Increased Surge in Expats has Increased the Need for International Tax Advice

According to International Investment, the number of expats hits a record high of 258 million, this increasing global movement of people is driving significant demand for international tax advice. 

Quoting the International Organization of Migration, one in every 30 (about 258 million people) were living outside their country of origin in 2017. 

That is both a record high and a number that has beaten all expectations. A 2003 projection anticipated that by 2050, there would be around 230 million based outside their birth nation. But the latest projection has been dramatically revised upwards, there will be more than 405 million living away from their country of birth by 2050.

The demand for international tax advice is set to grow further still as the world becomes increasingly globalized and as the cross-border regulatory landscapes continue to evolve at a faster pace.

 

This can be attributed, we believe, to three key factors: 

1. First, is the increasing movement of people. Whether driven by geopolitical, work or lifestyle reasons, more and more individuals are on the move around the world.  In addition - and despite the rhetoric of some populist politicians - globalization in the world of trade and commerce is here to stay and is, if anything, gaining momentum as it encourages economic growth, creates jobs, makes firms more competitive, and lowers prices for consumers," he added.
2. Second, since the global financial crisis both individuals and companies have become more financially literate and aware of the importance of specialist financial advice, especially when it comes to cross-border affairs. and
3. Third, the reporting and tax filing requirements are increasing in most jurisdictions.  For instance - and this is just one example - in the US where the Foreign Account Tax Compliance Act, or FATCA, is almost universally recognized as being burdensome, onerous and complex."

"The enquiries are coming from both internationally-mobile individuals and firms who are seeking advice on compliant and up-to-date tax filing, residency issues, inheritance tax, self-assessment, property tax structuring and disclosures, national insurance contributions, trusts and wills," director of deVere Tax Consultancy, Mitch Young, said.

 

Need International Tax Advice?

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).

 

 

 



 

 

 

 

Tax Court Decision May Create Challenges To Deduction Denials for Legal Marijuana Businesses!

According to Law360, a recent U.S. Tax Court decision may open up a new avenue to challenge a tax code provision that prohibits deductions and credits for marijuana businesses, as several court judges said the provision may amount to an unconstitutional excessive penalty.

Earlier this month, the Tax Court in an opinion with multiple partial dissents, upheld a $1.2 million tax deficiency for a California medical marijuana company, rejecting its arguments that Internal Revenue Code Section 280E is a penalty and an unconstitutional excessive fine that violated the Eighth Amendment.

Section 280E, which forbids a business to take credits or deductions when trafficking in a controlled substances, was enacted under Congress’ “unquestionable authority” pursuant to the 16th Amendment , which grants Congress the power to collect taxes on income, the majority opinion said. Section 280E does not violate the Eighth Amendment , which prohibits excessive fines, because the disallowance of deductions is a matter of “legislative grace,” not a penalty, the opinion said.

However, in an opinion dissenting in part, Judge David Gustafson said he would have held Section 280E unconstitutional because the 16th Amendment authorizes Congress to tax “income,” which is a gain or profit, but the disallowance of all deductions under Section 280E results in a tax on something that is different from someone's “income” within the meaning of the 16th Amendment.

 

“Even if it’s not an excessive fine, the fact that it’s a fine means it’s effectively a penalty for crime,” he said.

“That puts 280E in a whole new light.

It’s no longer a tax; it’s a penalty."

 

Judge Gustafson also said in his dissent that the Tax Court's reliance on the Tenth Circuit’s decision in Alpenglow Botanicals LLC v. United States , which upheld the IRS’ disallowance of $50,000 in business expenses for a Colorado marijuana dispensary under Section 280E, was not persuasive because the Tenth Circuit did not perform an Eighth Amendment constitutional analysis.

Since then, 10 states have legalized marijuana, Illinois is slated to legalize cannabis beginning Jan. 1, 2020, and 33 other states and Washington, D.C., have permitted the use of medical marijuana. As marijuana use becomes more mainstream, Section 280E is effectively penalizing businesses trying to legally operate at the state level, according to Rachel K. Gillette, who is chair of the cannabis law group at Greenspoon Marder LLP.

Have a Tax Problem?

 

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).

 

 

 

 

 



 

2nd Circ Orders Trump's Accountant To Hand Over Tax Returns

According to Law360, President Donald Trump and his accounting firm must comply with a subpoena from the Manhattan district attorney and hand over tax returns, the Second Circuit ruled on November 4, 2019, in a decision that will likely be appealed to the U.S. Supreme Court.

The Second Circuit disagreed with U.S. District Judge Victor Marrero of the Southern District of New York that the federal court should abstain from the case under the U.S. Supreme Court's 1971 case Younger v. Harris, which bars federal courts from interfering in matters a state court can handle.

