Conservatives, NDP call on CRA Commissioner to explain allegations of wrongdoing at global tax division

Conservatives, NDP call on CRA Commissioner to explain allegations of wrongdoing at global tax division

by | Jul 3, 2022 | 2022

Us totalization agreements

The Conservative Party and the NDP are calling on Canada Revenue Agency Commissioner Bob Hamilton to testify before a Parliamentary committee after a massive disclosure of sensitive internal documents revealed numerous allegations of wrongdoing at a CRA division responsible for ensuring multinational companies pay appropriate levels of Canadian tax.

The government documents, which were submitted in a federal court case late last year, reveal the names of several whistleblowers who have made a wide range of allegations from within the agency, as well as the names of senior CRA officials who were subject to internal complaints. The documents also include a 2021 report by an outside team of psychological consultants that found half of the staff in the division said they had been victims of bullying, harassment or intimidation.

The documents suggest that at least some of the tension in the division was owing to a disagreement over the agency’s handling of a specific multimillion-dollar tax agreement reached with a multinational company. The identity of the company in question is repeatedly redacted in the documents.

Some division staff disagreed with the tax agreement because they saw it as a “sweetheart” deal for the company and opposed the way it was approved, the records show. Staff who felt the division was under inappropriate pressure to approve the agreement filed internal complaints.

The documents relate to turmoil inside the CRA’s Competent Authority Services Division, which is part of the agency’s international and large business directorate. The CASD works with international companies that operate in Canada to determine their Canadian tax obligations.

The now-former head of the division, Donna O’Connor, breached hiring rules and failed to set an appropriate leadership tone, according to the findings in a December, 2019, report produced by the CRA’s internal affairs and fraud control division and filed as part of the court case. The CRA report says Ms. O’Connor told a CRA investigator that her “division was corrupt,” but did not elaborate. Ms. O’Connor also said she was trying to clean up bad practices, according to the report.

Staff in Canada Revenue Agency unit complain of bullying and harassment, report finds

During a Monday meeting of the House of Commons Finance committee, Conservative MP Dan Albas provided notice of a motion calling on Mr. Hamilton to appear and explain the issues raised in the documents. The committee could vote on the matter as soon as Tuesday.

Mr. Albas told The Globe and Mail after the meeting that the Liberal government frequently boasts it is working hard on the world stage to ensure large companies pay their fair share of tax. But he noted the documents suggest some within the CRA disagree with how such files are handled.

“That’s one of the reasons why I’d like to have the commissioner come before committee, so that he can lay out his case as to what is occurring at CRA under his watch,” Mr. Albas said.

NDP finance critic Daniel Blaikie said he will support the Conservative motion calling for Mr. Hamilton to appear. He noted the CRA has long been accused by critics of doing a poor job of enforcing tax rules for wealthy people and large corporations.

“And so when you couple that with these stories about a broken culture that even people within the CRA are calling corrupt, it is very concerning,” he said.

Liberal and Bloc Québécois MPs did not say Monday whether they would vote for the motion, which would require the support of a majority of MPs on the committee for it to go ahead.

CRA spokesperson Etienne Biram said in a statement Monday that the allegations related to the specific tax deal were reviewed by the CRA’s internal fraud division and a third party expert in tax law.

“While complaints in the Federal Court documents claim a ‘sweetheart deal’ was struck in 2019, the investigation determined that the terms of the [agreement] were in fact favourable to the CRA and did not provide any form of preferential treatment,” Mr. Biram said in an e-mail. He also said allegations that the deal was granted with no analysis and that employees were forced from their positions were all deemed to be unfounded.

Mr. Biram said the CRA takes allegations of misconduct seriously, but he added that it is difficult for the agency to respond to allegations that are before the Federal Court. He also noted that the Federal Court case is about two other allegations that are not related to the tax deal.

The Federal Court case began in September, 2021, when two CRA employees asked the court to review a decision by Public Sector Integrity Commissioner Joe Friday to stop investigating their allegations of wrongdoing at the CRA. The commissioner explained in letters to the employees that he felt his office did not need to investigate because the agency was already dealing with the matter.

Documents related to the commissioner’s investigation, which began in 2020, were submitted to the court, making them publicly available.

The commissioner’s office told The Globe last week that it was approached on April 12 by the Attorney-General, on behalf of the CRA, and made aware that some of the documents contain sensitive information. On April 19, the commissioner’s office wrote to the Federal Court, saying it intended to replace its court filings with new versions of the documents that will redact “irrelevant” third-party information, including the names of people who made allegations and the names of those against whom the allegations were made.

The Conservative Party asked Privacy Commissioner Daniel Therrien to launch an investigation into the release of “sensitive whistle-blower information” after the website Blacklock’s Reporter wrote about the case last month.

The court documents show the Integrity Commissioner’s office investigated a wide range of allegations put forward by the two CRA employees and determined that some warranted further review and others did not.

In a July 21, 2020 letter from Mr. Friday to one of the employees, the commissioner said he would be investigating some but not all of the allegations. Mr. Friday agreed to investigate concerns over travel expenses in the division and the possibility that it had a “toxic” work environment.

But Mr. Friday’s letter said he would not be investigating an allegation related to the specific tax deal, in part because his office is not authorized to review information that is subject to solicitor-client privilege.

For subscribers: Get exclusive political news and analysis by signing up for the Politics Briefing.

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 Looks to Get Global Tax Deal Back on Track…

by | Jul 2, 2022 | 2022

Foreign asset reporting

WARSAW — Treasury Secretary Janet L. Yellen arrived in Europe this week to join U.S. allies in confronting multiple threats to the world economy: Russia’s war in Ukraine, soaring inflation and food shortages.

