Tag Archive for Tax Blog

2015 Fiscal Year Budget Request Released To Congress

President Barack Obama released his fiscal year 2015 budget request to Congress on Tuesday March 4, 2014 and lawmakers will promptly ignore it.

But the annual ritual highlights his policy priorities for the coming year and serves as a Democratic Party manifesto as Democrats seek to draw a contrast with Republicans ahead of congressional elections in November which include Overseas Tax Proposals.

The administration wants new limits on overseas tax avoidance by corporations by seeking to prevent them from playing one country’s tax rules against anothers.

At the moment, big corporations must pay the top 35 percent corporate tax rate on foreign profits, but not until those profits are brought into the country. Read More

Written by | Posted in Corporate • Expatriate • International • Tax Policy

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

II. Social Security Taxes: The Bane of the Existence of Self-employed U.S. Citizens Who Work Abroad –

A hostile environment faces the person who, alone or with one or two others, goes into business for himself. In recent years, various factors have increased the adversity the small businessperson faces. Escalating employment taxes represent a significant barrier to the economic survival of these individuals.

This section explores the self-employment taxes that face a U.S. citizen working abroad as a self-employed individual.

a. The Employment Tax Regime Read More
Written by | Posted in International

7 Habitual Mistakes Companies Make – Chapter 6 (6)

TaxConnections Blog Post
Internal Audits Fix Financial Accounting Problems –
Collusion –

IN A NUMBER of cases, personnel will take advantage of a tax risk weakness to give a benefit in favor of a connected person to the potential detriment of the business. In the absence of strict internal auditing being performed in the area of payroll taxes , opportunities abound for personnel to apply lax standards to taxing benefits or perks granted to certain employees. In other areas, independent contractors will be granted favorable terms, with the minimum deduction or no deduction of payroll taxes, to their benefit, but to the detriment of the business. If any discrepancy arises, the IRS will look to the business to make good any shortfall. Read More

Written by | Posted in Tax Risk Management

Employment Taxes And The Self-Employed Global Worker – So “Un”Happy Together – Part I (4)

I. Domestic Administration of Social Security Taxation and the Scope of International Coordination – continued
c. The Third Aspect: Taxation of Benefits

Up to 85% of social security benefits received by United States citizens and residents are included in income and subject to taxation, depending on the level of benefits, tax filing status, and other income received. For non-United States citizens and non-residents, income tax is generally withheld by the payor of benefits at a rate of 30% of 85% of the gross benefit amount, or an effective rate of 25.5%.

This jurisdictional overlap is typically dealt with by tax treaties. If not for tax treaties, Read More

Written by | Posted in International

Currency Conversion: Timely, Late, Amended FBAR And Form 8938

It’s that time of year when we all worry about getting material ready for preparation of United States tax returns and related information return filings. During the course of this information gathering a taxpayer may discover that some forms were completed incorrectly in the past and should be amended or, perhaps the taxpayer discovers a filing should have been done, but was not. Two very important forms for US persons having overseas accounts or assets are the so-called “FBAR” short for “Report of Foreign Bank and Financial Accounts” (FinCen Form 114) and the “Statement of Specified Foreign Financial Assets” (IRS Form 8938). International tax practitioners know how severe the penalties can be for non-filings or improper filings of these two forms.

Below is some very basic information about these forms to get you ready for tax filing time: Read More

Written by | Posted in FBAR • IRS

7 Habitual Mistakes Companies Make – Chapter 6 (5)

TaxConnections Blog Post
Internal Audits Fix Financial Accounting Problems –
Internal Auditors Revisited –

HISTORICALLY THE PRESENCE of internal auditors in any business has made a significant contribution toward deterring the incidence of fraud in that business. Internal auditors should play a pivotal role in the Tax Risk Management process by providing the much-needed support and expertise to continuously monitor the controls that are in place in order to pick up on any emerging tax risks. They are also skilled and experienced in identifying potential risk issues and have the know-how to properly investigate these risk issues. Read More

Written by | Posted in Tax Risk Management

Understanding Your Odds With IRS Audit Technique Guides

Many taxpayers fear that aggressive deductions wave flags in front of Internal Revenue Service auditors and quite often I am asked what the chances are of being audited as if my opinion is some sort of a benchmark. The fact of the matter is that every tax return electronically filed is subject to some form of inspection, matching protocol, examination or audit.

