TaxConnections


 

Archive for Tax Legislation

FATCA Historical (R)Evolution: Legislative History Reveals That FATCA Had Little To Do With Collecting Tax Revenue From U.S. Persons Evading Tax Through Offshore Bank Accounts (Part I)

Prior to the enactment of FATCA, Congress and the Executive were in possession of concrete-evidence revealing FATCA would fail to collect any meaningful amount of tax-revenue from U.S. persons evading tax through offshore financial center holdings.  Congress should have halted enactment of HIRE – if in fact, FATCA’s purpose was to collect tax-revenue from offshore tax evasion by U.S. persons.

The United States Congress used estimates from the Joint Committee on Taxation (JCT) as the foundation for supporting the Foreign Account Tax Compliance Act (FATCA), contained in the Hiring Incentives to Restore Employment Act (HIRE).

HIRE was a tax expenditure designed to encourage U.S. small business to hire new employees.  HIRE included two tax expenditures of note: a payroll tax exemption to employers and a one-thousand dollar tax credit for employers hiring employees between February of 2010 and January of 2011.[1]  FATCA was included in HIRE because the tax revenue collected from FATCA was supposed to offset the tax expenditures authorized by HIRE.[2]  The tax revenue FATCA was said to be targeting was from U.S. persons with foreign bank accounts who were evading tax.

In July of 2008, and around the time of the UBS scandal and the Global Financial Crisis the U.S. Senate Permanent Subcommittee on Investigations held a hearing and issued a report entitled “Tax Haven Banks and U.S. Tax Compliance”.[3]  The underlying justification for FATCA as a substantial revenue raiser rested on a single statement found in a footnote in the 2008 hearing report:  “Each year, the United States loses an estimated $100B in tax revenue due to offshore tax abuses.”[4]  In a 2009 follow-up report, the Ways and Means’ Subcommittee on Select Revenue Measures held a hearing entitled:  Banking Secrecy Practices and Wealthy Americans.  During this hearing, the Senate increased the U.S. tax revenue loss-estimate by 50 percent stating: “Contributing to the annual tax gap are offshore tax schemes responsible for lost tax revenues totaling an estimated $150B each year.”[5]  The estimates entered into the record during these hearings measured the offshore tax gap, or the amount of tax revenue[6] that would be collected if offshore tax evasion by U.S. persons holding foreign bank accounts was ended.  One month, before HIRE was signed into law by President Obama, new evidence revealed the offshore tax gap was nowhere near as large as previously thought.

Read more

Need To Register As A Lobbyist? A Must Read!

Tom Kerester, lobbying,

Moving on to a more serious question, are the actions you, your staff, or your client take subject to the Federal Lobbying Disclosure Act (LDA), effective as of January 1, 2008 and revised as of January 31, 2017? This highly technical Act is a must read by all persons involved in contacting Members of Congress and/or their staff.

Read more

Contacting Members of Congress – Dos And Do Nots

Tom Kerester

Members of Congress have many sources from which they can obtain critical information on the impact a proposed tax will have on taxpayers generally. But they value most the information they obtain from tax practitioners who deal with tax matters hourly and daily. So, take advantage of the opportunity to furnish the Members of Congress the vital and critical information they need and cannot obtain that information elsewhere. Please review the list of The Dos and The Do Nots.

Read more

Approval Process Of International Tax Treaties By United States

Tom Kerester

Foreign countries across the world have intricate tax treaties with the United States, which include topics such as exchanging tax information with tax authorities. In order for these tax treaties to come to fruition, they must first pass through the Executive and Legislative Branches of the U.S. Government for approval.

Read more

The Major Contenders For London’s Relocating European Financial Center

As I hear it, if the Netherlands were to substantively amend its ‘maximum 20% bonus of salary’ regulation, then the relocation decision for many EU facing funds would be an easy choice. But because of that regulation, it has created an opportunity for other cities to pitch to the institutions for the funds and trading business relocation.

