Scott Michel, a partner and President of Caplin & Drysdale, a DC-based law firm, advises that on July 10, 2013, the Hong Kong Legislative Council moved to enable Hong Kong to enter into stand-alone Tax Information Exchange Agreements and, more importantly for U.S. persons who have financial accounts there, to sign an “intergovernmental agreement” (IGA) with the U.S. for implementation of the Foreign Account Tax Compliance Act (FATCA).
It is expected that the U.S. and Hong Kong will agree on an IGA, and that financial institutions in Hong Kong will begin to comply with FATCA’s due diligence and automatic disclosure provisions next year.
The implications are profound for any U.S. citizen, green card holder or tax resident who has non-U.S. financial accounts or other financial assets, such as life insurance, retirement plans and the like. FATCA will require banks and other entities to ascertain which clients are subject to the U.S. tax system, to ask them to sign a W-9 form making their account transparent to the IRS and a waiver of domestic bank secrecy or confidentiality rules, and to begin in 2014 to share data with the IRS regarding their assets.
To the extent affected Americans have not complied with U.S. tax rules, they should consider their options in order to try to spare them from the most extreme enforcement measures available to the IRS.
Automatic Information Exchange Comes to Central The towering skyscraper financial firms in Central hold trillions of dollars in funds among millions of account holders and offer wealth and trust management services, insurance and annuity products, retirement plans, and the like.
Many clients of these entities have a U.S. passport or green card. Maybe it is time to reconsider their U.S. Citizenship and Expatriate?
Need FATCA or Expatriation Advise? Contact the Tax Lawyers
Steven Mopsick has an interesting view of how well or poorly the IRS has preformed in it's Offshore Voluntary Disclosure Program (OVDP). It should be obvious to practitioners and taxpayers alike that the IRS offshore voluntary disclosure program first announced in 2009, is not for everyone. It is expensive, time consuming and sometimes nerve-wracking.
What has been your experience as to how the IRS has preformed in it's Offshore Voluntary Disclosure Program? Please feel free to add your comments! Also, feel free to advise the IRS directly, since they are currently seeking comments on Offshore Voluntary Disclosure Program!
There are currently 17 states offering sales tax holidays where state sales tax charges
are temporarily dropped on back-to-school items such as clothing, footwear, classroom supplies, computers and certain other products, according to CCH.
“What’s really important for consumers to know is the specific information about products that qualify for each state’s holiday in order to maximize sales tax savings,” said CCH senior state tax analyst Carol Kokinis-Graves in a statement. “Typically several restrictions will apply and each state usually provides official, highly detailed rules on specific items that do or do not qualify for state sales tax exemptions on designated dates.”
Florida: On Aug. 2-4, the following are exempt: clothing with a sales price of $75 or less per item and school supplies with a sales price of $15 or less per item; and personal computers and related accessories with a sales price of $750 or less purchased for noncommercial use. The holiday exemption does not apply to sales of such items made within a theme park, entertainment complex, public lodging establishment or airport.
For a complete listing of State Sales Tax Back to School Holidays see AccountingToday.
The U.S. Internal
Revenue Service is pursuing tax enforcement cases against companies over the
issue of "stateless income," a senior agency official said on
Wednesday Jul 24, 2013 in a reference to corporate profits that are not taxed by any
country. Erik Corwin, an IRS deputy chief counsel, said there were international tax
disputes with companies, "most involving consequences of complex
restructurings designed either to create stateless income or to affect a tax
efficient repatriation." "So those are a family of cases that are in the pipeline and being looked
at," he told tax lawyers in a speech in Washington. Asked by reporters later to elaborate on any litigation, Corwin declined to
comment. But tax lawyers said the references to stateless income and profits
held offshore could signal a new enforcement approach by the IRS. "I have not heard the IRS use the term before," Edward Kleinbard, who coined the "stateless income" phrase in a 2007 research paper, said in a telephone interview.
By “stateless
income,” I mean income derived by a multinational group from business
activities in a country other than the domicile of the group’s
ultimate parent company, but which is subject to tax only in a jurisdiction
that is not the location of the customers or the factors of production through
which the income was derived, and is not the domicile of the group’s parent
company. Stateless income thus can be understood
as the movement of taxable income within a multinational group from high-tax to
low-tax source countries without shifting
the location of externally-supplied capital or activities involving third
parties. Stateless persons wander a hostile globe, looking for asylum; by
contrast, stateless income takes a bearing for any of a number of zero or
low-tax jurisdictions, where it finds a ready welcome.
As an
example, a U.S. firm that sells software in Germany earns stateless income when
through structuring the added value from the sales to German consumers is taxed
in Ireland rather than
Germany
or in the U.S. where the parent company resides. The
same analysis would apply to a German firm whose income from sales to U.S. or
French customers comes to rest for tax purposes in Luxembourg.
Concern over stateless income was raised in May when the Senate Permanent Subcommittee on Investigations released a report that found Apple Inc avoided $9 billion in U.S. taxes in 2012 using a strategy involving three offshore units with no discernible tax home or "residence."
