Tag Archive for Tax Blog

7 Habitual Mistakes Companies Make – Chapter 5 (20)

TaxConnections Blog Post
More Facts Resolve Tax Risks –
Aiming toward a Letter of Findings –

IDEALLY THE TAXPAYER’S representatives should attempt to establish a high-level relationship with representatives from the IRS. In so doing, an introductory meeting should be convened wherein the representatives discuss the way forward and the amicable approach they intend to adopt.

This is also an important forum for the taxpayer to emphasize that a letter of findings must be issued by the IRS prior to any assessments and that the taxpayer be given reasonable opportunity to respond to the letter of findings. Read More

Written by | Posted in Tax Risk Management

North Carolina Benefits from Amazon Sales Tax Collection

As many people know, Amazon has been clashing with many states whether it should be required to charge, collect, and remit sales tax. Many states have taken the position that Amazon’s affiliates and distribution centers created the dreaded “nexus.” If an online retailer (or any company) has so-called “nexus” it is required to charge, collect, and remit tax in that state. With millions of dollars at stake, Amazon threatened to pull its affiliate programs in those states which, in turn, would cut tens of thousands of jobs. Fearful of huge job cuts in a struggling economy, many states allowed Amazon a grace period, permitting the company to continue its program and not collect sales tax for x number of years in the future. Once the grace period expired, then Amazon would have to charge, collect, and remit tax. In return, the state would keep its jobs as well as get more tax Read More

Written by | Posted in Sales/Use Tax • State And Local Tax (SALT)

Why Is It That The IRS Seems To Always Receive Budget Cuts When They Produce The Most Revenue?

On January 17, 2014, President Barack Obama signed into law the omnibus appropriations bill to fund the government through fiscal year 2014, bringing Internal Revenue Service funding below its 2009 level! The Consolidated Appropriations Act (H.R. 3547) allocates $11.3 billion to the Internal Revenue Service, which is a $526 million decrease, or 4.4% decrease from the previous year.

This makes the Internal Revenue Service one of the biggest losers in the 2014 budget deal, since the service would get just $11.3 billion, which is $526 million below its 2013 budget and $1.7 billion less than President Obama requested and is lower than its 2009 budget. Read More

Written by | Posted in Federal • IRS

OECD Releases Draft of Radical Country-by-Country Reporting Template

The OECD has just published its draft of “A Model Template of Country-by-Country Reporting” that would require companies for the first time to provide tax administrations with exhaustive details of how they allocate their income, taxes, and business activities on a country-by-country basis.

On July 19, 2013 BEPS Action Plan, the OECD was directed to “develop rules regarding transfer pricing documentation to enhance transparency for tax administration, taking into account the compliance costs for business.

The rules to be developed will include a requirement that MNE’s provide all relevant governments with needed information on their global allocation of the income, economic Read More

Written by | Posted in OECD • Transfer Pricing

A Tax Professional’s Secret Weapon

There is one gift I would like to give every tax professional; this one gift will attract more people to you and greatly improve your business opportunities. The future of your success in the tax profession will start with how you have prepared your Professional Summary in your online profile. This is someone’s first glimpse into the heart of your tax expertise and promotes your tax reputation. Without building a strong online tax reputation you are invisible to the world and our goal at TaxConnections is to create more visibility for our members than they would have anywhere else. We build strong online tax reputations at TaxConnections by driving millions of interested site visitors to our members profiles. The secret to your online success is converting this increased traffic into action and I will teach you how the pros do it! Read More

Written by | Posted in TaxConnections

More U.S. Taxpayers Admit to Secret Swiss Accounts

Why Swiss Bank Clients Who Can’t Stand the Heat Are Getting Out of the Kitchen –

Every July, people from around the world descend upon a small village in Spain called Pamplona for the fiesta of San Fermin. Encierro, or “The Running of the Bulls,” is the event at the heart of the fiesta. The fiesta is celebrated in honor of San Fermin, patron saint of Navarra, although the religious aspect would seem to have taken on a secondary role over the last number of years.