Today’s historically connected engagement electronically between the US Government and its citizens has eroded privacy by subjecting us all to some form of unnoticed scrutiny. But at the same time incremental audit rates of substance seem to have proportionally decreased which mean that any particular taxpayer’s odds of attracting attention are slim unless you are a complete moron or behaving overtly fraudulent. Basically the simple Read More

Written by | Posted in Audit • Individual • IRS • Small Business

Statute of Limitations Remains Open Forever For Any Return Which Fails to File An Associated Information Report!

Taxpayer spend some of their time monitoring when the statute of limitations expires for certain tax return exposure items. This means watching the calendar until you are clear of audit. Unless you skip filing taxes entirely, you might assume your risk of audit eventually passes.

Taxpayers with a unreported income from a foreign bank account find that this situation is tough to resolve. The safest approach is going into the IRS Offshore Voluntary Disclosure Program, although some clients opt for more aggressive approaches.

Failure to file any one of the various foreign information reporting forms (e.g. 5471, 3520, 8838, etc.) leaves the statute of limitations open for every item in the associated federal Read More

Written by | Posted in Audit • Individual • OVDP

A Collection… The Humorous Side of Tax… (2)

Each year during tax season I forward some of my favorite tax quotes and tax humor.

♦ “Nobody likes taxes, but they’ve been around forever. Taxes date all the way back to the year one, when baby Jesus was visited by two wise men and an IRS agent, who demanded half the family’s frankincense.” -Jimmy Kimmel

♦ “The U.S. Senate is considering a bill that would tax Botox. When Botox users heard this, they were horrified. Well, I think they were horrified. It’s difficult to tell.” –Craig Ferguson

♦ Why does Santa have an accountant in the USA? So he can avoid Gift Taxes.

♦ NASA astronomers, using the Hubble space telescope, have discovered a giant black Read More

Written by | Posted in Tax Humor

Delinquent FBARs – Form TDF 90.22.1 Is Replaced By Form 114!

On September 30, 2013, FinCEN posted on their internet site, a notice announcing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form). FinCEN Form 114 supersedes TD F 90-22.1 (the FBAR form that was used in prior years) and is only available online through the BSA E-Filing System website.

On July 29, 2013, FinCEN posted a notice on their internet site that introduced a new form to filers who submit FBARs jointly with spouses or who wish to have a third party preparer file their FBARs on their behalf. The new FinCEN Form 114a, Record of Authorization to Electronically File FBARs, is not submitted with the filing but, instead, is maintained with the FBAR records by the filer and the account owner, and made available to FinCEN or IRS on request. Read More

Written by | Posted in FBAR

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

I. Domestic Administration of Social Security Taxation and the Scope of International Coordination – continued
b. The Second Aspect: Benefits Eligibility

In general, any individual is eligible to receive United States social security benefits at the age of sixty-two if he is considered “fully insured” and has filed the necessary paperwork. An individual is generally considered fully insured when he accumulates coverage, by earning wages or self-employment income that has been subject to social security contribution requirements, for a total of forty quarters.

Several sections of the Social Security Act provide for increases and decreases in benefit Read More

Written by | Posted in International

7 Habitual Mistakes Companies Make – Chapter 6 (4)

TaxConnections Blog Post
Internal Audits Fix Financial Accounting Problems –
Have You Read the Rest of This Special Report?

IF YOU FIND yourself at this point not knowing what the answer is, you have either turned directly to this page without reading the rest of the special report, or you have missed the point of this special report—be proactive, get internal audit to double-check the main tax risk areas, get help through a tax team to identify the tax risk areas, work according to a tax strategy document which is continuously revisited, avoid being insular and get out of the ivory tower, go and chase down all the facts to get an accurate picture of any tax problems around any major transaction. Communicate, communicate, and communicate again, get to know the business and all its facets, get internal audit involved to check again, and Read More

Written by | Posted in Tax Risk Management
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