Tag Archive for Tax Blog

Will It Happen this Year? A Permanent R&D Credit

The federal income tax credit for certain R&D expenditures (primarily wages and supplies) has been a temporary provision since first enacted in 1981 (it first expired in 1985 and has been extended about 14 times since). The temporary credit seems odd considering the following:

• Every President and probably most legislators since 1985 have called for a permanent credit.

• Unlike most other credits, there is economic justification for the credit beyond only incentivizing R&D in the U.S. There are spillover effects from a company’s R&D activity and the credit helps compensate for them. Read More

Written by | Posted in R&D Credit Services

Lights, Camera, Action And Tax Cut!

Movie Production Incentives (hereinafter “MPIs”) are tax benefits offered on a state-by-state basis throughout the United States to entice, as applicable, in-state film production and post-production activities. The state-by-state legislative histories and policies driving MPIs are clearly aimed at increasing economic growth at the state and local levels through filmmaking and television production throughout the United States while curtailing the departure of movie production to other countries.

While the applicable qualifying production activities vary from state-to-state many common qualified production activities include, but are not limited to, feature films, television series, relocated television series, television pilots and television movies. Furthermore, the structure, type, and size of the incentives vary from state to state. Many MPIs include tax credits and Read More

Written by | Posted in Sales/Use Tax • Specialty Tax Incentives

Too Many FATCA Loopholes?

According to the 175-page bipartisan staff report FATCA’s implementing regulations have created multiple loopholes, without statutory basis, in the disclosure requirements.

Among other problems, the Senate Subcommittee stated that the FATCA regulatory loopholes will:

1. require disclosure of only the largest dollar accounts;
2. permit banks to ignore, in most cases, bank account information that is kept on paper rather than electronically;
3. allow banks to treat accounts opened by offshore shell entities as non-U.S. accounts Read More

Written by | Posted in FATCA • International • Tax Fraud/Evasion/Crimes

Intangible Property – Section 482 And International Financial Centers

Introduction

Inter-company pricing embraces some basic concepts. Those principles emanate from virtues of corporate structures that have related ownership of entities. The dealings between related entities brings into play arms length standards applicable to related entities. (See TaxConnections, April 24, 2014, Introduction to Section 482 and International Financial Centers) These governing guidelines are promulgated by regulation particularly to conduit entities that provide sales, services, personal property, and intangible property entities that compliment global enterprise of a parent or subsidiary. This writing focuses upon the guidelines that establish the borders of intangible property. Read More

Written by | Posted in Corporate • International

Clock Ticking Down – Only Days Left To FATCA Registration

IGA List Expands To 55 (And Mexico IGA Revised)

60 days remain until the July 1st deadline that FATCA’s 30% withholding applies to payments from US sources.

But of immediate importance is the 4 days remaining for foreign financial institutions (FFIs) to register by May 5 with the IRS to obtain a GIIN and to be included on the IRS’ list of participating FFIs in order to avoid the attracting the 30% withholding by US withholding agents.  Yet, as of April 30th, the list of IGAs now to be treated in effect is only, including 28 that have been signed and 27 that have only been agreed in substance.  Firms in the other 100 jurisdictions, many who expected last minute relief, are now in a panic. Read More

Written by | Posted in FATCA

106 Swiss Banks Seek Non-Prosecution from US Justice Department

106 Swiss banks (of approximately 300 total) filed the requisite letter of intent to join the Program for Non-Prosecution Agreements or Non-Target Letters (the “Program“) by the December 31, 2013 deadline.  Renown attorney Jack Townsend reported on his blog on February 14th provided a list of 49 Swiss banks that had publicly announced the intention to submit the letter of intent, as well as each bank’s category for entry: six announced seeking category 4 status, eight for category 3, thirty-five for category 2.  106 was a large jump from the mid-December report by the international service of the Swiss Broadcasting Corporation (“SwissInfo”) that only a few had filed for non prosecution with the DOJ’s program (e.g. Migros Bank, Bank COOP, Valiant, Berner Kantonalbank and Vontobel).

What is the Program for Non-Prosecution Agreements or Non-Target Letters for Read More

Written by | Posted in FATCA • International • IRS • OVDP • Tax Fraud/Evasion/Crimes

Analysis of The New FATCA W-8IMY

On April 30, 2014 the IRS released the new Form W-8IMY (“Form W-8IMY”), formally replacing its 2006 predecessor W-8IMY. This new Form W-8IMY has 28 parts whereas the previous August 2013 FATCA draft W-8IMY only contained 26.  The new 2014 Form W-8IMY is vastly different from the seven-part 2006 predecessor form.

Below is a summary for the W-8IMY.  For a full compliance analysis of the new form W-8IMY and the other potentially required withholding forms see LexisNexis® Guide to FATCA Compliance, Chapter 11 Withholding And Qualified Intermediary, § 11.08 Applicable Withholding Forms, [5] Analysis of Form W-8IMY.

Form W-8IMY is submitted generally by a payment recipient (the “filer”) with non-beneficial Read More

Written by | Posted in FATCA

52 FATCA Agreements… Israel Reached And Australia Signed FATCA Agreements

On Thursday, April 28, 2014, we posted “51 FATCA Agreements and Growing!” where we discussed the IRS’ Announcement 2014-17 which provides that countries that have FATCA agreements “in substance” with the United States will be seen as complying with the law, even if the agreements are not finalized by December 31, 2014.

Since then, Australia signed and Israel Reached Agreement on their FATCA agreement, bringing the total to 52 Countries with United States FATCA Agreements!

31 nations with agreements:

1. Australia Read More

Written by | Posted in FATCA

Understanding The PFIC Rules Without Suffering A Migraine

The PFIC regime was not introduced until 1986. Prior to 1986, U.S. taxation of foreign corporations was strictly tied to control of the corporation held by U.S. persons. This allowed not only the foreign mutual fund to avoid U.S. taxation, but also U.S. persons who invested in the fund. How so?

For starters, the fund itself avoided U.S. taxation because it was a foreign corporation that derived only foreign-source income. The fund was able to avoid the taint of being classified as a controlled foreign corporation, or “CFC” because it was owned by a large number of U.S. and foreign investors, each of whom owned a relatively small percentage.

U.S. investors avoided U.S. taxation in two primary ways. First, the fund paid no dividends. Read More

Written by | Posted in International

eBay To Pay $3 Billion Tax On Foreign-Held Cash

eBay has made a huge decision to bring back as much as $9.7 Billion that had been designated as permanently invested overseas. As eBay made this decision, they had to pay tax on the difference between the United States and foreign tax rates. The tax to bring foreign held cash back to the United States: a staggering $3 billion. Moving the money back to the United States diminished eBay’s First Quarter.

At the end of 2013, eBay announced it has $12.8 billion in cash and investments with $9.7 billion held overseas. Because of this lucrative tax charge to eBay, they are reporting a $2.33 billion first-quarter loss. eBay made a major decision relocating capital to the United States in pursuit of financial growth and new acquisitions. Finance insiders predict Second Quarter revenues of $4 Billion. eBays sister company PayPal continues to draw new users which is Read More

Written by | Posted in Corporate • International • Tax Provision/Tax Reporting

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 2 – 2.2.2)

Posted in sections, this is my Doctoral Thesis on 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

2.2 THE RELEVANT CONSTITUTIONAL PROVISIONS
2.2.2 Bill of Rights
In addition, 7(2) of the Constitution states that: Read More

Written by | Posted in Africa • Audit
« Older Entries   Recent Entries »