The bull-run is a spectacle unlike no other. It is defined by the level of risk and the physical ability of the runners. After the launching of two rockets, a herd of six bulls is released from Read More

Written by | Posted in FATCA • FBAR • OVDP

Help! I Want to Expatriate, But They Won’t Let Me… Part I

Lately, renouncing United States citizenship has become more and more fashionable with the full implementation of the “Foreign Account Tax Compliance Act (also known as “FATCA”), looming on the horizon.

I am now more often receiving inquiries about expatriation from the foreign parents of a child born in the United States while the parents were studying there or were there on some other temporary basis. Increasing inquires are also coming from parents of a child who was born overseas but to parents, only one of whom was a US citizen and who resided in the US for a certain time period before the child was born. In both of these cases, the children have acquired US citizenship “at birth”. In these sometimes frantic phone calls, the parents are protesting the child’s “involuntary” acquisition of US Read More

Written by | Posted in FATCA • IRS

What’s New In The 2013 Form 1120-S?

The Internal Revenue Service has released a final version of the 2013 Form 1120-S, U.S. Income Tax Return for an S Corporation, and final instructions reflect what is new on as described below:

Form 1125-E, Compensation of Officers. For tax years beginning after 2012, use Form 1125-E if the S corporation deducts an expense for compensation for officers and has total receipts of $500,000 or more. See the instructions for lines 7 and 8.

New Schedule B-1 (Form 1120S), Information on Certain Shareholders of an S Corporation. S Corporations that check the “Yes” box for question 3 of Form 1120S, Schedule B, will need to complete new Schedule B-1 (Form1120S). See Schedule B-1 Read More

Written by | Posted in IRS • Tax Policy

Captive Cases Series – Case Law Conclusions: The Harper Test and Corporate Substance

The third prong of the Harper Test is “whether the arrangement was for “insurance” in its commonly accepted sense.” The case provides further guidance in this paragraph:

Rampart was both organized and operated as an insurance company. It was regulated by the Insurance Registry of Hong Kong. The adequacy of Rampart’s capitalization is not in dispute. The premiums charged by Rampart to its affiliates, as well as to its shippers, were the result of arm’s-length transactions. The policies issued by Rampart were valid and binding. In sum, such policies were insurance policies, and the arrangements between the Harper domestic subsidiaries and Rampart constituted insurance, in the commonly accepted sense. Read More

Written by | Posted in Tax Risk Management

Home Sweet Home for International Tax Collection

I received a panicked call from a client recently, being detained at a major metropolitan airport. The client, a nonresident United States taxpayer, owed money to the IRS. Upon investigation, I learned who was responsible for detaining him: none other than the IRS. Under what authority? A two-year-old program designed to target nonresident delinquent taxpayers who travel to and from the United States.

New York tax practitioners can soon expect to receive similar calls. Dubbed the “contact program,” it has a clear objective: to improve tax administration and compliance among nonresident U.S. taxpayers. In what ways?

(1) By collecting delinquent taxes; Read More

Written by | Posted in International • IRS • Tax Controversy

7 Habitual Mistakes Companies Make – Chapter 5 (19)

TaxConnections Blog Post
More Facts Resolve Tax Risks –
Repricing Agreements –

A REPRICING AGREEMENT can be in the form of a separate agreement, a clause, or an addendum; but it essentially provides for circumstances which occur or manifest later into the transaction and which impacts on the financial model of the structure, which may not have been contemplated.

Circumstances may include the introduction of and changes to any law, rule, regulation, directive, or banking practice applicable to the transaction, the rate and practice of levying tax, damages, and other costs which may become payable due to a breach. Of course Read More

Written by | Posted in Tax Risk Management

221% Increase of US Expatriation

A record number of United States taxpayers renounced their citizenship or green cards in 2013, according to new data.

Each quarter the U.S. Treasury publishes the names of the Americans who officially expatriated during that period. In the last quarter of 2013, 630 people renounced their citizenship or relinquished their green cards, added to the previous 2013 quarters (2,369 people), bringing the total for 2013 to 2,999.

On Monday, May 14, 2012 we posted Facebook’s Co-Founder Just Defriended America, regarding Face book’s Co-Founder Mr. Saverin’s renouncing his U.S. citizenship ahead of the company’s IPO. Read More

Written by | Posted in Expatriate
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