports may also need to be filed with the Financial Crimes Enforcement NEtwork (FinCEN) or the IRS, including the FBAR and Form 5472.

Failure to file may result in fines, and if not resolved, the property can be seized or sold at auction, and nonresident aliens with a federal tax lien can have their information shared with the Department of Homeland Security. 

Can Visits to the U.S. Impact Taxes?

Visits exceeding 183 days in a given year or over a three-year period (see below example) can impact residency status for tax purposes, which would subject an individual to tax on worldwide income and foreign financial assets and accounts as well as additional filings for any interest in a foreign business and bank accounts. The United States calculates this by using the substantial presence test.

 For example:

Year

# of Days in US

Calculation

Current

85

85 x 1 = 85 days

Prior

100

100 x ⅓ = 33 days

Two Years Prior

120

120 x ⅙ = 20

Total Days in the US 

138

 

The above individual would not qualify as a resident under the substantial presence test.

 To avoid the substantial presence test, individuals should limit visits to less than 120 days of presence each calendar year. There are also other ways to avoid being considered a U.S. resident for tax purposes, including job roles (certain visas), professional athletes temporarily competing in a charitable event, or if time was spent stateside due to a medical condition occurring while visiting the U.S. Additionally there are exemptions for closer connections. Individuals that do meet the exemption should file IRS Form 8843.

 As foreign individuals look to invest, it is helpful to know the intricacies of the U.S. and foreign tax system. Foreign investors holding real estate properties or other assets in the U.S. are encouraged to seek the advice of a tax consulting and accounting firm that specializes in the intricacies of U.S. tax reporting as it applies to international investors and trust holders.

 

TIGTA Highlights the IRS’ FATCA Enforcement Woes

TIGTA Highlights the IRS’ FATCA Enforcement Woes

by | Jul 13, 2022 | Compliance, 2022, International, Taxes, U.S.

TIGTA Highlights the IRS’ FATCA Enforcement Woes

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

TIGTA Highlights the IRS’ FATCA Enforcement Woes

 

 In the first 12 years of the U.S. Foreign Account Tax Compliance Act, the IRS has spent nearly $600 million on enforcement but has only managed to collect $14 million in penalties in return. This poor performance indicates that the agency strongly needs to revise its enforcement strategy according to a recent audit report by the Treasury Inspector General for Tax Administration.

Initially, the IRS had big compliance plans for FATCA and published a sprawling compliance roadmap addressing several aspects of FATCA. But years of budget constraints and other personnel resource issues led the IRS to shrink those plans to two compliance campaigns, which are handled by the IRS’ Large Business & International division.

The first campaign, Campaign 896, focuses on offshore private banking and U.S. taxpayers who have either underreported or failed to report their foreign assets on Form 8938. According to the IRS, over 330,000 taxpayers with foreign accounts exceeding $50,000 failed to file the form between 2016 and 2019. This means the government could collect at least $3.3 billion in penalties from the group, if each taxpayer pays the minimum FATCA penalty, which is $10,000.

The second campaign, Campaign 975, focuses on the accuracy of taxpayers’ FATCA filings, but the IRS has only been able to review one tax year — 2016 — leaving the agency far behind its goals.

All of this means that the IRS has a lot of work to do in monitoring FATCA and ensuring taxpayers are complying with the law. In an audit report published April 7, the Treasury Inspector General for Tax Administration described some of the IRS’ progress and setbacks with FATCA compliance. TIGTA conducted the audit to evaluate how the IRS has been using the information it gathers under FATCA to improve taxpayer compliance.

The most important takeaway is that the IRS is planning to increase its audits and reviews of U.S. foreign account holders, meaning that taxpayers with such accounts should prepare for increased scrutiny. If they have any unreported accounts, they should also evaluate voluntary disclosure and other options to potentially minimize any penalties from the government.

