Tag Archive for Tax Blog

Employment Taxes And The Self-Employed Global Worker – So “Un”Happy Together – Part IV (1)

A Lesson for the Ages: If You Can’t Beat Them Join Them –

Because U.S. citizens working abroad do not have the luxury of escaping U.S. self-employment taxation by forming a foreign entity and because no special exemptions exist for overseas companies, the techniques available for avoiding U.S. self-employment taxation are the same for self-employed individuals working abroad as they are for self-employed individuals working inside the United States. Self-employed individuals working abroad should turn their attention to forming a U.S. entity, such as an S corporation.

A popular technique for the small businessperson to avoid self-employment taxation is to Read More

Written by | Posted in International

7 Habitual Mistakes Companies Make – Chapter 7 (4)

TaxConnections Blog Post
Communication to Eliminate Tax Risk –
Numbers Get You into Trouble

TAKE THE CASE of Equinox Ltd. (a fictitious name for the real company). It had garnered up thousands of VAT input tax credit invoices, with which it had claimed millions of dollars worth of input tax credits. The VAT legislation required Equinox Ltd. to ensure that the VAT number of suppliers was on all tax invoices. This also meant that the VAT number had to be correct.

After a while, the IRS conducted a VAT audit and reviewed a batch of tax invoices for a specified period. It became obvious quite quickly that all the tax invoices from one Read More

Written by | Posted in Tax Risk Management

TaxConnections Announces 45-Day Trial Membership for Tax Professionals – Free Advertising!

TaxConnections is pleased to announce 45-Day Free Trial Memberships for Tax Professionals! We welcome tax advisors to experience the opportunities to acquire new business and increase sales and revenue through www.taxconnections.com. We are grateful for our members who have been with us from the ground up and now find themselves benefiting from new tax business on our site. We receive private messages from tax professionals weekly excited about the new clients and business now finding them on TaxConnections for free!

Kat Jennings, Founder and CEO stated “One of the first questions people ask us is how we make money! We tell them our goal is to make certain that the 2 Billion people searching the web for tax help each year can find a tax advisor for free – in one click. The Read More

Written by | Posted in TaxConnections

A Collection… The Humorous Side of Tax… (4)

♦ In 1952, Joseph Nunan., IRS commissioner from 1944-47 was busted for evading taxes. It turned out that Nunan had won a $1,800 bet that Harry Truman would win the presidential election but failed to report his winnings to the IRS. Source: Chicago Tribune

♦ A dog who thinks he is a man’s best friend is a dog who obviously has never met a tax lawyer. Fran Lebowitz Social Studies, 1981

♦ What’s the difference between an Revenue Agent and a soldier? The soldier jumps to orders and the Revenue Agent jumps to conclusions.

♦ You know, gentlemen, that I do not owe any personal income tax. But nevertheless, I send a small check, now and then, to the IRS out of the kindness of my heart. David Rockefeller Read More

Written by | Posted in Tax Humor

Think You Got Game? Try Solving A Criminal Tax Problem – Part IV

Question # 4: What affirmative defenses might Jack and Janet assert?

See Part I, Part II, Part III, and Part V

a. Cash hoard defense: Jack and Janet had $ 16,000 lying around, which presumably funded some of their expenditures.

i. The government would counter that by asking, “When did you acquire that $ 16,000? Did you have such great years prior to 2004 that you wound up saving $ 16,000?”

ii. The government would want to look at what was going on with Jack and Janet financially. Did they have unpaid debts or did they file for bankruptcy? Both are inconsistent Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

The Tax Non-Compliant American Abroad: What Are Your Choices? Part IV

“Streamlined” Procedure

Perceiving the various problems with the aforementioned options, the Internal Revenue Service announced the “Streamlined Procedure” – a friendlier and less costly approach to bring non-compliant Americans living overseas back into the tax filing system.

