Tax Inversion and the United States

Tax Inversion and the United States

Recent mergers by large multinational corporations have increased awareness to the practice of corporate inversion, or tax inversion. Corporate inversion, as defined by the U.S. Department of the Treasury, “is transaction in which a U.S. based multinational restructures so that the U.S. parent is replaced by a foreign parent, in order to avoid U.S. taxes.” Typically, “a U.S. company acquires a smaller company based in a foreign country- usually a low-tax country – and then relocates the residence of the combined company in that other country for tax purposes” (Hanlon and Zeints). Understanding why companies leave the United States, the effects of their relocation on the United States, government actions taken to curtail future inversions, and analyzing solutions is essential to making it less attractive for corporations to incorporate elsewhere. Reevaluating the U.S. tax code will lead to a significant decrease in inversions and increase in tax revenue for the United States. Current domestic tax policy is a major factor in many companies’ decisions to give up their U.S. residency.

Multinational corporations seek to increase profits by reducing their costs, including tax bills, as much as possible. Operating across the globe, they conduct business outside their country of incorporation and generate income in foreign markets. Which country a company establishes residence in can significantly influence the amount of taxes it owes to governments. Unfortunately, current tax policy can place the United States at a competitive disadvantage when a company is trying to decide where to call home. Companies based in the United States are subject to a tax policy that follows a worldwide view (DeAngelis 1356). Income generated, both, domestically and abroad is subject to the U.S. corporate tax rate of 35 percent (DeAngelis 1356). It is also subject to taxation by the country in which the transaction took place (DeAngelis 1356). While tax credits for payment of foreign taxes are offered to U.S. companies, the tax bill of those subject to territorial regimes is often still lower (DeAngelis 1357). Territorial tax structures only subject income generated within the domestic country’s borders to taxation (DeAngelis 1357). Any income from beyond the country of incorporation’s borders is only taxed by the source country (DeAngelis 1357). By relocating its headquarters from the United States to a country with a tax code resembling a territorial structure, companies can often reduce their tax liabilities. Using cost-benefit analysis and strategic decision-making, a company can determine which tax jurisdiction is most favorable. Countries recognize this opportunity and strategically develop tax policies encouraging foreign entities to establish residency and invest within their borders.

When companies renounce their citizenship, and leave the U.S., they take tax revenue with them. Companies surrendering their American residency strips the United States of the ability to invest in valuable programs. The Joint Committee on Taxation Revenue Estimate for H.R. 415 determined that there is potential that “inversions cost the U.S. as much as $40 Billion over the next 10 years” (“You Don’t Get to Pick…”). As noted by the White House, these funds could be used to fund 7 years of child care programs, make college more affordable, and reduce poverty through tax credits (“You Don’t Get to Pick…”). Operating with a budget deficit, every dollar is crucial to continuing government expenditures taken for granted. Eroding of the tax base limits the government’s ability to operate and prepare the United States for the future. Quickly finding a solution to the inversion epidemic is pivotal in preventing greater strain on the budget.

Action must be taken to create an environment where leaving the United States is never optimal. Congressional legislation toward a revised tax code is the only permanent fix. Unfortunately, due to Congress’ unwillingness to do so, the Treasury Department opted to exercise its power to make inversions less attractive and beneficial to companies (Hanlon and Zients). Recently, the department has addressed “serial inverters” and “earnings stripping” (Hanlon and Zients). Scott DeAngelis, a graduate student at Vanderbilt University studying Law and Economics, suggests creating a patent box to the likes of European nations (1383). Doing so would eradicate some of the advantages of relocating to countries with these policies. Solutions such as these are only patches to the problem or parts of the whole fix. DeAngelis endorses the notion that, “The best course of action for the United States would be to join the member countries of OECD and G20 and adopt the OECD’s proposed multilateral instrument” (1380). When the global market place is growing increasingly connected, drafting tax instruments that work harmoniously is the most logical solution. Without international agreement, nations will, justifiably, do what is only in their best interest. Selecting a course of action and moving to enact resolution must be of high importance.

