International Taxation

International Tax

When it comes to International Taxation, reporting requirements and statutory filings can become a full-time job. If you are doing business across borders, competing in several jurisdictions, and working to comply with local tax laws, then you understand this. Not only are you dealing with compliance laws and increased global competition, you also must stay tuned-in to your international effective tax rate. The key to success demands maintaining a responsive tax strategy that is aligned with your total business strategy.

To accomplish this, our international tax advisors are prepared to help you with…

Specialized Expatriate Tax Preparation Services
Streamlined Procedures (SLP) for Non-Resident U.S. Taxpayers to Establish U.S. Filing Compliance
Financial Crimes Enforcement Network (FinCEN) Form 114: Report of Foreign Bank and Financial Accounts (FBAR)
Foreign Account Tax Compliance (FATCA) filing IRS Form 8938

Our Expatriate Tax Services Include…

US tax filing for expatriate employees, including personalized strategies to minimize US tax liability.
FBAR and FATCA compliance, when appropriate
Any relevant international US tax filing requirements needed, including filings for trusts, corporations, and state taxes.
Tax Treaty and Social Security planning.
Tax equalization and reimbursement calculations, when required.

Inbound and outbound transactions

Cross-border transactions can become arcane and complicated when it comes to taxation. There is a plethora of traps the necessitate you involve an advisor knowledgeable of international tax laws and regulations. At its heart, the rules and regulations center on two basic types of cross-border transactions: Inbound and Outbound.

Inbound transactions involve foreign taxpayers doing business or investing in the United States.

Outbound transactions involve U.S. taxpayers doing business or investing in foreign countries.

U.S. Tax impact of foreign activities

U.S. citizens are taxable on their worldwide income, with a credit or deduction for taxes paid on foreign income. The United States makes no distinction between earnings from business or investment activities within the United States and those outside its borders.

Transactions by U.S. taxpayers in other countries are generally referred to as “outbound transactions,” while those of foreign taxpayers within the United States are “inbound transactions.” Rules for outbound transactions capture foreign income for U.S. tax purposes and are intended to prevent tax avoidance through the use of foreign entities.

FATCA SERVICES & U.S. TAXES

What is FATCA?

Our Consultants have extensive experience helping individuals and companies filing their FBAR and reporting their Foreign Financial Assets annually with the United States Department of Treasury. FATCA law is designed to improve tax compliance involving foreign financial assets and offshore accounts. Penalties for non-compliance are potentially severe. Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938.

In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

What is FBAR?

Report of Foreign Bank and Financial Accounts (FBAR) – FinCEN Form 114

What is This Reported?

Maximum value of financial accounts maintained by a financial institution physically located in a foreign country.

When is This Due?

Must be received by October 15 with no extensions of time granted.

Who Must File?

U.S. persons, which include U.S. citizens, resident aliens, trusts, estates, and domestic entities that have an interest in foreign financial accounts and meet the reporting threshold.

When the Reporting Threshold (Total Value of Assets) Aggregate value of financial accounts exceeds $10,000 at any time during the calendar year. This is a cumulative balance, meaning if you have a combined account balance of $12,000 at any one time (but divided between 2 accounts), both accounts would have to be reported.

FBAR Penalties

Those required to file an FBAR who fail to properly file a complete and correct FBAR may be subject to a civil penalty not to exceed $10,000 per violation for no willful violations that are not due to reasonable cause.

For willful violations, the penalty may be the greater of $100,000 or 50 percent of the balance in the account at the time of the violation, for each violation.

Filing FBAR requires Statement of Specified Foreign Financial Assets – IRS Form 8938.

Who Must File?

Specified individuals, which include U.S citizens, resident aliens, and certain non-resident aliens that have an interest in specified foreign financial assets and meet the Reporting Threshold (Total Value of Assets).

Taxpayers living in the US:

Unmarried taxpayer (or married filing separately): Total value of assets was more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the year.

Married taxpayer filing jointly: Total value of assets was more than $100,000 on the last day of the tax year, or more than $150,000 at any time during the year.

Taxpayers living outside the US:

Unmarried taxpayer (or married filing separately): Total value of assets was more than $200,000 on the last day of the tax year, or more than $300,000 at any time during the year.

Married taxpayer filing jointly: Total value of assets was more than $400,000 on the last day of the tax year, or more than $600,000 at any time during the year.

What is This Reported?

The maximum value of specified foreign financial assets, which include financial accounts with foreign financial institutions and certain other foreign non-account investment assets.

When is This Due?

The form is attached to your annual return and due on the date of that return, including any applicable extensions.

Non-Compliance with Form 8938 Reporting Requirements

Penalties Up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply

An additional penalty of up to $50,000 for continued failure to file after IRS notification, and a 40 percent penalty on an understatement of tax attributable to non-disclosed assets.

Whatis SLP?

Streamlined Procedures to Get Current with Your Filing Obligation

If you are a non-resident U.S. taxpayer who wishes to come into compliance with your U.S. filing obligations, you may be eligible for special IRS procedures.

On June 26, 2012, the IRS announced new streamlined filing compliance procedures for non-resident U.S. taxpayers. These procedures recognize that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or FBARs but have recently become aware of their filing obligations and now seek to come into compliance with the law.

These new procedures are for non-residents including, but not limited to, dual citizens who have not filed U.S. income tax and information returns.