But one of Ms. Yellen’s first orders of business during a stop in Poland will be trying to get the global tax deal that she brokered last year back on track after months of fledgling deliberations about how to enact it. The two-pronged pact among more than 130 countries that was reached last October aimed to eliminate corporate tax havens by enacting a 15 percent global minimum tax. It would also shift taxing rights among countries so that corporations pay taxes based on where their goods and services are sold rather than where their headquarters are.

Turning the agreement into a reality is proving to be a steep challenge.

The European Union has already delayed its timeline for putting the tax changes in place by a year and progress has been halted over objections by Poland, which last month vetoed a plan to enact the new tax rate by the end of next year. Despite initially signing on to the deal, Poland has voiced reservations, including whether the minimum tax will actually prevent big tech companies from seeking out lower-tax jurisdictions. Polish officials have also expressed concern that the two parts of the tax agreement are moving ahead at different paces, as well as trepidation about the impact that raising its tax rate will have on its economy at a time when the country is absorbing waves of Ukrainian refugees.

In meetings in Warsaw on Monday, Ms. Yellen pressed top Polish officials to let the process move ahead, making clear that the tax deal continues to be a priority of the United States. She is meeting with Poland’s prime minister, Mateusz Morawiecki, and the finance minister, Magdalena Rzeczkowska.

According to the Treasury Department, Ms Yellen told Mr. Morawiecki that international tax reform and the global minimum tax would raise crucial revenues to benefit the citizens of both Poland and the United States.

The meetings come at the beginning of a weeklong trip that also includes stops in Brussels and Bonn, Germany, which is hosting the Group of 7 finance ministers’ summit. Ms. Yellen will be focusing on coordinating sanctions against Russia with European allies and addressing growing concerns about how disruptions to energy and food supplies could affect the global economy.

The tax agreement has been one of Ms. Yellen’s top priories as Treasury secretary. Gaining Poland’s support is critical because the European Union requires consensus among its member states to enact the tax changes.

“I think the reality of turning a political commitment into binding domestic legislation is a lot more complex,” said Manal Corwin, a Treasury official in the Obama administration who now heads the Washington national tax practice at KPMG. “The E.U. has moved and gotten over most of the objections, but they still have Poland and it’s not clear whether they’re going to be able to get the last vote.”

With President Emmanuel Macron of France heading the European Union’s rotating presidency until June, his administration was eager to get a deal implemented. But at a meeting of European finance ministers in early April, Poland became the sole holdout, saying there were no ironclad guarantees that big multinational companies wouldn’t still be able to take advantage of low-tax jurisdictions if the two parts of the agreement did not move ahead in tandem, undercutting the global effort to avoid a race to the bottom when it comes to corporate taxation.

Poland’s stance was sharply criticized by European officials, particularly France, whose finance minister, Bruno Le Maire, suggested that Warsaw was instead holding up a final accord in retaliation for a Europe-wide political dispute. Poland has threatened to veto measures requiring unanimous E.U. votes because of an earlier decision by Brussels to block pandemic recovery funds for Poland.

The European Union had refused to disburse billions in aid to Poland since late last year, citing separate concerns over Warsaw’s interference with the independence of its judicial system. Last week, on the eve of Ms. Yellen’s visit to Poland, the European Commission came up with an 11th-hour deal unlocking 36 billion euros in pandemic recovery funds for Poland, which pledged to meet certain milestones such as judiciary and economic reforms, in return for the money.

Negotiators from around the world have been working for months to resolve technical details of the agreement, such as what kinds of income would be subject to the new taxes and how the deal would be enforced. Failure to finalize the agreement would likely mean the further proliferation of the digital services taxes that European countries have imposed on American technology giants, much to the dismay of those firms and the Biden administration, which has threatened to impose tariffs on nations that adopt their own levies.

“It’s fluid, it’s moving, it’s a moving target,” Pascal Saint-Amans, the director of the center for tax policy and administration at the Organization for Economic Cooperation and Development, said of the negotiations at the D.C. Bar’s annual tax conference this month. “There is an extremely ambitious timeline.”

Countries like Ireland, with a historically low corporate tax rate, have been wary of increasing their rates if others do not follow suit, so it has been important to ensure that there is a common understanding of the new tax rules to avoid opening the door to new loopholes.

“The idea of having multiple countries put the same rules in place is a new concept in tax,” said Barbara Angus, the global tax policy leader at Ernst & Young and a former chief tax counsel on the House Ways and Means Committee. She added that it was important to have a multilateral forum so countries could agree on how to interpret and apply the levies.

Yet, while Ms. Yellen is pushing foreign nations to adopt the tax agreement, it remains unclear whether the United States will be able to pass its own legislation to come into compliance.

An earlier effort by House Democrats to adopt a tax plan that would satisfy terms of the agreement fell apart in the Senate, where Democrats continue to disagree over the scope and cost of a tax and spending bill that President Biden has proposed.

Republicans in Congress have made clear that they are unlikely to support any agreement that the Biden administration has brokered and called on the Treasury Department to consult with them before trying to move ahead.

“As it is, there’s very little chance of a global minimum tax agreement — there is already resistance to approval at the E.U., which should be the easiest part of these discussions, and it will only get harder going forward,” said Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee. “Meanwhile, here in the U.S., there’s little political support for an agreement that makes the U.S. less competitive and takes a big bite out of our tax base.”

Ms. Yellen is expected to convey to her counterparts this week that the agreement is still a priority for the Biden administration and that she hopes that the United States can make the tax changes needed to comply with the agreement in a small spending package later this year, according to a person familiar with the negotiations.

The post Yellen Looks to Get Global Tax Deal Back on Track During Europe Trip appeared first on New York Times.

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.

Frozen: How the Revocation of the U.S. – Russia Tax Treaty Puts Global Trade on Thin Ice

Frozen: How the Revocation of the U.S. – Russia Tax Treaty Puts Global Trade on Thin Ice

by | May 18, 2022 | 2022, International, Taxes, U.S.

