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Ranking Members Warn Against Bypassing Treaty Process

U.S. Senate Committee On Finance

The top Republicans on the U.S. Senate Finance Committee, the U.S. Senate Foreign Relations Committee, and the U.S. Senate Banking Committee expressed serious concerns with the Administration’s recent suggestions it is considering circumventing the Senate’s constitutional treaty authority in implementing a global tax agreement.  Finance Committee Ranking Member Mike Crapo (R-Idaho), Foreign Relations Committee Ranking Member Jim Risch (R-Idaho) and Banking Committee Ranking Member Pat Toomey (R-Pennsylvania) wrote Treasury Secretary Janet Yellen today asking for clarification of recent comments, reiterating the importance of constitutionally mandated congressional approval of tax treaties.  The letter comes as the Organisation for Economic Development and Co-operation (OECD) is negotiating an agreement on global tax rules.

From the letter:

As you know, under the U.S. Constitution, a bilateral or multilateral tax treaty would require the advice and consent of the Senate, with a two-thirds vote of approval.  Further, we are unaware of any existing congressional authorization that would permit the Administration to conclude a lesser international agreement, such as a congressional-executive agreement.  As described, the nature of changes required to implement Pillar One necessitates the conclusion of a treaty, not a congressional-executive agreement or other legislative override.

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House Ways And Means Markup Of Build Back Better

Let's Avoid Unnecessary Costs And Complexities

Let’s Avoid Unnecessary Costs And Complexities

The House Ways and Means markup of the Build Back Better Act (H.R. 5376) has over 120 tax changes included. This includes a lot of energy credits. Subtitle G on Green Energy is laid out in 257 or the 2466 pages of legislative text. The cost estimate over ten years from the Joint Committee on Taxation is $235 billion. In comparison, the social safety net provisions in Subtitle H cost almost four times as much, but will likely provide benefits to those more than in need than for the energy credits.

For example, there is a new refundable credit proposed at new IRC §36E for the purchase of an electric bicycle costing up to $5,000 (for a $750 credit) but the bike can’t cost more than $8,000. My Google search indicates that these bikes cost under $2,000. While there likely are ones costing more, if the buyer needs the $750 credit to buy it, why not skip the credit and the complexity it will add to our tax law and the buyer can instead buy one that costs $750 less.

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Tax Court In Brief: Tax Shelter Scheme With Offshore Trusts

Tax Court In Brief: Tax Shelter Scheme With Offshore Trusts

This is from Freeman Law: Tax Court In Brief

Crim v. Comm’r, T.C. Memo. 2021-117 | October 4, 2021 | Lauber, J. | Dkt. No. 16574-17L

Short Summary: During tax years 1999 through 2003, Mr. John Crim promoted a tax shelter scheme involving domestic and offshore trusts. In 2008, Mr. Crim was convicted of certain crimes (conspiracy to defraud the United States and a corrupt endeavor to interfere with the administration of the internal revenue laws) and imprisoned until 2014.

The Internal Revenue Service notified Mr. Crim that it proposed to assess penalties under Section 6700(a) by letter dated June 16, 2010. On July 26, 2010, the Internal Revenue Service assessed the proposed penalties. On November 18, 2011, the Internal Revenue Service filed a notice of federal tax lien. On March 8, 2017, the Internal Revenue Service sent Mr. Crim a Letter 1058, Notice of Intent to Levy.

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Biden Global Tax Deal Puts Politics Over Progress, Surrenders Fate Of U.S. Economy To Foreign Competitors

Biden Global Tax Deal Puts Politics Over Progress

Brady, Crapo: Biden Global Tax Deal Puts Politics Over Progress, Surrenders Fate of U.S. Economy to Foreign Competitors

In a joint statement, Congress’s top Republican tax writers, Senate Finance Committee Republican Leader Mike Crapo (R-Idaho) and House Committee on Ways and Means Republican Leader Representative Kevin Brady (R-Texas), blasted the Biden Administration’s announcement that it had reached an agreement with the Organization for Economic Cooperation and Development:

“Rather than securing an agreement that would provide certainty and immediately eliminate digital services taxes, the Administration has instead used this global forum to advance its short-sighted domestic tax agenda. 

“By doing so, the Biden Administration is putting politics over progress and surrendering the fate of the U.S. economy to our foreign competitors. 

