Texas | TaxConnections

23 Mar 2021

Tax Treaties: United States And Ukraine

Quick Summary. Ukraine imposes an income tax on worldwide profits earned by Ukrainian entities. Non-resident entities are subject to Ukrainian income tax on Ukrainian-sourced income. Resident individuals are subject to tax upon their worldwide income. Non-resident individuals are subject to tax on their Ukrainian-sourced income.

The Ukrainian Parliament (the Verkhovna Rada of Ukraine) has enacted tax legislation providing for a number of significant changes in 2020, including transfer pricing; tax depreciation; withholding taxes; permanent establishments and 0ther taxes. In addition, beginning in 2021, legislation implements changes with respect to controlled foreign companies and thin capitalization rules.

Written by Jason Freeman | Posted in Tax Treaties: United States And Ukraine • TaxConnections

19 Mar 2021

Tax Treaties: United States And Belarus

Quick Summary. The Republic of Belarus is an Eastern European country bordering Russia, the Ukraine, Poland, Lithuania and Latvia. Following the fall of the USSR, Belarus attained the status of an independent country in 1991. It is comprised of six provinces, with its capital in Minsk.

In 2019, Belarus implemented comprehensive tax reform, including changes with respect to “business purpose” taxation standards, as well as transfer-pricing and thin-capitalization rules. Current transfer-pricing rules bring Belarusian framework closer to the OECD’s framework.

Belarus imposes a profits tax on corporations. Resident companies are subject to tax on their worldwide income. Non-resident companies are subject to tax on Belarus-sourced income that is derived through a permanent establishment. Certain other non-resident company income is subject to withholding tax.

Recent tax reform measures specifically combat “resident of nowhere” status individuals. Belarus taxes residents on worldwide income; non-residents are subject to tax on Belarus-sourced income.

Belarus is a member of the United Nations (UN) and the Commonwealth of Independent States (CIS), as well as the Eurasian Economic Union (EAEU).

Written by Jason Freeman | Posted in Tax Treaties: United States And Belarus

17 Mar 2021

Is Section 7345 Constitutional? Jones v. Mnuchin

There have been numerous constitutional challenges of U.S. tax laws since the Sixteenth Amendment was passed in 1913. As the Internal Revenue Code has grown over the years so have the court battles. A recent challenge involves Section 7345. According to that code provision, taxpayers who have “seriously delinquent tax debt” may have their U.S. passports denied, revoked, or limited. In a recent decision issued by a U.S. district court, the court found that Section 7345 was (and is), in fact, constitutional.

Section 7345, Generally

On December 4, 2015, former President Obama signed the Fixing America’s Surface Transportation Act (the “FAST Act”).[1] In an effort to promote tax compliance, Section 7345 was enacted by Section 32101 of the FAST Act.[2]According to Section 7345, if the Secretary of Treasury receives certification by the Commissioner of the Internal Revenue Service that an individual taxpayer has a seriously delinquent tax debt, the Secretary of Treasury shall transmit such certification to the Secretary of State for action with respect to the denial, revocation, or limitation of the individual’s passport.[3]

Written by Zachary Montgomery | Posted in Section 7345

04 Mar 2021

IRS Announces Tax Relief To Texans Due To Severe Winter Weather

One of the most devastating major winter storms in the history of the State of Texas has finally passed. Recognizing the significant emotional and financial toll the storm has taken on Texans, the IRS recently released an announcement indicating that residents and businesses in all 254 Texas counties may qualify for tax relief. See TX-2021-02 (Feb. 22, 2021). This Insight summarizes some of the more noteworthy relief provisions.

Postponement of Certain Tax Deadlines.

Both the Internal Revenue Code and the governing regulations provide authority for the IRS to provide relief to those affected by a federally declared disaster. Exercising this authority, the IRS has declared that certain taxpayers “that reside or have a business in all 254 Texas counties qualify for tax relief.” These taxpayers include:

Written by Matthew Roberts | Posted in Freeman Law • Texas • Texas Tax Relief

02 Mar 2021

Freeman Law: The Tax Court In Brief

The Week of February 22 – February 26, 2021

Llanos v. Commissioner | February 22, 2021 | Kerrigan, K. | Dkt. No. 8424-19L

Opinion

Short Summary: IRS assessed § 6702 penalties against petitioner for filing frivolous returns. Eventually the IRS issued a Final Notice of Intent to Levy, to which the taxpayer timely request a CDP hearing. At the CDP hearing, the petitioner indicated that he had not received the required notices of deficiency for the civil penalties. Petitioner did not request any collection alternatives. The settlement officer upheld the levy action, and petitioner filed in tax court. Tax court held for the IRS.

Key Issue: Whether petitioner made a “meaningful” challenge to the penalties so as to trigger a de novo review, and whether the levy action was appropriate.

Written by Jason Freeman | Posted in Freeman Law • Offer In Compromise • Tax Court In Brief • Texas

26 Feb 2021

Tax Treaties: United States And Poland

Quick Summary. Situated in Central Europe, Poland is bordered by Germany, Ukraine, Russia, Belarus, the Czech Republic, Slovakia and Lithuania. Poland is a republic with a bicameral parliament comprised of the Sejm and Senate. Poland is comprised of 16 provinces.

