Tag Archive for Tax Blog

Hold On To Your Seats!

The Dawn of A New Day

The IRS just recently announced changes to its offshore voluntary compliance programs and it more than likely will affect you! The changes that were announced on June 18, 2014 are expected to help both taxpayers living abroad and those living within the United States come into compliance with their U.S. tax obligations.

The changes are two-fold and affect two classifications of taxpayers: those that have willfully failed to disclose foreign accounts and those who have done so innocently or without their conduct rising to the “willful” level. Specifically, the changes include an expansion of the streamlined filing compliance procedures announced in 2012. And Read More

Written by | Posted in FATCA • IRS • OVDP

The World of Tax Is About To Change – Be Part of A Community of Tax Advisors Creating The Most Exciting Shift In Selling Tax Services Online

In the weeks ahead, after nearly four years of development, you will experience a very exciting shift in accessing tax education and information. Our 3000 tax advisor members from more than 75 countries are now starting to upload their tax education videos for pay per view online. We have aggregated to one platform hundreds of videos that educate tax professionals and consumers. If you are a tax professional and want to become a member of TaxConnections join us now and participate in this stunning shift in online tax education. You will be able to generate revenue with your tax expertise through an innovative video platform that took us four years to create and complete. We are very excited about the advances we have made for the tax profession to videotape themselves and upload their tax expertise on the TaxConnections platform and be paid. Next week we Read More

Written by | Posted in TaxConnections

The Basics of Offshore Tax Planning For Canadian Corporations – Part 4

Transfer Pricing Issues

As is the case with most major counties, Canada has rules in its tax laws aimed at preventing income from being shifted to other jurisdictions by unreasonable transfer pricing [1].

To date, most of the activity of the CRA and reported tax cases has focused more on inbound transfer pricing issues involving charges by multi-national corporations to Canadian subsidiaries. However, the rules can certainly be applied in connection with outbound tax planning of the type being outlined in this series [2].

If the CRA successfully applies these rules, they could lead to a reassessment of Read More

Written by | Posted in Corporate • International • Transfer Pricing

IRC 1014 And The Significance of Stepped Up Basis In Estate Planning

According to Internal Revenue Code Section 1014 the basis of property acquired from a decedent is the fair market value of the property at the date of the decedent’s death. This is often referred to as stepped up basis and it is profoundly significant for US taxpayers dealing with the myriad of issues surrounding estate planning or tax preferential transfer of assets.

For those of you not used to the term ‘basis’ it generally is defined as the cost or value of an investment, asset or something that is owned, given or inherited at the time it was acquired. It also refers to any investment in improvements made to the asset while you owned it. Read More

Written by | Posted in Estate Planning Tax

Innocent And Injured Spouses – Part 3

Injured Spouse

An Injured Spouse is a spouse who has had part or all of their refund seized due to the debt owed by the non-injured spouse. In order to qualify as an Injured Spouse a taxpayer must meet the following qualifications:

1. File a joint tax return with the non-injured spouse.
2. Have had, or suspect you will have, part or all of your portion of the refund seized due to the other spouses back debts.
3. Not be obligated to pay the other spouses back debts.
4. Have received income reported on the joint return. Read More

Written by | Posted in Individual

FBAR Compliance Is Not Quite Painless, But It Beats The Alternative

It is not illegal to put your money in overseas bank accounts or to have foreign financial interests. It is, however, against U.S. law to hide it in order to avoid paying income taxes. In the past, the IRS was not very successful in going after all that untaxed wealth. According to a 2012 Forbes online piece, the “super rich” were hiding an astonishing $21 Trillion (with a T!) in foreign accounts.

Enter FATCA

In a previous blog, we highlighted how FATCA widened the net in uncovering all that wealth. FATCA is, among other things, the tool the IRS uses to find out about U.S. account holders and about those who abet anonymity by hiding the identity of their owners. Read More

Written by | Posted in FBAR

The Basics of Offshore Tax Planning For Canadian Corporations – Part 3

Active Business Income vs. FAPI

The tax benefits of setting-up an offshore structure and establishing Forco will only be present with respect to income earned by Forco that is considered to be income from an active business. If the income is classified as “foreign accrual property income” (“FAPI”), there will generally be no benefit achieved.

FAPI is a key concept that is part of Canada’s tax system for taxing income earned through “foreign affiliates”. In many respects, FAPI is similar to the US tax concept of “Subpart F income”.

Namely, it is a mechanism aimed at preventing taxpayers from deferring tax on certain Read More

Written by | Posted in Corporate • Expatriate • International

Innocent And Injured Spouses – Part 2

There are two other situations that fall into the realm of Innocent Spouse, the Separate Spouse election and Equitable Relief.

Under the Separate Spouse election (§ Cod. Sec. 6015(c)) a requesting spouse may elect to be treated as if the joint return had been filed separately. The requesting spouse bears the burden of proof and eligibility requirements are very stringent as follows:

1. At the time of the election the requesting individual is no longer married to or is legally separated from the individual with whom the joint return was filed; or
2. The requesting individual was not a member of the same household as the individual with whom the joint return was filed at anytime in the 12 month period ending on the date Read More

Written by | Posted in Individual • IRS

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 3 – 3.3.3)

Posted in sections, this is my Doctoral Thesis of taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

CHAPTER 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.3.3 Abuse of Discretion Read More

Written by | Posted in Africa • Audit

Should I Stay Or Should I Go? – Part 19

Answers to the Most Frequently Asked Questions Regarding OVDP

As a tax attorney specializing in the Offshore Voluntary Disclosure Program (OVDP), nary a day goes by that I don’t get a call from a person inquiring about the OVDP. The questions asked are relatively the same. After a while, I began to make a list of the most frequently asked questions. Below are my answers to them: (final post of questions and answers)

XXIII. Does my case remain within the Voluntary Disclosure Practice even after opting out?

Yes. Therefore, you must cooperate fully with the examiner by providing all requested information and records. In addition, you must pay, or make arrangements to pay, the tax, Read More

Written by | Posted in FBAR • OVDP

Foreign-Owned Business Reporting Requirements

Foreign corporations engaged in business in the United States must comply with particular record-keeping and international tax reporting obligations under the Internal Revenue Code. The code sections pertaining to foreign-owned domestic corporations and businesses also apply to U.S. taxpayers who engage in business with these companies. These rules are enumerated under IRC §§ 6038A and 6038C, which were enacted in the 1980s and later strengthened and expanded throughout the 1990s.

Reporting Obligations Prior to IRC § 6038

Prior to the enactment of IRC §6038A, U.S. parent corporations were required to report transactions that occurred between the corporation and its foreign affiliates and between Read More

Written by | Posted in Corporate • International • United States

Innocent And Injured Spouses – Part 1

Spouses being held liable for their partner’s tax liabilities have given rise to two separate and unique types of relief by legislation and the IRS. These are often confused and misunderstood. We will define both Innocent and Injured Spouses, determine how to qualify for the different types of relief, discuss timing options, and review recent legislation and court cases.

When a couple files a joint tax return they are agreeing that everything on that tax return is true and they are responsible for everything on the return. This is known as joint and several liability, (§ Cod. Sec. 6013(d)(3)) which means that both parties are totally responsible for all of the tax liability on the return both together and separately. Read More

Written by | Posted in Individual
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