Here are the major points:

• Taxpayers will be required to file only 3 years of back tax returns and 6 years of FBARs, and if IRS agrees that the taxpayer is eligible for the Streamlined Procedure, no penalties will be assessed for the late filings. Read More

Written by | Posted in Expatriate • FATCA • FBAR • Individual • IRS • Tax Fraud/Evasion/Crimes

Form Over Substance – Go For Two

Our firm receives questions on a regular basis from taxpayers and their CPA’s alike regarding businesses that provide both services and tangible personal property. In most states, tangible personal property is subject to sales tax while the sales of services is not. Alternatively, a similar question comes in with real property improvement contractors that sell some tangible personal property, some installation, and some real property contracts with installation. The question is even more pressing in the case in which the taxpayer is a real property improvement company that has significant sales to tax-exempt or governmental entities. The issue remains the same, how does the taxpayer exempt the service or minimize the sales tax ramifications in their business?

In this simple example, consider an interior design company. In most states the sale of Read More

Written by | Posted in Real Estate • Sales/Use Tax

7 Habitual Mistakes Companies Make – Chapter 7 (3)

TaxConnections Blog Post
Communication to Eliminate Tax Risk –
Missed Communication –

THE LEADING CHARACTERS in this special report have been business owners, the BO/CFO, the tax manager, and the legal team. Much has been written about the formation of the tax team and the interaction with the outside advisors and other key participants. Hell, even communication with the CEO, the board, and the audit committee has been suggested.

Why then a chapter dedicated to communication to eliminate operations tax risk?

The fact is that historically in-house tax compliance departments have formed part of an Read More

Written by | Posted in Tax Risk Management

Employment Taxes And The Self-Employed Global Worker – So “Un”Happy Together – Part III (3)

Recommendations to Assist Self-Employed U.S. Citizens Working Abroad Avoid or Reduce Self-Employment Taxes and Social Security Taxes – continued
c. Forming a Foreign Affiliate of an American Employer

A more practical solution for the self-employed U.S. citizen seeking to avoid U.S. self-employment and social security taxation is to form a foreign affiliate of an American employer. The term “foreign affiliate” is defined in two sections of the IRC: 26 U.S.C. 3121(l)(6) and 26 U.S.C. 3121(l)(8). Under 26 U.S.C. 3121(l)(6), a foreign affiliate of an American employer is defined as any foreign entity in which an American employer has at least a 10% interest. This 10% interest is determined by a 10% ownership of the stock of Read More

Written by | Posted in International

Think You Got Game? Try Solving A Criminal Tax Problem – Part III

Question # 3: What holes do you perceive in the case and how should they be filled?

See Part I and Part II.

a. The government should check to see if the IRS issued Jack and Janet a 1099 for the dividends and for the sale of stock. If so, the special agent would need to determine who the 1099s were issued to and at what address. Were Jack and Janet living at that address at the time the 1099s were sent? There is a presumption of receipt if the government establishes that the 1099s were mailed to the correct address. What is that important? The receipt of 1099s by Jack and Janet would help the government prove willfulness. In Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

Why Do They Send Corrected 1099s?

About this time of year (and for the next month or so), you might receive a corrected Form 1099 from your broker. Despite presumably their best efforts it is common for some types of investments to make corrections, especially when it comes to allocating the fund income between dividends, qualified dividends, capital gain distributions, and nontaxable return of capital. So why does that happen and what can you do to avoid problems with the Internal Revenue Service?

It happens because mutual funds are complicated. A mutual fund is made up of lots of other investments, so before the mutual fund knows its own income for the year they need to receive that information from the various investments. Then the mutual fund needs to aggregate all of that information and give the info to your broker. Allocating everything Read More

Written by | Posted in Income Tax • Individual

Pay Your Tax Or Get A Credit Rating Downgrade!

According to Nassim Kadem’s article in today’s Australian Review (13 March 2014), the Australian Taxation Office (ATO) has floated the idea of having outstanding tax debts listed by the personal credit rating agencies. This would require a change to the secrecy provisions of relevant taxation statutes.

However, in the last several decades, these provisions have been considerably watered down to accommodate information exchange between the ATO and various Australian and international government agencies. Accordingly, it might be expected that Australia’s Parliament will not be averse to the ATO suggestion.

ATO Second Commissioner Geoff Lepper was appearing before a Parliamentary hearing Read More

Written by | Posted in Australia/Oceania • Individual
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