Frozen: How the Revocation of the U.S. – Russia Tax Treaty Puts Global Trade on Thin Ice

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

Updated: May 18, 2022

We continue to monitor the U.S.-Russia tax treaty withdrawal along with economic and  trade sanctions. It’s a constantly developing situation that profoundly affects global business and cross-border tax collection. Following is an update to IWTA founder Jack Brister’s  article published in JD Supra on March 18, 2022.

New Developments

 The Biden administration is poised to fully block Russia’s ability to pay U.S. bondholders. A temporary exemption deadline that gave Moscow leeway to pay coupons in dollars expires on May 25, 2022. The move could bring Moscow closer to the brink of default, Treasury sources told Bloomberg.

Tax Treaty Revocation in Action

The U.S. government had already been putting pressure on Russia. On April 5th the Treasury Department told multiple news outlets that it had suspended its tax information exchanges with Russia. That decision essentially blocks Russian authorities from obtaining tax information from the U.S. that would help their domestic collections, which could be a strong economic blow to the country.

Frozen: How the Revocation of the U.S. – Russia Tax Treaty Puts Global Trade on Thin Ice

Originally published on March 18, 2022 on JDSupra.

Permanent Normal Trade Relations (PNTR), commonly known as a nation’s most favored (MFN) status has been used in trade treaties for years. Using the MFN clause requires that a country that provides a trade concession to one trading partner must extend the same treatment to all of its partners. Used by the World Trade Organization the loss of this status can expose a country to discriminatory import tariffs.

Through the MFN status, the 164 members in the World Trade Organization treat each other equally, benefitting from highest import quotas, lowest tariffs and fewest trade barriers for goods and services. Members are allowed to impose whatever trade measures they wish on non- members, within reason. In addition, Biden announced that the G7 was seeking to ban Russia’s borrowing from the IMF and the World Bank. By revoking Russia’s MFN status, the United States and its allies send a strong signal that they no longer consider Russia an economic partner.

But the losses will go farther than Russia. The resulting tariffs will also raise costs for Americans and trading partners that may rely on affected Russian products. The United States is somewhat reliant on commodities exported from Russia, including fertilizers and base metals and the specific import restrictions will determine the impact of the sanctions.

What Are the Tax Implications of a Revoked U.S. – Russia Tax Treaty?

In tax treaties, the MFN clause promotes non-discrimination and parity for treaty partner countries. The main purpose of a tax treaty is to ensure proper tax treatment of monies earned by citizens, expats and residents of each other’s country. At present, the tax treaty between the United States and Russia is still in place, however, the US Senate Foreign Relations Committee has proposed a review of the US-Russia tax treaty.

Without the treaty, Russian investors with U.S.-sourced dividends would not only face a 30% withholding tax rate, they would also lose preferential treatment. The impact could be as great for American businesses in Russia as it is for Russian businesses. However, the ability to have offshore holdings in haven jurisdictions as well as the option of using cryptocurrencies for transactions, revocation of the tax treaty may not be as effective as it looks on paper..

 

Proposed tax changes aimed at penalizing the Russian government and Russians subject to sanctions who own U.S. assets is also in play. The plan, by Senate Finance Committee Chairman Ron Wyden (D., Ore.), would look to remove foreign-tax credits and certain deductions for U.S. companies earning income in Russia and Belarus.

 

We advise clients with business and investment ties to Russia to keep in touch as we continue to monitor the breaking developments in this unprecedented time of turmoil.

 

 

International Tax in 2022: The Year of Disclosure and Investment

International Tax in 2022: The Year of Disclosure and Investment

by | Jan 19, 2022 | 2022, Covid-19, International, Taxes, U.S.

International Tax in 2022: The Year of Disclosure and Investment

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

International Tax in 2022:

The Year of Disclosure and Investment

For taxing authorities around the world, monitoring taxpayer disclosures and transparency will be a top line item in 2022, meaning taxpayers — especially high-net-worth individuals and corporate entities — should expect more scrutiny into their affairs. Governments are in a unique position as they navigate multiple demands and pressures. On one hand, the revenue demands of the COVID-19 economic recovery require creative strategizing, and lawmakers around the world are eyeing tax as a main driver. Increased public scrutiny on high-net-worth individuals due to data leaks like the Panama Papers and Pandora Papers is also placing more pressure on lawmakers to hold tax evaders to account. Throw in long simmering concerns about tax fraud, international money laundering and corruption, and it is apparent that taxing authorities will be focusing on how they can obtain more taxpayer information. At the same time, countries are also competing for foreign investment as part of their pandemic recovery strategy, and tax incentives for foreign investors will be a key area to watch in 2022.

New Rules: The U.S. Corporate Transparency Act

In the United States, Democratic and Republican lawmakers alike are concerned that the country’s millions of anonymous shell companies are enabling corruption, tax fraud, and money laundering. Those concerns drove Congress in January 2021 to enact a wide-sweeping beneficial ownership reporting law, the Corporate Transparency Act, which is one of the largest transparency-related laws in recent memory. The CTA was included in the National Defense Authorization Act for Fiscal Year 2021. In 2022, Treasury’s Financial Crimes Enforcement Network (FinCEN) will release three sets of implementing rules for the CTA that will impact millions of U.S. corporations, limited liability companies, and similar entities. Over the next few months, taxpayers will need to keep abreast of the rules as they are released by FinCEN and potentially participate in FinCEN’s regulatory notice and comment process as the office attempts to address several open issues within the law.

The CTA requires domestic and foreign “reporting companies” to send to FinCEN the names, addresses, dates of birth, and driver’s licenses or other identification numbers of their beneficial owners who have substantial control. But what is a reporting company? Or a beneficial owner? What does substantial control mean for purposes of the CTA? The first tranche of proposed FinCEN rules, which were published December 8, 2021, to provide some guidance.

The CTA applies to corporations, LLCs, and “other similar entities” and although the law doesn’t define “other similar entities” the December 8 proposed rules offer some insight.

