Archive for March 31, 2014

IRS Released Revised Form W-8BEN-E For Entities

Earlier, we posted “IRS Revised Form W-8BEN For Individuals – What Form Do You Use For Entities?” Where we discussed that the Internal Revenue Service (IRS) had released revised IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (Individuals)).

The IRS Instructions for Form W-8BEN provided that Form W-8BEN IRS Form W-8BEN is now used exclusively by individuals and Entities should use IRS Form W-8BEN-E which was still in draft form.

We advised that taxpayers should use the old W-8BEN for entities, until the new one (coming out soon) for entities, W-8BEN-E comes out. Well the new Form W-8BEN-E has Read More

Written by | Posted in FATCA • IRS

VAT Consequences For I.T. Companies In Ireland – Part I

For many businesses moving to Ireland, especially I.T. companies, a considerable amount of research and planning into our tax regime is usually carried out in advance. From experience, however, the question these companies rarely ask themselves is “what are the key VAT issues affecting our company if we locate to Ireland?

The current Irish VAT rules are as follows:

• The place of supply for businesses established in the E.U. who provide electronically supplied services to private consumers within the E.U. is the E.U. member state in which the supplier is established. For example, if an I.T. company established in Ireland supplies digital materials via the market to a private consumer living in France, the place Read More

Written by | Posted in Europe, Middle East • VAT

7 Habitual Mistakes Companies Make – Chapter 8 (1)

TaxConnections Blog Post
The Protectors for Big Business
Introducing the Protectors

THE TERMINOLOGY MAKES one think of these acronyms as famous sporting teams. But as famous sporting teams command attention, so do these regulations insofar as they impact on tax risk. What follows is a brief summary of these regulations, their impact on tax risk management, and why an orchestrated Tax Risk Management process will help with overall regulatory compliance.

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Written by | Posted in Tax Risk Management

The IRS Will Soon Be Asking Questions PART I — Nominees and FATCA

In my tax practice in the Middle East, it is very common for family members to have legal title to assets they do not own. For example, it is common for a parent to have the eldest son hold legal title to property in which the child has no beneficial interest whatsoever; sometimes the nominee relationship is entered into in an attempt to circumvent forced inheritance shares of Sharia law, or to avoid probate.

What is a Nominee and How Does a Nominee Relationship work?

A nominee is a person or entity named by another party (called a “nominator”) to hold title to a certain property. The nominee is the registered owner of the property but he is not the beneficial owner. All rights and incidents of true ownership belong to the beneficial owner and essentially, the nominee stands in a position of trust to follow the orders of the Read More

Written by | Posted in Expatriate • FATCA • FBAR

A Collection… The Humorous Side of Tax… (9)

♦ The best way for the Government to maintain its credit is to pay as it goes-not by resorting to loans, but by keeping out of debt-through an adequate income secured by a system of taxation, external or internal, or both. — President William McKinley’s First Inaugural Address

♦ Taxes are not good things, but if you want services, somebody’s got to pay for them so they’re a necessary evil. Michael Bloomberg

♦ The tax laws are written by men with considerable net worth, and with little understanding of what wage earners must do to make ends meet. Martin L. Gross

♦ Q. Did you hear about the new sushi bar that caters exclusively to lawyers? Read More

Written by | Posted in Tax Humor

IRS Revised W-8BEN For Individuals – What Form Do You Use For Entities?

The Internal Revenue Service has released revised IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (Individuals)). The IRS has also released revised IRS Instructions for Form W-8BEN .

Generally, certain foreign persons are required to provide IRS Form W-8BEN to their withholding agents or payors with regard to certain income payments, including fixed or determinable annual or periodical income (FDAP income) from US sources, in order to:

• Establish that such persons are not US persons;

• Claim that they are the beneficial owners of the payments; and Read More

Written by | Posted in IRS

Retirement Plan Recharacterization – Part I

Retirement Plan Recharacterization means according to Reg. Sec. 1.408A-5 that if you make a contribution to one type of IRA (Individual Retirement Account)  you may be able to treat the contribution as though it had been made to a different type of IRA. This is basically considered a correction that can be significant for a wide variety of reasons.

One common reason that I’ve seen is if you converted a traditional IRA to a Roth IRA you may want to recharacterize the Roth IRA back to a traditional IRA if the value of the assets in the Roth IRA has declined between the conversion date and the due date for the tax return reporting the conversion.

This is because the amount you would have to include in income as a result of the Read More

Written by | Posted in Individual • Retirement

A Collection… The Humorous Side of Tax… (8)

♦ A CPA goes into a pet shop to buy a parrot. The shopkeeper shows him three identical parrots on a perch and says, “The parrot on the left costs $500.” “Why does that parrot cost so much?”, asks the CPA. “Well”, replies the owner, “it knows how to do complex audits.” “How much does the middle parrot cost?”, asks the CPA. “That one costs $1,000 because it can do everything the first one can do plus it knows how to prepare financial forecasts.” The startled CPA asks about the third parrot, to be told it costs $4,000. Needless to say, this begs the question, What can it do? To which the owner replies, “To be honest, I have never seen him do a darn thing, but the other two call him Senior Partner.”

♦ Tax law is a funny thing. I think it fair to say that most CPAs know something about the federal income tax; many if not most lawyers do not. –Bernard Wolfman Read More

Written by | Posted in Tax Humor

7 Habitual Mistakes Companies Make – Chapter 7 (11)

TaxConnections Blog Post
Communication to Eliminate Tax Risk –
Communication and Beyond Tax Risk Management

IN AN ATTEMPT to address the occurrence of material weaknesses under SOX 404 (dealt with in chapter 8), and in an attempt to limit these exposures, Margaret S. Thomas CPA in her lecture notes on “Sarbanes-Oxley 404: Compliance and Beyond,” 2006 states that “an ethical cultural environment should be created in any business. Management should create policies that create a positive environment for employees, without fear of reprisal, to report unusual occurrences. All incidents of alleged fraud or discrepancies must be investigated promptly and action taken. Employees must be encouraged to come forward with any information that may have an impact on the business.” Read More

Written by | Posted in Tax Risk Management

Top 5 2013 US Expat Tax Updates for Americans Living Abroad

The tax season is upon us and as expats begin the arduous task of gathering documents for their US tax preparation, it seems like a good time to provide an overview of the 2013 tax changes that may impact expats. The most important impact may be saving money, so let’s take a closer look!

1)     The Foreign Earned Income Exclusion (FEIE)

We love that the Foreign Earned Income Exclusion adjusts for inflation each year! Last year the FEIE was $95,100 and this year it jumps to $97,600. This means you deduct the first $97,600 you earn—you could eliminate your entire US tax liability with this credit alone. However, it’s important to remember that you must ‘qualify’ as an expat to be Read More

Written by | Posted in Affordable Healthcare Act • Expatriate • FATCA • FBAR

How To Surpass The Client Acquisition Strategies of The Big Four

For years the Big Four have operated under a shroud of secrecy about the people working at their firms. What I mean by this is that if you go to any Big Four site and type in any of the firms search bars “International Tax Partner” you come up with a referral to no one! You are left with the time consuming process of researching to make calls to find someone who knows someone, who knows someone, and many people ultimately get frustrated and walk away from Big Four sites with no results. The thinking is “someone will recruit our people” but the reality is people are already on other media sites. However, you must ask yourselves can anyone find and connect with your “international tax partners” without paying another site to send an email to someone out of their network. The point is that all this blocking of your tax expertise is also blocking business to your tax services providers. Read More

Written by | Posted in TaxConnections
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