Read more

Changing Taxation-Based Citizenship Through Regulation, Not Law

John RIchardson

This post is a continuation to my recent post: “The Internal Revenue Code does not explicitly define “citizen”, “citizenship” or require “citizenship-based taxation“.

Read more

2015 Tax Legislation Changes – Lots of Them!

In 2015, over 15 federal laws were enacted, making over 150 changes to the federal tax laws!  Many of these bills did not have the word tax in their title because the main purpose was appropriations or trade or the Highway Trust Fund.  The tax changes include many administrative changes such as on due Read more

HOW TO DEVELOP A LEADING AND PRODUCTIVE TAX ORGANIZATION IN 2016

 

 

We are now almost half of the way through our 12 week special blog series. We hope you have enjoyed our work so far.

If you have missed out on each or any weeks blog so far, you can find them here: Read more

2016 Form 1099’s are FATCA Compliant

Ronald Marini

 

IRS has issued the final version of 2016 Form 1099’s which contain a checkbox to be used if the form is being used to meet requirements of the Foreign Account Tax Compliance Act (FATCA).

The 2016 Forms Form 1099-B (Proceeds from Broker and Barter Exchange Transactions), 1099-DIV (Dividends and Distributions), 1099-INT (Interest Income), 1099-OID (Original Issue Discount) and 1099-MISC (Miscellaneous Income) each contain a checkbox entitled “FATCA filing requirement” that the form instructions instruct taxpayers to complete if they are using the form to meet the requirements of either of those regs. Read more

Colorado Tax Update & Top 10 Hacks To Streamline the Filing Process

John Dundon

My friends at the Colorado Department of Revenue Tax Division have been hard at work amending and repealing several different personal and corporate income tax regulations with a handful of notable mentions for non-residents and part year residents alike.

The updated guidance on determining credits for taxes paid to other states maybe worth a look. Of interest to me is that the year in which the income is actually earned by the taxpayer rather than the year it was paid is the reporting year.  This is a sneaker that can be huge for certain folks and is why we “plan” for transitions in our life as best we can.

What is of concern to me and will be monitored to the best of my ability is that mere presence in Colorado directly or indirectly via a pass through entity impacts source income. Read more

Proposed IRS Regulations Oppose Court Decision

Annette Nellen

Continuing with my list of ten news items and activities from 2015 that I think have particular tax policy relevance.  Today, for my fourth item is an odd and unfortunate way that the IRS is telling us they disagree with a 2013 court decision. In August 2015, the IRS issued proposed regulations under Section 199, Income attributable to domestic production activities – REG–136459–09 (8/27/15). This provision was added in 2004 and provides a “bonus” deduction for taxpayers engaged in domestic manufacturing which is broadly defined to include some construction, film production, and software development. It is a fairly complex provision that involves numerous definitions and allocations to identify the specified income that then generally produces a 9% deduction for the taxpayer.

The issue helps show the complexity that is involved when special rules exist. Special rules require precise definitions to know what qualifies and what does not. The particular issue I’m referring to what constitutes minor assembly (no 199 deduction) versus production (generates a 199 deduction).

Read more

Mistakes Religious Organizations Make When Filing a Tax Return

John Stancil

When it comes to the IRS and religious organizations, these organizations fall into two categories – churches and other religious organizations. Due to the First Amendment, the IRS is extremely reluctant to tread in the area of church organizations. This is not to say that churches have carte blanche to ignore the tax laws, but that the IRS grants them a great deal of leeway in regulating them. All religious organizations are subject to the law in regard to taxation. However, many operate as if the laws do not apply to them. Some of the most common mistakes made by religious organizations are the subject of this article.

At the outset, it should be noted that churches do not have to apply for 501(c)(3) status. They may choose to do so, and there are some very good reasons that they might wish to make such an application. All other religious organizations must apply for this status by completing and filing Form 1023 or Form 1023EZ. A church is automatically treated as though it has 501(c)(3) status.

Filing a return. Churches do not have to file a Form 990. However, some churches file these returns. This is unnecessary and may cause the IRS to take a closer look at the organization. If you don’t have to file, don’t file. Read more

Meet Tax Experts At TaxConnections...