THE ABCs of FATCA

The U.S. government created FATCA to ensure transparency of U.S. taxpayers’ offshore financial accounts and combat tax evasion. Under the law, taxpayers with a certain threshold of foreign financial assets. must file Form 8938, Statement of Specified Foreign Financial Assets. The thresholds, which start at $50,000 and top out at $600,000, depend on the taxpayer’s marital status and whether they live in the U.S. or abroad. Foreign financial institutions also have reporting obligations. Those with U.S. taxpayer assets are required to share information about those clients’ financial accounts with the IRS. Institutions that fail to do soare subject to a 30 percent withholding rate on their U.S. source payments.

Updating Procedures and Tightening the Reins

The IRS has spent a lot of money on FATCA compliance — over $573 million dollars — yet it has only collected a small fraction of that amount — $14 million — in FATCA penalties. In light of this lackluster performance, TIGTA made six recommendations to the IRS, some of which the IRS said it has already implemented, and others it is currently working on.

The first TIGTA recommendation is that the LB&I (Large Business and International) Division needs to tighten its surveillance of taxpayers who underreport their foreign assets and step up its compliance activity for that group, including levying penalty assessments and conducting examinations on taxpayers who consistently underreport. The IRS said it has already implemented that recommendation. For a list of currently published LB&I campaigns click here.

The second recommendation is that the IRS should establish procedures for identifying taxpayers who fail to file Form 8938 and particularly focus on examinations or penalty assessments for that group. The IRS said it already has a filter that identifies potential non-filers. Importantly for taxpayers, the IRS revealed that it is currently conducting civil and criminal examinations on non-filing taxpayers and is considering penalties in examinations, when they are appropriate.

The third recommendation is that the LB&I Division needs to ensure that foreign financial institutions are also complying with FATCA, and should think about expanding the scope of Campaign 975 to address taxpayers and foreign financial institutions alike. The IRS said it agreed and that Campaign 975 is doing just that. According to the IRS, the agency has already reviewed about 4,000 foreign financial institutions and flagged potential noncompliance by 34 institutions. Although this is a good development, the seemingly small level of noncompliance suggests that the IRS should not devote extensive resources to this, and might be better served by focusing more heavily on individual taxpayers.

But TIGTA and the IRS disagreed over the auditor’s fourth suggestion. The IRS requires foreign financial institutions to include taxpayers’ taxpayer identification numbers on their FATCA report (Form 8966), but between 2017 and 2019 the IRS exempted some institutions, allowing more time to comply with the requirement. TIGTA believes the IRS should now issue a notice to foreign countries that their financial institutions must collect and provide the taxpayer identification numbers of U.S. individuals owning a foreign bank account.

The IRS believes this is not necessary because it issued a notice about this in 2017 (Article 2, Model 1A Reciprocal IGA; Notice 2017-46). TIGTA pushed back on this and wrote that the IRS should not assume that foreign financial institutions are aware of the 2017 notice and know what to do. They pointed out that less than half of the Form 8966s filed between tax years 2016 and 2019 had a valid TIN. The majority had an invalid TIN or completely lacked one. If the IRS does implement TIGTA’s recommendation, this could bring greater transparency to the agency’s investigations and compliance campaigns.

The fifth recommendation is that the IRS should establish goals, milestones, and timelines for FATCA campaigns in order to determine whether the campaigns are effective in meeting their objectives and affecting tax compliance. The IRS agreed with this and pledged to refine their metrics with respect to goals, milestones, and timelines.

Lastly, TIGTA recommended that the IRS should create an information sharing program that would allow the agency’s Small Business/Self-Employed division to access FATCA data and use it for examinations and collection actions. The IRS said it has implemented that recommendation.