A foreign reporting company is any entity formed under foreign law that is registered to do business within the United States. A domestic reporting company is any entity created by the filing of a document with a secretary of state or filed with a similar office within a U.S. jurisdiction, like a state.

In the proposed regulations, FinCEN wrote that the proposed definition of domestic reporting company “would likely include limited liability partnerships, limited liability companies, business trusts (aka statutory trusts or Massachusetts trusts) and most limited partnerships, in addition to corporations and limited liability companies,” because they typically are created by a filing with a secretary of state or similar office.

That definition will capture a lot of entities – there are about 30 million in the U.S. according to FinCEN’s estimation. Another 3 million are created annually. FinCEN said it does not plan to include any other legal forms other than corporations and LLCs within the definition, noting that U.S. state and tribal laws differ on whether other types of trusts and business forms like general partnerships are created by a filing.

There also are several exemptions, as the CTA exempts 23 different kinds of entities under 31 U.S.C. 5336(a)(11)(B)(i)-(xxiii). For example, FinCEN’s proposed regulations clarify that under the large company exemption, any domestic company or foreign entity that is registered to do business in the U.S. is exempt from the CTA’s reporting requirements if it meets the following hallmarks: (1) Over 20 full-time U.S.-based employees; (2) more than $5 million in gross receipts or sales from sources inside the U.S., as reflected on a U.S. federal income tax or information return; and (3) operates a physical office in the U.S.

The next question is, who is a beneficial owner with substantial control? The CTA defines a beneficial owner as “any individual who meets at least one of two criteria: (1) exercising substantial control over the reporting company; or (2) owning or controlling at least 25 percent of the ownership interest of the reporting company.” Under the CTA, substantial control is defined as: (1) service as a senior officer of a reporting company; (2) authority over the appointment or removal of any senior officer or dominant majority of the board of directors (or similar body) of a reporting company; and (3) direction, determination, or decision of, or substantial influence over, important matters of a reporting company.

Beyond that, the proposed regulations say that determining an ownership interest is a facts and circumstances inquiry that evaluates criteria such as: (1) equity in the reporting company and other types of interests, like capital or profit interests (including partnership interests), or convertible instruments; (2) warrants or rights; or (3) other options or privileges to acquire equity, capital, or other interests in a reporting company.

The stakes – and potential penalties – are high. Taxpayers that willfully fail to share beneficial ownership information with FinCEN face civil penalties of up to $500 per day. Criminal penalties can hit $10,000 per violation. Based on this, and the broad sweeping nature of the CTA, taxpayers who meet the criteria for domestic or foreign reporting companies or want to know if they are exempt, will want to explore their options with an experienced international tax professional.

High Net Worth Individuals: Wealth Tax VS Enforcement

Globally, wealth taxation has commanded quite a bit of attention as governments strategize ways to raise revenue in light of the COVID-19 pandemic. Some countries have been more active than others. For example, Singaporean lawmakers are considering a graduated net wealth tax between 0.5 and 2 percent imposed on individual net worth exceeding SGD 10 million (about $7.4 million). Norway’s Parliament at the end of 2021 passed a bill to increase the country’s wealth tax base rate from 0.85 percent to 0.95 percent. Taxpayers whose assets exceed NOK 20 million will be assessed at a 1.1 percent rate. 

Meanwhile, in the U.S. and much of Europe, wealth taxes have failed to gain much traction. What has proven popular is an increased focus on tax enforcement. President Joe Biden placed tax enforcement as a cornerstone of his Build Back Better economic strategy, and he wants to increase the IRS’ funding by $80 billion. For over a decade significant budget cuts have eroded IRS enforcement capabilities and cost the government billions of dollars in uncollected taxes. The IRS funding plan, which is part of Biden’s now- stalled Build Back Better social spending bill, would give the IRS $80 billion over 10 years to ramp up its enforcement and investigative work, particularly on audits of corporations and wealthy taxpayers. See our recent article on Build Back Better.

In the United Kingdom, HM Revenue & Customs has increased its investigations into criminal and tax offenders, and that work has recovered over £1 billion over the past five years. HMRC plans to continue that work in 2022, and specifically plans to rely more heavily on its powers to freeze and recover unexplained assets. Judging by the department’s prior activity, that could be quite a bit of activity: between 2020 and 2021, HMRC issued 151 account freezing orders, covering over £26 million in assets.

In 2021, Spain decided to investigate high net worth individuals who move their tax domicile abroad to determine whether or not they are doing so fraudulently, and that activity will continue in 2022. The same is true in China. In late 2021, China’s State Tax Administration announced that it would launch investigations into high net worth individuals suspected of engaging in tax evasion. Developments like these suggest that high net worth individuals should prepare for increased scrutiny into their tax affairs and engage the help of a professional to prepare for potential inquiries.

For how this ties-in to the new treatment of GILTI tax rules, see our related articles, The Biden Administration is Homing in on GILTI.

Global Tax Incentives for Investors

On the other hand, governments are keen to attract foreign investors with various tax credits and incentives, and individuals taking stock of these opportunities have a wide menu to peruse.

For example, Canada recently enacted an investment tax credit for capital invested in carbon capture, utilization, and storage projects, which can be claimed starting in 2022. Malaysia’s National Economic Recovery Plan contains a host of tax incentives for foreign businesses, including reduced corporate tax rates for companies that want to create a principal hub in Malaysia. China decided to offer an important tax exemption to foreign investors investing in China’s mainland bond market. Effective November 7, 2021 through December 31, 2025, foreign institutional investors are exempted from paying corporate income tax and value-added tax on bond interest gains generated by investments in the Chinese mainland bond market, according to the country’s Ministry of Finance and State Administration of Taxation. Poland’s Ministry of Finance is also assessing the country’s suite of tax incentives and whether they need an overhaul, in order to attract more investors to Poland. Accordingly, the Ministry has commissioned a study and results should be released in the next few months.