The Second Circuit said that even though the Younger case does not apply, presidential immunity from the state criminal process does not extend to investigations such as grand jury subpoenas at issue in the case.

Manhattan District Attorney Cy Vance is seeking Trump's personal tax returns and other records from Mazars USA LLP as part of an investigation into hush-money payments to two women alleged to have had affairs with Trump, Stephanie Clifford, also known as Stormy Daniels, and Karen McDougal, and how those payments were recorded in the Trump organization's records, the district attorney's office has said. The case is Trump v. Vance Jr., case number 19-3204, in the U.S. Court of Appeals for the Second.

Being Audited by the IRS?

 



Contact the Tax Lawyers at
Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).

 

 

 

 

IRS Auditors Set to Audit Companies that Owe Repatriation Tax

The Internal Revenue Service said on November 4, 2019 that it would begin examinations of U.S.-based multinational companies’ 2017 and 2018 returns to ensure they comply with the repatriation tax provision of the tax overhaul enacted two years ago.

To promote compliance with Internal Revenue Code Section 965 , the IRS said it would start scrutinizing affected multinationals’ returns as part of its campaign announced in July 2018 on that facet of the Tax Cuts and Jobs Act .

The agency said its focus will start with examining 2017 returns and “generally require” looking at companies’ 2017 and 2018 filings. In addition to examinations, the campaign will provide technical assistance to IRS teams working on Section 965 matters, with a focus on identifying and addressing taxpayer populations with potential material compliance risk, according to the agency’s announcement.


The agency also said the audit could expand beyond reviewing taxes paid on offshore profits, it could trigger an examination of other changes companies made to their tax strategies after the 2017 law, which cut the corporate rate to 21% and overhauled the international tax rules.

“It is anticipated that returns selected as part of the 965 campaign will also be risked and, if appropriate,
examined for other material issues,
especially issues related to”
corporate planning
in response to the tax law,

the IRS said on its website, referring to the code section 965.

Affected companies were given the option of paying the tax interest-free over eight years, though as November 4, 2019's notice said, the “vast majority” of Section 965 liability has been expected to arise on corporate returns for 2017 and 2018.

The LB&I division currently has 53 active compliance campaigns listed on the IRS website.

 

Being Audited by the IRS?

 

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).

 

 

 

 

 

 

 

 

 

 

Sources:

 

IRS

 

Law360

 

Bloomberg

 

 

 

NRAs Spending > 120 Day in the US May Have US Tax Liabilities

Spending more that 3 months a year in the U.S. may trigger taxable residency without realizing it, bringing with it the additional responsibility of financial reporting obligations and potentially creating tax liability for any affiliated offshore companies.

You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:

1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
   • All the days you were present in the current year, and
   • 1/3 of the days you were present in the first year before the current year, and
   • 1/6 of the days you were present in the second year before the current year.

Example:

You were physically present in the U.S. on 120 days in each of the years 2012, 2013, and 2014. To determine if you meet the substantial presence test for 2014, count the full 120 days of presence in 2014, 40 days in 2013 (1/3 of 120), and 20 days in 2012 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2014.

People who unknowingly pass this threshold may be insulated from U.S. income taxes, where there country of residence as an income tax treaty with the U.S., but they’re still considered U.S. residents for other purposes like information reporting.

As explained in IRS Publication 519 (U.S. Tax Guide for Aliens): Effect of Tax Treaties… If you are a dual-resident taxpayer, you can still claim the benefits under an income tax treaty. A dual-resident taxpayer is one who is a resident of both the United States and another country under each country’s tax laws. The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tie-breaker rule). If you are treated as a resident of a foreign country under a tax treaty, you are treated as a nonresident alien in figuring your U.S. income tax. For purposes other than figuring your tax, you will be treated as a U.S. resident...

Where a foreign resident is able claim Treaty Tiebreaker provision, they may still need to file:

1. Form 114 - Report of Foreign Bank and Financial Accounts (FBAR),  
2. Form 5471- Information Return of U.S. Persons With Respect  to Certain Foreign Corporations
3. Form 8938 - Statement of Specified Foreign Financial Assets (where treaty tiebreaker claim is not made on timely file return). and
4. Forms 3520 or 3520-A - Annual Reports Regarding Foreign Trust.

The penalty for failing to file any of the above mentioned forms is: 

1. Form 114 is $10,000 where the IRS believes that the taxpayer didn't intentionally fail to file the FBAR. However, where the IRS believes the omission was willful then the penalty for failing to file Form 114 is the greater of $100,000 or 50% of the balance in the foreign account.
2. For Form 5417 & 8938 the IRS may assert a $10,000 penalty for each failure for each applicable annual accounting period, plus an additional $10,000 for each month the failure continues, beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $60,000.
3. Form 3520: Greater of $10,000 or the following (as applicable):

• 35% of the gross value of any property transferred to a foreign trust for failure by a U.S. transferor to report the creation of or transfer to a foreign trust. 
• 35% of the gross value of the distributions received from a foreign trust for failure by a U.S. person to report receipt of the distribution.
• 5% of the gross value of the portion of the foreign trust's assets treated as owned by a U.S. person under the grantor trust rules (Sec. 671 through 679) for failure by the U.S. person to report the U.S. owner information.
• Form 3520-A: Greater of $10,000 or the 5% penalty (discussed above).