A Tighter Leash for FATCA Compliance

The fact that the IRS already has implemented some of TIGTA’s recommendations demonstrates the agency’s seriousness about FATCA and ensuring that taxpayers and foreign financial institutions comply with the law. TIGTA’s report shows that the IRS’ FATCA issues are two-fold: first, the agency needs additional resources to oversee FATCA, but it also needs to better allocate the resources it does have. Considering that the Biden administration recently increased the IRS’ budget, a tighter leash for FATCA laggards and new FATCA-related compliance campaigns could be right around the corner.

 

Democratic bill would mandate new IRS free tax-filing program

Democratic bill would mandate new IRS free tax-filing program

by | Jul 13, 2022 | 2022

Us settlors trust

Sen. Elizabeth Warren is leading fellow Democrats in renewing a push for the IRS to create its own free tax-filing services and move away from its current private partnership, whose services only a slim portion of taxpayers use.

Warren, D-Mass., put forward a bill that would mandate the IRS create its own free, online program for preparing and filing tax returns and expand taxpayers’ access to their own tax-related data held by the agency. California Democrats Brad Sherman and Katie Porter led introduction of a House version of the measure.

The legislation would direct the IRS to create software that would allow any taxpayer to prepare and file their individual income tax return beginning in tax year 2023. The agency would also have to allow taxpayers with fairly straightforward returns — those who don’t take any above-the-line deductions, itemize their deductions or receive income as a sole proprietor of business, for instance — to elect that Treasury prepares their tax return beginning in the 2023 tax year.

The IRS would have to create a program for taxpayers to securely download third-party-provided return information and IRS-held data related to their individual tax bills.

The bill would require a program by March 1, 2023, allowing taxpayers who don’t have to file tax returns to claim refundable tax credits. The provision aims to expand a sign-up tool for the child tax credit to nonfilers who can access other tax benefits like the earned income tax credit, which is open to low-income workers.

The measure would also bar the Treasury secretary from entering into any new agreements that would restrict the federal government’s right to provide services or software for preparing and filing taxes.

A fact sheet from the bill’s sponsors points to problems with the IRS Free File program, which currently aims to offer free tax preparation to 70 percent of taxpayers by partnering with private tax preparing firms. The lawmakers argued that program is underused, often confuses taxpayers into paying for services and fails to adequately protect taxpayer data. In the last two years, major online tax platforms H&R Block and Intuit’s TurboTax withdrew from the program.

Only 2.8 percent of all individual tax returns filed in fiscal 2021 were submitted through the Free File program, according to IRS data.

The bill picked up co-sponsors since its last introduction in 2019 and now has 22 Democratic senators signed on.

Warren has sought to tie the issue to Democrats’ push for a budget reconciliation bill. Senate Majority Leader Charles E. Schumer, D-N.Y., and Sen. Joe Manchin III, D-W.Va., are in talks in the hopes of agreeing to a package broadly including pieces to lower prescription drug costs, incentivize clean energy production and increase taxes on the wealthy and corporations.

The latest Senate version of the legislation included about $80 billion over a decade for the IRS largely intended to boost its ability to go after uncollected taxes and raise federal revenue in the process. It also included $15 million for the IRS to study the feasibility of creating a free, direct online tax return system.

When Treasury Secretary Janet L. Yellen appeared before the Finance Committee in June, Warren pressed her for a commitment the IRS will go farther and build its own free filing system if Congress delivers the $80 billion cash infusion.

Yellen pointed to more pressing priorities like working through a massive backlog of tax returns, but agreed the IRS would take up the issue when it’s “adequately resourced.”

Read more

This news is brought to you by IWTA. Founded in 2015 and located on Avenue of the Americas, in the heart of New York City, International Wealth Tax Advisors provides highly personalized, secure and private global tax, GILTI, FATCA, Foreign Trusts consulting and accounting to many IWTAS.COM clients worldwide, including: Singapore, China, Mexico, Ecuador, Peru, Brazil, Argentina, Saudi Arabia, Pakistan, Afghanistan, South Africa, United Kingdom, France, Spain, Switzerland, Australia and New Zealand.