Prepare Now

In summary, foreign and domestic business entities, high net worth individuals and cross-border taxpayers will have to navigate an increasingly sophisticated terrain in the coming year and should be prepared to defend their current tax activity or take advantage of new taxing incentives as they appear. Legislative uncertainty only adds to the urgency. Given the breadth and depth of these new and anticipated changes, taxpayers are strongly advised to enlist the help of an experienced international tax practitioner to develop a game plan, mitigate loss, and stay ahead of global tax changes.

 

Three Key Tax Implications of the Biden Administration’s New Infrastructure Bill

Three Key Tax Implications of the Biden Administration’s New Infrastructure Bill

by | Nov 16, 2021 | Taxes, 2021, U.S.

Three Key Tax Implications of the Biden Administration’s New Infrastructure Bill

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

Tax Implications of the Biden Administration’s New  Infrastructure Bill

Part One

The long-awaited infrastructure proposal was approved by Congress late last week and has been signed into law by President Joe Biden. As part of the President’s mission to “build back better,” the proposal is a considerable investment in the country’s infrastructure. 

 

And while not as large as once envisioned — originally, it was $3.5 trillion — it is still a substantial amount at $1.2 trillion. Funding for the Infrastructure Bill will come from a few sources.

 

Following are some of the tax changes that will impact businesses and investors.

 

Early Expiration of the Employee Retention Tax Credit 

Established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, the Employee Retention Tax Credit, or ERC, provided relief to business owners. The intention was to help businesses retain their workforces and avoid layoffs. While the ERC was supposed to end at the end of 2021, once President Biden signs the Infrastructure Bill, the provision will end on September 30, 2021. 

 

The ERC allowed a per-employee refundable quarterly tax credit to eligible businesses based on a percentage of qualified wages and health insurance benefits. Not every business was eligible for the ERC — employers had to have shown a significant decline in gross receipts.

 

The ERC will be considered terminated effective October 1, 2021, except for recovery startup businesses. It remains unknown whether employers who would have qualified for the fourth quarter credit and reduced their payroll tax deposits prior to the passage of the bill, will face late deposit penalties for the short-fall of the payroll taxes deposited.

 

Targeting the Cryptocurrency Industry  

While the ERC amendment simply moved back an already expiring provision by three months, rules for reporting on cryptocurrency transactions are more substantial — including treating failure to report as a felony.

 

The provisions state that any person who regularly executes transfers of digital assets — including bitcoin, ether and NFTs — needs to report those transactions to the IRS, as well as reporting any digital asset transaction over $10,000. The rule is similar to the mandates that exist for stock and bond trades today.

 

Crypto fans fear the new rules will require everyday users, developers, and cryptocurrency miners to report information they may be unaware of, thus finding themselves positioned for potential felony convictions and five-year prison terms. 

 

Under the new law, the definition of a broker will be expanded to include those who operate trading platforms for cryptocurrency and other digital assets. In addition, brokers will be subject to new reporting requirements for purchases, sales, transfers and transactions involving cryptocurrency. Transfers between self-custody wallets and crypto exchanges would need to be reported by the exchange, and could lead to an incorrect cost base.

 

The bill will require the IRS to define a “broker” of digital assets and what are “digital assets,” and both have yet to be defined. This part of the bill is expected to be fought in Congress and the Courts before it takes effect in January 2024.

 

Pension Smoothing

Pension smoothing provides flexibility in funding pension obligations to sponsor defined benefit plans. The infrastructure bill adjusts the funding stabilization percentages that were included in the American Rescue Plan Act enacted in March, and extends the interest rate stabilization period from 2029 to 2034.

 

International and domestic tax are in a period of dynamic change, as how and where we conduct  business and what we define as currency is evolving at a rapid pace.

 

We look forward to keeping our readers and clients up-to-date with timely information for strategic planning.

It Happened in South Dakota

It Happened in South Dakota

by | Oct 20, 2021 | Compliance, 2021, Taxes, U.S. Economic System

It Happened in South Dakota

Karma Martell 2019

Karma Martell

Karma Martell,  Founder of  KarmaCom, is a seasoned professional business commentator, writer, and marketer, and serves as virtual CMO for International Wealth Tax Advisors. 

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

Pandora Papers Thrusts South Dakota into

Tax Haven Spotlight

 

The Pandora Papers, a recent reveal of pervasive cross-border financial crime and elaborately-crafted tax dodging structures, as reported by a global network of investigative journalists, has already shaken up governments and elections, upended tax authorities and initiated criminal investigations.

Although the global sting reaches far and wide, from celebrities and sports figures to world leaders, dictators, captains of industry and oil tycoons, what is especially cringeworthy is that the structures designed for the ultimate in tax-dodging and wealth-hiding were set up by blue-chip U.S. legal and investment firms.

Perhaps the most intriguing revelation of all from a stateside perspective was the emergence of South Dakota as a preferred tax haven of the rich and famous.

While Bermuda, the British Virgin Islands and the Cayman Islands positively glow with the patina of privilege and preference, what makes South Dakota, recently dubbed “the Mount Rushmore of tax havens,” a territory for the titans of too-much-is-never-enough?

 

The Wild West of Bank and Finance Laws

Do you get a lot of credit card offers in the mail from banks you’ve never heard of? Chances are, the bank’s HQ is in, you guessed it, South Dakota. Flip over a few credit cards in your wallet and read the fine print. Why set up an issuing bank in South Dakota? In 1981, the state abolished laws limiting the interest rate on credit cards. South Dakota is home to the big sky, (sorry, Montana) and the sky’s the limit when it comes to interest rates on your Visa or Mastercard.

In 1983, South Dakota was the first state to establish perpetual trusts. In a nutshell, perpetual trusts allow monies to remain in place for generations, with no one having to pay inheritance taxes.