The Constitution of Poland, which was adopted in 1997, serves as the supreme law and the legal system is governed by a code of civil law. Poland’s judiciary serves as an independent branch of government and incorporates a four-tier court system headed by the Supreme Court.

Article 26(2e) of the Corporate Income Tax Act provides for new withholding rules and exclusions/restrictions that became effective in 2020.

In addition, in 2019, Poland introduced an “IP Box” tax relief program whereby income derived from “eligible intellectual property rights” is subject to a preferential tax rate.

Poland is a member of the European Union (EU), the North Atlantic Treaty Organization (NATO), the World Trade Organization (WTO), and the Organisation for Economic Co-operation and Development (OECD).

Written by Jason Freeman | Posted in Tax Treaties: United States And Poland

25 Feb 2021

Texas State: Sales And Use Tax Exemptions

State Of Texas: Manufacturing Exemptions

State sales and use tax exemptions are available to taxpayers who manufacture, fabricate or process tangible personal property for sale.

Texas sales and use tax exempts tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a manufactured product to make it more marketable.

The exemption also applies to tangible personal property that makes a chemical or physical change in the product being manufactured and is necessary and essential in the manufacturing process. Some items, such as hand tools, are excluded from the exemption. A hammer, for example, is taxable even if it is used in fabricating a product for sale.

Written by TaxConnections Admin | Posted in Sales And Use Exemptions • Texas

24 Feb 2021

Tax Treaties: United States And South Africa

Quick Summary. South Africa is a parliamentary democracy with three branches sharing Constitutional authority: the executive, judiciary, and parliament branches. Its blended legal system combines Roman-Dutch civil law, English common law, and customary law. Under South African law, there are three levels of governmental authority: National; Provincial; and Local government.

Beginning in 2001, South Africa moved from a source-based income tax system to a residence-based income tax system. Residents are taxed on their worldwide income. Non-residents are taxed on their South African sourced income. The same rates apply to both residents and non-residents.

Written by Jason Freeman | Posted in Tax Treaties: United States And South Africa

23 Feb 2021

How Will States Deal With Budgetary Issues?

As we begin a new year, new issues arise for states. As states are dealing with budgets for the year, spending has increased and tax revenue have decreased. The COVID-19 pandemic has changed our lives, the way we work, shop and interact with others.

A few states are seeing their residents, like California, New York and New Jersey, all high tax jurisdictions, moving to and becoming permeant residents of Florida, Texas, and Nevada, all states with low taxes or no state tax on companies or individuals.

How will states deal with these budgetary issues? Decrease spending? Increase tax rates? Expand the tax base? Tax out-of-state companies and Individuals? Increase tax credits and incentives, to attract investment? My guess, all the above, except for decreases to spending.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State Budgets

19 Feb 2021

Tax Court In Brief: Freeman Law

The Tax Court In Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

The Week of February 8 – February 12, 2021

BM Construction v. Comm’r, T.C. Memo. 2021-13 | February 8, 2021 | Urda, J. | Dkt. No. 24352-17L

Opinion

Short Summary: The IRS initiated an examination of the tax liabilities associated with Mr. Bernotas and his sole proprietorship, BM Construction. After issuing an initial report on May 7, 2014, the examination officer issued two Letters 950-D: (1) to Mr. Bernotas with respect to his income taxes on June 6, 2014; and (2) to BM Construction with respect to backup withholding tax liabilities on June 13, 2014. The examination officer detailed these actions in the file’s activity log and noted that neither of the mailed letters were returned. At more than one subsequent in-person meeting, Mr. Bernotas was notified of his appeal rights—particularly that he had 30 days from the date of Letter 950-D.

Written by Jason Freeman | Posted in IRS Examination • IRS Note Of Intent To Levy

17 Feb 2021

State And Local Tax: Controlling Interest Transfer Tax

Do you own an entity that holds real estate? Are you thinking about selling real estate? Are you considering selling the real estate asset or selling the entity that owns the real estate?

Generally, a real estate transfer tax is imposed on documents that convey an interest in real estate from one person to another person. The transfer tax, generally, is imposed on the recordation of a deed and is based on the consideration paid or the fair market value of the property (the “Real Estate Transfer Tax”).

Taxpayers utilized loopholes to avoid paying the Real Estate Transfer Tax, by selling the entity that owns the real estate instead of selling the real estate itself. Approximately 17 states have closed such loopholes.

Written by George Rendziperis, J.D. | Posted in Freeman Law • State And Local Tax

16 Feb 2021

So You Made Money On GameStop, Now What? A Primer On Capital Gains

The GameStop stock saga will undoubtedly go down in history as one of the most mystifying market events Wall Street has ever seen. Indeed, the markets have seen a massive influx of new retail investors into the space. But many of these investors have not previously participated in the market.[1] As noted by CNBC:

There were 3.7 million downloads of Robinhood in January, according to app market intelligence firm SensorTower, even with the millennial-favored stock trading app’s unpopular decision to put trading restrictions on a handful of stocks during GameStop’s climb. After the GameStop drama in February, downloads are still tracking strongly with 1.8 million month-to-date.[2]

Written by Ryan Dean | Posted in Capital Gains • Freeman Law • Texas