William Richards | TaxConnections

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Introduction

Recently there has been a flurry of activity with respect to International Financial Centers and their standing and obligations concerning the disclosure of their financial clients and records. This text will direct itself to the fundamentals of the tools that have traditionally been utilized to monitor, sensible regulation, reasonable supervisory monitoring, and appropriate national enforcement.

This will be presented in segments of regulation, the tools of enforcement of those regulations, and taxpayer defenses to enforcement. A main purpose is to establish an understanding of principles that will give a more meaningful understanding of the various unilateral agreements between the United States and various countries regarding business activities, including the use of anonymous banking facilities.

Basic Requirements Imposed Upon United States Taxpayers.

The apparatus of the United States government in implementing a supervisory role of international transactions emphasizes the functions of the Treasury Department and its collection agency, the Internal Revenue Service (hereinafter the Service). The functions can be divided into record keeping requirements imposed on taxpayers, examination authority of the Service in the monitoring phase of international activity, and enforcement used to compel compliance. Read More

Written by William Richards | Posted in International • United States

Foreign Corporations Generally. A foreign corporation entity is the vehicle of choice in utilizing the benefits of Financial Centers Offshore. A foreign corporation is one which is not created or organized in the United States and therefore is not a domestic corporation. A domestic corporation is taxable on its worldwide income. By definition, a foreign corporation is not a United States person and income is not taxable as a United States person. It is not subject to taxation of its accumulated earnings and profits until distributed to its United States shareholders. The general taxation of a foreign corporation is subject to the application of Subpart F Income taxation which is specifically designed to re-characterize foreign corporations as controlled foreign corporations.

Subpart F Income Taxation. Subpart F income rules are the core legislation designed to create controlled foreign corporations. By virtue of the codification, United States shareholders’ accumulated earnings of a foreign corporations’ profits are deemed distributed each taxable year. The accumulated earnings that would otherwise be lodged as foreign corporate accumulated earnings and not taxable until distributed, becomes taxable by Subpart F Income Read More

Written by William Richards | Posted in Corporate • International