Trusts are wealth structures favored by high-net-worth families and individuals, and South Dakota has a history of legislating highly favorable laws for settlors and trustees. The sweet green icing on the money layer cake is no income tax, no capital gains tax and no inheritance tax. The cherry on top are laws that ensure the investor of extreme privacy and secrecy from any blue and brown suits that may try to penetrate their personal Fort Knox.  Assets held in South Dakota trusts have increased from 57 billion to $360 billion in the last 10 years.

According to the Pandora Papers, among South Dakota’s wealthy foreign opt-ins are Ecuador’s President Guillermo Lasso, Chinese real estate billionaire Sun Hongbin, and Guatemalan industrial products titan Federico Kong Vielman.

IWTA founder Jack Brister weighs in: “Though it is true that South Dakota, along with Wyoming, have strong state-level asset privacy laws, it should be known that these laws don’t allow U.S. or international persons a means of U.S. tax avoidance.  

U.S. persons are always subject to U.S. tax no matter where they reside or where their assets are located.  Trustees are held liable for the appropriate tax reporting and payment of tax due and no state law can remove these federally-mandated responsibilities. 

 The skinny on the matter is that the U.S.-legislated law in which the premise is a trust, even those established under U.S. law, are foreign trusts unless specific criteria are met. The purpose for enacting such a broad definition of what a foreign trust is was to cast a wide net to ensure U.S. persons could not use such structures to avoid their tax responsibilities without facing severe penalties.  In doing so, the U.S. limited its ability to tax trusts established in the U.S. by foreign persons where the trust had no U.S. assets or income and the beneficiaries were not residing in the U.S. 

 This is because the U.S. has no authority to tax foreign persons if they are not deemed to be U.S. residents and have no U.S. assets or income. Reminder: capital gains and most interest income are tax-exempt. Business income and real property gains are subject to taxation.   

These rules apply equally to aforeign trust.  Therefore, whena trust is established under state law where the primary fiduciary responsibilities are with a foreign person and not the U.S. trustee (generally a U.S. trust company), and the trust has no U.S.- sourced income, the trust treated as a foreign person, which means there is insufficient nexus to the U.S., resulting in the U.S. having no legal taxing authority.” 

Which U.S. States Have the Most Trusts According to the Pandora Papers?

According to Axios, trusts held in the states listed below account for about 1 trillion dollars in secretly-held assets. According to Bloomberg, South Dakota state data alone show one half trillion dollars of wealth in trusts.

How the U.S. Treasury Views Americans’ Reporting of Foreign Assets

The U.S. Bank Secrecy Act demands that foreign banks disclose assets and accounts held by U.S citizens, and that U.S. citizens report those accounts or face a penalty, with $10,000 being the threshold of compliance. FBAR, the Foreign Bank Account Report, is the most-commonly filed disclosure form, while those with assets over $200,000 if living abroad and $50,000 if living stateside, are required to file FATCA (Foreign Account Tax Compliance Act) form 8938. For more on FATCA filing rules, see our blog post. For more on FBAR rules and compliance see the IWTA FBAR primer. 

FATCA and the Banking Secrecy Act (BSA) are under the jurisdiction of FinCen, the Financial Crimes Enforcement Network of the U.S. Treasury. FinCen investigations take place worldwide, supporting partner countries in combating money laundering, terrorist financing and other financial crimes. 

One might assume that the U.S. would bring the same level of scrutiny to those transferring foreign wealth to U.S. financial institutions and shell companies, but that is not the case because the U.S. has no legal jurisdiction to assert taxing authority.

Why the U.S. is Becoming a Favored Foreign Tax Haven

Although the USA supports the OECD’s global tax effort, they have refused to sign on to the Common Reporting Standard (CRS) which pledges inter-country cooperation in reporting financial assets and accounts to outside jurisdictions. The CES was formed in 2014, per the request of the G20. 112 countries currently participate in the CRS.

The power and autonomy of individual state governance makes it possible for U.S. states to create what amount to independent tax havens under the umbrella of the USA. According to Axios quoting a study by Israeli academic Adam Hofri-Winogradow, 17 of the world’s 20 least-restrictive jurisdictions for trusts were American states.

Will Congress and The Fed Intervene?

On October 6th, 2021, members of congress introduced “The Enabler’s Act.” The Act would expand the 1970-era Bank Secrecy Act to legislating accountability to parties typical in aiding and abetting money laundering and tax evasion, such as accountants, lawyers, investment advisors, and even public relations professionals and art dealers.

The new provisions would in effect expand FinCen’s 2020 Anti-Money Laundering Act. According to The Hill, not only will the Enabler’s Act improve the chances of catching violators, it would close a loophole in the securities laws that currently exempts investment advisers from the same reporting and procedures that are required of broker-dealers, — in at least some circumstances.

The law does not call out registered investment advisers per se, but its definition of investment professionals is broad and could close the loop. Thus, a new set of whistleblowers may come forward with new insights and information regarding the shadowy world of dark money.

West May Still be Best

It should be noted that unless the Treasury Department revises the definition of a foreign trust for tax purposes, The Enabler’s Act, if passed, is not likely to impact the ability of foreign persons to use the U.S. as a place to establish wealth structures which may avoid their home country tax laws.

 

International Tax Guru Jack Brister, founder of International Wealth Tax Advisors, to Appear as Anchor Panelist in Upcoming Webinar on Foreign Trust Tax Reporting

International Tax Guru Jack Brister, founder of International Wealth Tax Advisors, to Appear as Anchor Panelist in Upcoming Webinar on Foreign Trust Tax Reporting

by | Oct 5, 2021 | Taxes, 2021, International

International Tax Guru Jack Brister, founder of International Wealth Tax Advisors, to Appear as Anchor Panelist in Upcoming Webinar on Foreign Trust Tax Reporting

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

Even the seasoned accounting professional can get stymied by foreign trust reporting and the correct filing of Form 3520. Foreign trust and cross-border tax expert Jack Brister joins legal experts in a live webinar detailing the quirks and specificities of foreign trust compliance.