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Eroding The Tax Base Of Other Countries By Imposing Direct U.S. Taxation On Residents Of Those Countries

Eroding The Tax Base Of Other Countries By Imposing Direct U.S. Taxation On Residents Of Those Countries

This is the fourth of a series of posts about international tax reform generally and how FATCA, CRS, citizenship-based taxation, GILTI, etc. work together.

The first three posts were:

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New Tax Reporting Requirements For Cryptocurrencies And Other Digital Assets In Senate Infrastructure Bill

New Tax Reporting Requirements For Cryptocurrencies And Other Digital Assets In Senate Infrastructure Bill

On August 10, 2021, the U.S. Senate passed a $1 trillion infrastructure bill after months of negotiations. Tucked away within the sweeping legislation are measures that would extend Form 1099-B and cost basis reporting requirements to so-called “digital assets” such as Bitcoin and Ethereum. The requirements, which are expected to raise $28 million of revenue for the bill, could impose onerous tax reporting obligations on crypto miners, software developers, and other players in the industry that may not have the resources or capabilities to report user transactions.

The Proposed Reporting Requirements

Under the Senate bill, starting on January 1, 2023, a “broker” will be required to report transactions involving “digital assets” for the calendar year to the IRS on Forms 1099-B or another similar tax form. The legislation would treat digital assets as “specified securities,” meaning brokers would need to track and report such information as the identity of customers as well as the cost basis and gain/loss from the sale of digital assets. Under the bill, brokers would also be required to report transfers of digital assets to non-brokers. For purposes of the new requirement, digital assets would include any “digital representation of value” recorded on a blockchain or similar technology. This expansive definition would cover all cryptocurrencies and potentially other forms of digital assets such as non-fungible tokens (NFTs). As with traditional Form 1099-B reporting, taxpayers may be subject to substantial penalties for failure to file or timely file an informational return with the IRS.

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List Of Legal Documents Required For A Company To Set Up A Foreign Subsidiary In Korea (Part III In Series)

List Of Legal Documents Required For A Company To Set Up A Foreign Subsidiary In Korea (Part III In Series)

1)Corporate Nationality Certificate of the parent (foreign investor) (Format #1, 3 copies)

2) “Certificate” stating information to be taken from Memorandum and Articles of Association of the Parent Company (Format #2, 2 copies)

3)  Certificate of Corporate Resolution (minute of BOD meeting of the parent) stating a plan for establishment of a Korean subsidiary, size of paid-in capital and business purposes of Korean subsidiary. (Format (#3, 2 copies)

4)  “Power of Attorney” authorizing C.P.A Kook-Hee Lee or his colleague CPA) by foreign investor for preparation of legal documents for company setup, application for tax license, and opening bank accounts of Korean subsidiary. (Format #4, 3 copies)

5)  Power of Attorney” authorizing judicial scrivener by foreign investor for preparation of the minutes of Inaugural shareholder’s meeting and BOD meeting and other legal documents and to have the legal documents notarized by a notary public and filing all legal documents with the court for the registry. (Format #5, 1 copy)

6)  Acceptance letter of inauguration of the position of director and Representative Director to be issued by elected representative director. (Format # 6/ 2 copy)

7)  Residence certificate of Representative Director showing current residence place    (Format # 7 / 2 copy)

8). Photocopy  of passport of Representative Director  (format # 8   )

9)  Acceptance letter of inauguration of position of Directors to be issued by  appointed directors respectively. (Format # 9/ 2 copy)

10)  “Identification Certificate and Power of Attorney issued by the representative director to CPA kook Hee Lee or his colleague CPA for Korean  translation and notarization of all legal documents and translation of Korean language version of all legal documents into English for foreign investor. (Format # 9 / 2 copy)

11)  “Identification Certificate and Power of Attorney d authorized by the appointed directors ( and statutory auditor ) to judicial scrivener for  preparation and / or  notarization of all legal documents for inaugural shareholder’s meeting and BOD meeting  But This power of Attorney shall not be prepared in case the paid-in capital of the subsidiary is less than one billion won  ( format # 11 / 2 copy)

12) “Certificate of Personal Signature

13) Report on Seal Impression In Korea the corporate seal of the Representative director registered with the Court registry shall have legal effect on all legal documents or business contracts. instead of personal signature of the Representative director  Accordingly, the seal is required to be registered with the court at incorporation of the subsidiary  and the company obtains corporate seal certificate from the court for verification of truth of the affixed corporate seal on legal documents when proceeding important legal actions