Companies, and corporations, owe it to shareholders to increase their value and returns. Current tax policy in the United States has led many entities to question where they locate their operations. By simply relocating headquarters beyond the U.S. border, it is possible to reduce tax liabilities and increase the bottom line. Globalization has led to this phenomenon. Taxes faced by those in worldwide tax regimes, as the United States is, are frequently greater than those in territorial-like regimes. As a result, many U.S. companies left the United States solely for tax purposes, and many more continue to evaluate the opportunity. Reviewing the tax code and enacting legislation fit for the 21st century will help mitigate this issue and grow U.S. tax revenues. Ultimately, working with the international community to draft a comprehensive tax reform for a global marketplace will best serve everyone.

The Effects of Globalization and Taxation on the United States

Globalization has always played a pivotal role in the world we live in. It can be traced back thousands of years to when colonies would make simple trades with one another. However, over the last few decades we have seen an enormous increase in globalization as technology has evolved. Globalization101, a website that conducts extensive research on globalization, defines the term as “a process of interaction and integration among the people, companies, and governments of different nations, driven by international trade and investment and aided by information technology” (“What is Globalization?”). What sticks out most about this is when they say globalization is aided by technology. The development in technology over the years has had a direct impact on the growth of globalization.

The two main growths in technology that have affected globalization the most are the internet and travel. The internet has played such a big role in the growth process of globalization. It makes it much easier for companies to communicate with each other from different locations around the world. Along with our ability to communicate, our ability to travel has also improved. In today’s world one can travel from New York to Europe in about seven hours. A century ago the only way to travel across the Atlantic Ocean was a four weeklong voyage on a boat. The evolution of transportation has opened the door for companies to grow their businesses internationally. We have seen so many companies start small and evolve into huge international corporations, and it is because of the development of technology. Just as the growth of technology has had an impact on globalization, the growth of globalization has had a great impact on taxation. The laws of taxation are different in every country and companies try to take advantage of this. One country that has seen these effects first hand is the United States.

Although globalization is so great for our world, the United States economy has been affected negatively over the last few decades. Big companies are increasingly moving abroad to other countries where taxes and labor is much cheaper. Companies can make much more money developing and constructing their products abroad and shipping them into the United States. One of the main reasons companies do this is because income taxes in the United States are much higher than that of other countries. James Hines, an economic professor from The University of California Berkley, has done research on the impact globalization has on taxation in various countries. He states, “governments of small countries instead rely on consumption-type taxes, including taxes on sales of goods and services and import tariffs, much more heavily than do larger countries. Since the rapid pace of globalization implies that all countries are becoming small open economies, this evidence suggests that the use of expenditure taxes is likely to increase, posing challenges to governments concerned about recent changes in income distribution” (Hines). In this excerpt, Hines discusses the different obstacles that countries like the United States face. Since the United States is such a big and powerful country, generally large companies find it beneficial to take advantage of smaller countries’ taxes. If the United States wants to prevent companies from moving abroad they must lower income and other taxes for large corporations. The U.S. government should also increase tariffs on goods shipped into our country as smaller countries do. If they make tariffs high enough it will make companies want to keep their production in the United States and it could possibly make companies that have previously moved abroad, move back to the United States.

Another reason U.S. companies are moving out of the country is their ability to hide revenue. Although this seems dishonest, many companies move abroad for this reason. United States companies also look into buying foreign companies so they can allocate their earnings abroad and pay much less in taxes. A website called the Economist explains this situation very clearly. They state, “for more than 30 years, companies, especially American ones, have been merging with foreign firms or acquiring them outright in order to shift their tax bases abroad. It started in 1982, when McDermott, a construction company, outsmarted America’s Internal Revenue Service by moving its base from New Orleans to Panama, where it had a subsidiary. Ever since, this kind of move, called a ‘corporate inversion,’ has been an attractive way for American companies with overseas earnings to reduce their tax bills” (“What’s Driving American Firms Overseas”). Just like McDermott Construction Company, many companies have followed suit. When companies move abroad they are able to shift their income and report it in the country with the lower tax rates. The only reason companies are able to do this is because of globalization. Without the increase in technology and globalization, these situations would not be possible. Globalization has played a huge role on taxation, especially in the United States.

Donald Trump’s tax plan and its effect on the United States Nationally, Globally, and its Citizens

Individual

Donald J. Trump initially proposed his tax plan of cutting taxes for businesses and the middle class while campaigning for the primaries. In August he revised his plan and added many details including; Tax Brackets, Standard deduction changes, corporate rates and eliminating the gift/estate tax. Furthermore, Donald J. Trump’s plan could have an effect on the economy at domestically and globally. In this paper, I aim to simplify the effects of his tax plan, on the individual, the United States and examine some assumed outcomes for the United States from a global perspective.