New York, NY, October 5, 2021             Industry-renown international tax and foreign trust expert Jack Brister, EA, MBA, TEP, will lend his expertise at a live, CPE-eligible webinar for finance and legal industry educator Strafford entitled, “Form 3520: Reporting Foreign Trust Activities on U.S. Beneficiaries’ Income Tax Returns.” The immersive webinar will cover the identification of filing obligations, how to complete form 3520, DNI planning after mid disallowance, and avoiding throwback tax. Interested professionals can sign up for the webinar directly on the Strafford website.

Even the seasoned accounting professional can get stymied by foreign trust reporting and the correct filing of Form 3520. Says Jack Brister, “Any information not provided or incorrectly presented can mean significant tax penalties ranging from 25% of the value of the trust to 35% of a distribution received. “

Join Jack Brister and a leading panel of legal and financial experts as they take a deep dive into the quirks and specificities of foreign trust compliance and the infamous IRS Form 3520.

When:  Monday, October 19, 2021, 1PM – 2:50 PM, EDT

Where: Livestreamed by Strafford. See https://b.link/strafford1021 for details.

What:  Topics covered will include but not be limited to:

  • Determining owners and responsible parties
  • What “reportable events” trigger a Form 3520 filing requirement?
  • DNI calculations and distribution strategies
  • Completing Form 3520
  • What are the penalties and relief provisions for failure to file a Form 3520 or Form 3520-A?
  • What is the overlap between Form 3520 and other foreign information reporting requirements such as Forms 5471, 8865, 8621, and Schedule B?
  • Throwback tax
  • IRC Section 6677 penalties for failure to file and relief provisions
  • What are the filing requirements for the U.S. beneficiary of a foreign non-grantor trust?
  • What are the processes for establishing a reasonable cause exception for penalty abatement?

 

About International Wealth Tax Advisors

International Wealth Tax Advisors (IWTA) specializes in mitigating U.S. taxes and solving highly-sophisticated cross-border tax issues.  Working with clients’ offshore and domestic wealth structures, we strategically pinpoint the intricacies and weaknesses of U.S. and foreign tax systems to minimize loss of wealth and profits.  

 

Follow Jack Brister for Insights and Updates on International Tax Compliance

 IWTA founder Jack Brister is a regular contributor to business intelligence publication J.D. Supra. His news updated can also be found on the IWTA blog, and daily on Twitter, handle @IWTAJack.

Third Quarter 2021 U.S. Economic Outlook: Vaxed, Taxed, and Roaring Back

Third Quarter 2021 U.S. Economic Outlook: Vaxed, Taxed, and Roaring Back

by | Aug 18, 2021 | U.S. Economic System, 2021, Covid-19

Third Quarter 2021 U.S. Economic Outlook: Vaxed, Taxed, and Roaring Back

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

Third Quarter 2021 U.S. Economic Outlook: Vaxed, Taxed, and Roaring Back

It’s been a year and a half since the onset of COVID-19, and there’s encouraging news for clients. The U.S. economy is bouncing back to life thanks in part to government aid and relatively high vaccination rates. The national economy grew at a seasonally adjusted, 6.5% annual rate in the second quarter, a sign that the nation has achieved a sustained recovery from the pandemic-induced recession. In fact, the economy has now surpassed its pre-pandemic levels.

Most importantly, profit margins are strong despite rising inflation and reports of higher costs which many economists view as short-term. Net profit margin for the S&P 500’s second quarter is expected to be 12.4%, according to a FactSet Research Systems’ senior earnings analyst.  If that turns out to be the actual net profit margin for the quarter, it will be the second-highest for the index since FactSet began tracking the metric in 2008, trailing only last quarter’s net profit margin of 12.8%.

The economy expanded at its fastest pace since last fall, but at a slower rate than the 8.5% growth rate that analysts had expected. That was mainly because supply chain bottlenecks and labor challenges exerted a stronger-than-predicted drag on many businesses as they sought to restock their shelves and hire staff. The drag on inventory rebuilding, in fact, was responsible for subtracting 1.1 percentage points from last quarter’s growth.

Corporate Earnings On-Track to Soar

In terms of corporate earnings, the S&P 500 is on track for its best quarterly earnings growth since 2009. So far S&P 500 companies have posted revenues well above end-of-quarter estimates; beating those estimates by a wider than average margin. Technology, energy, and industrials, posted some of the best performances. Analysts also expect double-digit earnings growth for the second half of 2021.

Those reporting robust second quarter earnings include American Express Co. (AXP.N), which posted second quarter net income of $2.3 billion, or $2.80 a share, up from $257 million, or $0.29 cents a share a year ago. Social media firm Twitter (TWTR.N) stunned Wall Street with earnings that blew past estimates, posting revenue growth of 74% over last year; the fastest since 2014.

All three major U.S. stock indices—the Dow Jones Industrial Average, S&P 500 and Nasdaq—rallied to record highs.  DJIA closed with a gain of 238.20 points or 0.68% at 35,061.50 to finish above 35,000 for the first time ever. The S&P 500 (.SPX) gained 44.31 points, or 1.01%, to 4,411.79. The Nasdaq Composite (.IXIC) added 152.39 points, or 1.04% to close at 14, 836.99. 

The economy is also receiving substantial support from the Federal Reserve. The Fed reaffirmed that it will keep its interest rates anchored near zero in the short term to encourage borrowing and spending. In a statement after its last policy meeting, it also reported that it will continue buying $120 million in government-backed bonds each month to keep longer-term borrowing rates low. However, given the magnitude of the economic rebound, the Fed signaled that rate hikes could begin in 2023.