14) Articles of Incorporation

Refer to Topic I-1, Par. 1

Note 1. Format #1, 2, 3, 4, 5, shall be notarized by a notary public and apostilled  in the country of the foreign investors and the directors of Korean subsidiary and. After the notarization and apostille the originals of these documents shall be couriered  to us, CPA firm for filing Report on Foreign Investment to foreign exchange bank and the court

Note 2 Format # 6. 7, 8, 9. 10.11.12.13 shall be signed, notarized by a notary public  and apostilled by the directors or representative director in their country

Note 3. After the notarization and apostille the originals of these documents shall be couriered  to us, Samhwa Accounting .

Note 4. We, Samhwa Accounting,  will send you  blank forms of all the above documents for filling in the blanks.

Note 5. you will be asked to send them back to  us, CPA firm by e-mail ( not PDF file ) after filling in for our prior review and supplement in case of necessity . before singing and notarization  .

The court does not accept incomplete or erroneous documents.

Have a question? Contact Kook-Hee Lee, International Tax Partner, Seoul, Korea.

READ PART II IN SERIES

How The World Should Respond To The US FATCA Driven Attack On The Tax Base Of Other Countries

How The World Should Respond To The US FATCA Driven Attack On The Tax Base Of Other Countries

This purpose of this post is to continue the general theme of focusing on the difference between what a law says and what the law means in application and effect. Yesterday’s post (The Pandora Papers, FATCA, CRS And How They Have Combined To Create Tax Haven USA) focused on the role that the 2010 US FACTCA law played in in facilitating the rise of Tax Haven USA. (To be clear, I am not saying that FATCA was the sole cause.) That said, the unwillingness of the USA to sign the CRS (“Common Reporting Standard”) has also played a role in the growth of the US as a tax haven.

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U.S. Supreme Court Narrows Computer Fraud And Abuse Act

U.S. Supreme Court Narrows Computer Fraud And Abuse Act

The U.S. Supreme Court recent decision in Van Buren v. United States significantly impacts the scope of the Computer Fraud & Abuse Act (“CFAA”).  The case carries implications for computer fraud prosecutions, employee abuse of computer databases, and a host of other areas, particularly given that the CFAA provides a civil cause of action that has become increasingly prevalent.  The Van Buren decision narrowed the scope of the meaning of “exceed[ing] authorized access” to a computer.

Background

In 2011, an FBI sting in Georgia resulted in police officer Nathan Van Buren being charged with violating the Computer Fraud and Abuse Act (CFAA). The sting operation was initiated after an individual complained that Van Buren had tried to shake them down by soliciting a loan.

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Why Wayfair Legislation Is Helping States Survive The Pandemic

Why Wayfair Legislation Is Helping States Survive The Pandemic

Last year was not an easy one for a variety of reasons, the ongoing pandemic chief among them. 2021 has provided some relief, but COVID’s economic impacts are still being felt by individuals, businesses and governmental organizations across the country.

According to a pair of Harvard economists, the pandemic would have cost the U.S. “at least 16 trillion” if it ended this fall. Given COVID numbers are still high in many areas, it’s safe to say the pandemic is not over and its true cost will exceed their estimate. By how much is yet to be seen.

That said, some states have weathered the pandemic better than initially feared. This is largely thanks to legislation adopted following the 2018 Wayfair decision which allowed states to collect additional tax from online purchases.

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IRS Launches New Webpage To Assist Taxpayers With Refunds Subject To Joint Committee On Taxation Review

Joint Committee Refund Case

The IRS announced a new webpage that provides information to taxpayers whose large refunds are subject to further review by the Joint Committee on Taxation (JCT or Joint Committee).

By law, when taxpayers claim a federal tax refund or credit of more than $2 million ($5 million for a C corporation), the IRS must review the refund or credit and provide a report to the JCT, a non-partisan committee of the U.S. Congress. Refunds subject to this review are known as “Joint Committee Refund Cases.”

Taxpayers can now find answers to most questions about Joint Committee case reviews and links to additional resources at Large Tax Refunds and Credits Subject to Review by the Joint Committee on Taxation – What to Expect.

The new webpage covers the following topics:

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