Individual

Let’s face it, there are not many people on this earth that think about the good of their country before the good of their own wallet. Trump’s tax cuts are close to home and can help the average American. He proposes doubling the standard deduction and lowering effective tax rates across the board. This means that around $8,000 for single filers and $16,000 is completely untaxed; combined with the fact that most incomes will see a lowering of effective tax rates, everyone will be paying fewer taxes(Fox, Pg.1). Trump’s system is very appealing across the board, but only two groups benefit greatly. First, since the standard deduction and the 0% tax bracket are increasing some families earning low incomes could experience no tax at all. The second group that could experience a massive tax break is multi-millionaires.

“… the highest-income 0.1 percent of taxpayers (those with incomes over $3.7 million in 2015 dollars) would experience an average tax cut of more than $1.3 million in 2017, nearly 19 percent of after-tax income.”(Nunns, Pg. 1)

Some people compare Trump’s tax plan to an escalated version of the George W. Bush tax cuts. Another issue with Trump’s tax plans is they are very vague in substance and impractical in today’s society where corporations and individuals take advantage of every break possible. One loophole that exists is that individuals can set up LLCs and like corporations and actually lower their tax rate, this is due to very low unearned income tax rates. By funneling all of your income through these mock corporations, individuals could create a tax ceiling of 15%(Trump’s unearned income alternative rate) even though the normal tax brackets go up to 33%. Now, it can be reasonably assumed that this plan once brought to a cooperative congress would be tightened up with many more rules added to eliminate glaring loopholes and problems with the plan. In the case of a democratic house or senate, these tax reforms could be shot down entirely. With the assumption that his whole plan goes through the decrease in tax revenue could create a strained relationship between the United States’ revenue stream and the expenditures they have budgeted for, thus influencing their ability to create an economic incentive for the U.S. economy.

National

On a grander scale than the individual, the United States economy would change due to Trump’s tax plan. After the individual changes are accounted for, the corporations would be the next largest factor. Trump plans on dropping corporate tax rate considerably, which would create an upwards swing in after-tax profits. This benefit could go two ways; first corporations could pay the excess profit out to shareholders in dividends or second corporations could reinvest the extra money into retained earnings. Either way, this would give an injection of good profits and growth to the economy. In terms of United States tax revenue, this growth caused by the tax break would make up for some of the deficit in tax revenue even more so if most of these profits were distributed in dividends. To further decrease the tax deficit Trump has proposed a one-time offshoring tax that would be paid by any U.S. firm that has moved its operations overseas. These measures could eliminate the deficit in the short term, but long term the deficit could arguably skyrocket. This is due to a drop in tax revenue and a projected increase in spending. Some major expenditures would include border security (the wall) and increases in military spending. Trump has promised to decrease expenditures in other facets but has only stated that he will eliminate inefficiency and cut out waste. The below figure compares our current Real GDP path and how it would change with Trump’s economic policy shown in 2009 dollars

As shown in the figure below, Trump’s economic policy is not very favorable for the United States economy. Due to increased globalization and low reinvestment of profits, the initial gain from Trump’s plan diminishes and actually reverses. Overall, Trump’s plan could be very bad for the economy, especially if previous tax cuts are any indication of their effects(Zandi, Pg. 2).
Global

Internationally, the United States is no longer the world’s only powerhouse. With a multitude of other countries on par with the US and winning in some facets. The United States is in no place to fall behind. The biggest problem with Trump’s tax plan and his overall economic policies is that they are isolationist policies. Globalization has created winners and losers, but segregating the United States by pulling out of trade deals like NAFTA will actually decrease exports and make our exports more expensive. Plus, the one-time offshoring tax will create a strain on multinational companies. The largest upswing for the United States would be the new low corporate tax rate could attract companies to come back to America and enjoy the low taxes. This is shown in the above figure with the temporary gain in GDP growth rate. It has not yet been shared exactly how the lower corporate tax rate would bring companies back, most companies that have offshored their business still maintain corporate status in the United States and I doubt that a break in corporate taxes would be greater than what it costs to pay an American Labor force.