Outlook is Rosy Despite Fears    

Although investors are concerned about the possible impact of the COVID-19 Delta variant on the global economy, the general expectation is that economic reopening will continue across major developed economies well into the second half of 2021.

Even with uncertainty about the path of the pandemic, the IMF  recently raised its projection for economic growth in 2021, the second time it has done so this year. The international organization expects the U.S. economy to expand 7% in 2021 and 4.9% in 2022, up from the 3.5% it projected a few months ago.

But the quickening growth—spurred by large spending packages proposed by President Joe Biden—have some analysts worried that inflation could rise too fast. Already, raw materials and parts, including semiconductors and copper, have spiked in price as demand has outstripped the ability of suppliers and shippers to keep pace.

As a result, some companies such as consumer products giant Procter & Gamble and Honeywell, maker of industrial and consumer goods, have said they plan to raise prices to offset rising costs. However Fed Chair Jerome Powell has said he expects such supply bottlenecks to lead to temporary price increases only, rather than a prolonged bout of accelerated inflation.

GILTI: Changes Ahead

President Biden has proposed to make substantial changes to the tax burden on foreign income through GILTI (global intangible low-taxed Income). The GILTI tax rate has been 21 percent, but the 2017 Tax Cuts and Jobs Act (TCJA) also allowed corporate taxpayers to deduct 50 percent of their GILTI income, which brought the effective tax rate down to 10.5 percent.

The Administration’s crackdown keeps the GILTI rate at 21% but eliminates the 50% deduction, meaning that multinational corporations would pay a higher minimum tax rate. This rate to be determined on a country-to-country basis, would eliminate the ability of corporations to offset losses incurred in one country against income earned in another. Under current law, income in a low-tax rate country can be blended with higher-taxed income and be either reduced or eliminated entirely. Once implemented, the changes will have significant ramifications for multinational corporate taxpayers in 2022, resulting in a higher effective tax rate on foreign income.  

Be Prepared for the New Tax Paradigm

With a global corporate tax policy on the near horizon, revisions to the TCJA and the Fed’s new policies on squashing well-established tax loopholes and challenging tax havens, international tax clients need to prepare now for the imminent changes ahead.

Mitigate your tax debt and build wealth with strategic moves and planning. Contact our office for a consultation with Jack Brister.

Get Ready for New Rules: The Biden Administration is Homing in on GILTI

Get Ready for New Rules: The Biden Administration is Homing in on GILTI

by | Apr 12, 2021 | 2021

Get Ready for New Rules: The Biden Administration is Homing in on GILTI

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

Get Ready for New Rules: The Biden Administration is Homing in on GILTI

The treatment of foreign trust distributions received by U.S. beneficiaries is an incredibly  complex area of U.S. tax law. Changes proposed to GILTI tax rules (Global Intangible Low-Taxed Income) by President Biden will come with new regulations and laws  that will undoubtedly result in thorny new issues for U.S. shareholders of CFCs (Controlled Foreign Corporations) and U.S. beneficiaries of foreign trusts. 

As many new clients have learned when they come to see us at the 11th hour of a cross-border tax problem, failure to comply with the tax rules can have dire – and very expensive – consequences.

The Current State of GILTI

The United States has adopted a series of laws designed to prevent U.S. taxpayers from enjoying the advantages of foreign trusts as U.S. income deferral mechanisms. The obvious application of these laws is to U.S.income taxpayers (citizens, green card holders and persons meeting the substantial presence test) attempting to transfer cash or income-producing assets to or from an offshore trust.

It is clear by the size of the penalties imposed on taxpayers who fail to file the information Forms 3520 and 3520-A, that the U.S. government is very intent on compliance with foreign trust reporting activities.

For example, the IRS views certain types of transfers as taxable income to the recipient, even if the intention was to make a gift. In those cases, transfers received by a U.S. beneficiary from a foreign trust/foreign corporation would generally be treated as taxable distributions. They would then be subject to the normal income tax rules that apply to distributions from foreign corporations or partnerships (depending on how the company is classified for U.S. tax purposes). 

Distributions of a foreign nongrantor trust received by a U.S. person, regardless of whether they are a named beneficiary or not, are taxable to the extent of their proportion of the trust’s distributable net income (taxable income) as computed under U.S. tax law. A U.S. person who received a distribution should also receive a foreign nongrantor trust beneficiary statement from the trustee to inform them of the distribution and the amount taxable. 

The complex nature of these foreign trust rules can have extremely severe financial impact. Noncompliance can trigger negligence penalties as well as interest charges on the accumulated tax owed to the IRS.

Note: Not sure what kind of a Foreign Trust you have or are beneficiary of? Read our Foreign Trust FAQ page, answer a few questions and our calculator will tell you what the entity is. https://iwtas.com/iwta-answers-faq-on-foreign-trust/

The Potential Bad News: A Heftier Tax Bill and Rules on a Country-by-Country Basis

The interest of the trust is attributed to the US beneficiaries under current law, which causes the beneficiaries to be subject to GILTI tax under the Controlled Foreign Corporation rules. The Biden tax proposal would double the effective tax rate to 21 percent by amending the 50 percent deduction provided by Section 250. The proposal would also remove the tax-free return on 10 percent of the CFC’s Qualified Business Assets Income (“QBAI”) and require that GILTI be calculated on a country-by-country basis. 

Clearly, if you are a U.S. beneficiary dealing directly or indirectly with a foreign trust, CFC or overseas retirement plan, be certain to deal only with professionals whose business it is to know the intricacies of cross-border tax rules; and with in-depth experience in the U.S. income taxation of foreign trusts. That, of course, is where we come in. Do not hesitate to call on us to book a consultation. It is our job to inform clients in the U.S. and abroad of potential changes to the U.S tax laws and prepare them in advance to maintain as much of their wealth and earnings as possible. 

If you, a colleague or client need help with any of the above issues, do not hesitate to reach out.

Contact us here.

 

 

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.