This is just one more reason that NRA's should consult with an experienced attorney before coming to the US for any long period of time and certainly for pre-immigration planning!

Want To Come To The US Hassle Free?

 

Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid (888) 882-9243

 



 

 

 

 

 

  

Trump's Change of Domicile from NY to Fl Will Save Him $$$

Donald Trump has announced that he intends the change his residence from New York to Florida. Many others wealthy individuals know that this change of domicile results in:

1. $0 in Florida State income tax, down from top rates in New York state of 9% and New York City of 4%.
2. $0 in Florida Estate tax, down from New York’s estate tax, which can be as high as 16%, and
3. Florida provides significant asset protections via its generous homestead exemption laws.

But first Trump must be abandon his New York domicile and he will most likely be subject to a NY tax audit, when he claims loss of domicile on his New York tax returns.

In such an audit, New York will likely look to see if Trump has stopped spending much time in New York, which for the time being it appears that he has, and how much time and connection he has now established in Florida. That includes not just time spent in Florida, but things such as registering to vote in the state, setting up bank accounts, and visiting Florida doctors and other professional people in Florida.

You need to prove by clear and convincing evidence that you not only left first state, New York, but relocated to the new state, Florida.

 

Need To Change Your Domicile For Tax Savings?

 

Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid (888) 882-9243

 

Court Told IRS Can't Summons Bank Docs In French Probe- But in Reality They Can!

According to Law360, a third-party IRS summons on a U.S. citizen's bank records for an investigation into a French company's tax liabilities in France violates federal tax laws because it's not connected to a U.S. debt, an Indiana federal court has been told.

The summons, issued to JPMorgan Chase & Co. seeking Joseph Dadon's bank records, should be quashed because it violates the Internal Revenue Code by requesting information on a tax liability not connected with the U.S., Dadon told an Indiana federal court in an amended petition filed Tuesday.
Under IRC Section 7602(a) , a summons can be issued to determine only if a person owes the U.S. taxes, Dadon said.

The IRS issued the summons to get information on potential value-added taxes that the French company, Société Française de Négoce International, owed the French government, and such a summons is not authorized by U.S. law, Dadon argued. The summons “was not issued in connection with any investigation relating to taxes due to the United States,” the petition said. The case is Joseph Dadon v. U.S., case number 1:19-cv-03862.

But Mr Dadon's attorney must not have read our May 21, 2019 post "Another IRS Summons on Behalf of a Foreign Government" where we discussed that on March 13, 2018 we posted District Court upholds Another IRS Summons Issued Pursuant to a Tax Treaty Request  discussing that a district court had upheld a summons that IRS issued to an American law firm, pursuant to a request from the French tax authorities, with respect to transfers of funds made by an alleged French citizen to a client trust account maintained by the law firm. (Franck Hanse v. US, Case No. 1:2017cv04573).

Furthermore, we previously posted on August 1, 2013 Federal Courts Authorize John Doe Summonses Seeking Identities of Credit Card Use For Norweign Tax Authority!  where we discussed that federal courts in Minnesota, Texas, Pennsylvania, Oklahoma, Virginia and California had entered orders authorizing the Internal Revenue Service (IRS) to serve John Doe summonses on certain U.S. banks and financial institutions, seeking information about persons who have used specific credit or debit cards in Norway. 
We also discussed how the DOJ, petitioned the U.S. District Court for the Western District of North Carolina to authorize IRS summonses to uncover the identities of Finnish residents using U.S.-issued payment cards in Finland. The DOJ and IRS are pursuing this matter under the U.S.-Finland tax treaty and at the request of the Finnish government.

“Our continued success in combatting Offshore Tax Noncompliance has been helped by the Assistance We Receive through the Network of Tax Treaties Around the Globe,” said IRS Commissioner Charles Rettig. 

 

 

 

“Yesterday’s effort reflects that the U.S. will return this help by working under the law with tax administrators in other nations to help them in their fight against tax evasion and avoidance. A global economy should not be allowed to serve as a possible vehicle for tax evasion in any country.”. 

 

Becoming A Believer That Fiscal Transparency Really Exists?

 

Have Undeclared Income from an Offshore Account?

Want to Know What OVDP Program is Right for You?

 

 

Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid (888) 882-9243