Companies that avoid taxes say they are doing nothing illegal, but are taking
advantage of breaks offered by governments to create jobs and business.
The repatriation of profits has been a top concern for U.S. companies, which
collectively have more than $1.5 trillion sitting offshore. Most say they keep
the money there to avoid the taxes they would face by bringing it home.
The IRS official's comments came days after the G20, a group of leading world
economies made up of 19 countries plus the European Union, voiced support for a
fundamental reassessment of the rules on taxing multinational corporations.
On July 19, the Organization for Economic Co-operation and Development, which
advises the G20 on tax and economic policy, released an action plan that said
existing national tax enforcement regimes do not work. The plan took aim at
loopholes used by companies such as Apple and Google Inc to avoid billions of
dollars in taxes.
"We must address the persistent issue of 'stateless income,' which
undermines confidence in our tax system at all levels," U.S. Treasury
Secretary Jack Lew said in a statement on July 19 following the OECD report.
WASHINGTON, July 24 (Reuters) - The U.S. Internal Revenue Service
is pursuing tax enforcement cases against companies over the issue of
"stateless income," a senior agency official said on Wednesday in a
reference to corporate profits that are not taxed by any country.
Erik Corwin, an IRS deputy chief counsel, said there were
international tax disputes with companies, "most involving consequences of
complex restructurings designed either to create stateless income or to affect
a tax efficient repatriation."
"So those are a family of cases that are in the pipeline and
being looked at," he told tax lawyers in a speech in Washington.
Asked by reporters later to elaborate on any litigation, Corwin
declined to comment. But tax lawyers said the references to stateless income
and profits held offshore could signal a new enforcement approach by the IRS.
"I have not heard the IRS use the term before," Edward
Kleinbard, who coined the "stateless income" phrase in a 2007
research paper, said in a telephone interview.
He is a former chief of staff to the congressional Joint Committee
on Taxation and now a professor at the University of California.
Concern over stateless income was raised in May when the Senate
Permanent Subcommittee on Investigations released a report that found Apple Inc
avoided $9 billion in U.S. taxes in 2012 using a strategy involving three
offshore units with no discernible tax home or "residence."
Companies that avoid taxes say they are doing nothing illegal,
but are taking advantage of breaks offered by governments to create jobs and
business.
The repatriation of profits has been a top concern for U.S.
companies, which collectively have more than $1.5 trillion sitting offshore.
Most say they keep the money there to avoid the taxes they would face by
bringing it home.
The IRS official's comments came days after the G20, a group of
leading world economies made up of 19 countries plus the European Union, voiced
support for a fundamental reassessment of the rules on taxing multinational
corporations.
On July 19, the Organization for Economic Co-operation and Development,
which advises the G20 on tax and economic policy, released an action plan that
said existing national tax enforcement regimes do not work. The plan took aim
at loopholes used by companies such as Apple and Google Inc to avoid billions
of dollars in taxes.
"We must address the persistent issue of 'stateless
income,' which undermines confidence in our tax system at all levels,"
U.S. Treasury Secretary Jack Lew said in a statement on July 19 following the
OECD report. (Reporting by Patrick Temple-West; Editing by Howard Goller and
Andre Grenon)
Liechtensteinische Landesbank is close to reaching a settlement with the
US Department of Justice, which is threatening to prosecute it for allegedly
abetting tax evasion by American clients.
LLB would become the third European bank, after Switzerland's UBS and Wegelin, to settle with U.S. authorities clamping down on offshore banks they accuse of helping wealthy Americans to avoid paying tax.
The tiny European principality of Liechtenstein has been quicker than Switzerland to succumb to pressure on its banking secrecy laws, but its banks have struggled with the resulting drop in client assets.
LLB now expects the settlement to
cost it up to CHF47 million (USD50 million), rather than the CHF16 million
originally budgeted.
In March it announced plans for a 25 per cent staffing cut
following the closure of its Swiss operation.
A petition of nearly 4,000 practitioner signatures has gone to the IRS to urge it to reverse its decision to retire two e-Services products used to file disclosure authorizations and resolve IRS account problems.
According to New River Innovation, the makers of Beyond 415, a Web software designed to help practitioners with best practices and automation for post-filing work and the entity that submitted the petition, “An overwhelming number of practitioners were upset and disappointed to learn that they would lose the convenience of interacting with the IRS electronically.”
"Overwhelming" practitioner response to this issue, according to New River, “spurred a grassroots movement to petition the IRS to abandon its plans to retire the e-Services products or replace the products with other electronic solutions. Various tax professional associations are also pushing the IRS to reconsider its decision.”
Disclosure Authorization, in particular, is popular among practitioners because it offers an efficient alternative to filing authorizations with the IRS Centralized Authorization File unit, which experiences long average processing times, New River added in a statement.
"This is a critical component to help advisors get their taxpayers clients right with the IRS", said Ronald A. Marini, Esq. of Marini & Associates, PA a Nationwide Tax Resolution Law Firm.