In conclusion, Donald Trump’s tax plan can and would have a much greater effect than it appears on the surface. If the senate agreed to adopt Trump’s full plan as it is now: the individual would see personal taxes decrease and corporate taxes decrease as well, Federal revenues would swing high then low along with the United States GDP, and Trumps overarching economic policy could put America in a very sticky place in the global economy. As a forewarning, this essay does follow many assumptions made by Moody’s and the Tax institute. In final thoughts, Trump’s tax plan would benefit Individuals and the United States corporations greatly but would create friction in the overall US economy could cause another economic slowdown.

Work Cited

Fox, Lauren. “Unlike His Immigration Plan, Donald Trump’s Tax Proposals Are Actually Feasible.” National Journal. National Journal, n.d. Web

Nunns, Jim, Len Burman, Jeff Rohaly, and Joe Rosenburg. “An Analysis of Donald Trump’s Tax Plan.” AN ANALYSIS OF DONALD TRUMP’S TAX PLAN (n.d.): n. pag. Web. < http://www.taxpolicycenter.org/publications/analysis-donald-trumps-tax-plan/full >.

Zandi, Mark. Clinton’s Proposed Economic Policies Will Be Forthcoming.MOODY’S ANALYTICS The Macroeconomic Consequences of Mr. Trump’s Economic Policies 1 (n.d.): n. pag. Moody’s. Moody’s. Web.

Gambling In New Hampshire

The New England state of New Hampshire in the North Eastern corner of the United States is the only state that imposes neither sales tax nor income tax on its citizens. New Hampshire shares its border with the Canadian state of Quebec, and the American states of Massachusetts and Vermont. It also has part of its border on the Atlantic Ocean, although that part is a mere eighteen miles long.

Being one of the thirteen colonies that revolted against English rule and sparking off the American Revolution, New Hampshire is steeped in history that entices many history buffs and antique hunters to visit it yearly. It was the first state to declare its independence. New Hampshire is today like a cottage state, and then as now, wealthy people chose to make their homes there, and to enjoy the beautiful scenery strict environmental laws have been put in place and enforced to keep New Hampshire the beautiful state it is.

To say that life is good for the one point three million citizens of New Hampshire would be fair, with the sixth highest income per capita in all of the United States. It would be almost paradise apart from one major fly in the ointment. There is almost no form of gambling available in New Hampshire. Live horse racing is permitted with on track betting only that is heavily patronized by the residents of New Hampshire. Also a fairly active and popular state lottery is run. People who live in New Hampshire have money in their pockets and like most other Americans they like to gamble, so what do they do?

They either travel to nearby states such as New Jersey for their share of live casino gambling, mostly either slots of table gaming, or they, like tens of millions of others all over the World; have discovered the pleasure and convenience of online internet gambling. The gambling population of New Hampshire has discovered that playing on line is a big thrill, and every game that they want to play is there for them. From roulette to blackjack to craps, played in realistic 3d reality, to all the latest slot games, it’s the nearest thing you will get to live casino gaming and you need never get trapped in a traffic jam again. Nowadays with new computer technology that easily allows connecting your computer to your television, people who have high definition, 62” plasma screens can feel that they are actually in a casino.

There are rumblings in the New Hampshire state government that there is an opportunity that is being missed to bring in valuable tax income by easing legislation and to gradually introduce gambling into the state. The initial proposal is to allow video poker and possibly slots to be installed at the racetrack sites in New Hampshire. Hardly Las Vegas, but it’s a start. Even that development seems a long way off, so the tax dollars that could be earned are going somewhere else while casino owners and casino enthusiasts are missing each other in New Hampshire.

1031 Exchanges Outside The U.s. Territory – What You Must Know

As a real estate investor, you probably are aware of the advantages of a 1031 exchange over outright sale of a property. An exchange defers your capital gains taxes, keeps your money working for you, and helps to build equity and maximize your returns. But 1031 exchanges are allowed not only for the good of the investor; by allowing investors to move their capital to the most advantageous investments, section 1031 stimulates the U.S. economy.
Since 1031 exchanges help advance the economy, would it be possible to exchange for a property situated in a foreign nation? The answer is no, it cannot be done. Although you are temporarily free from capital gains taxes, the money you saved in having a 1031 exchange falls under tax deferment and this presupposes that the government can collect the money from you anytime you want to sell your property.
It is a fact that IRS often encounters difficulty in collecting taxes especially when it regards the sale of a foreign property.
Mainly, the United States permit making 1031 exchanges within its territory to ensure that the economy will prosper and the IRS will be able to collect taxes sometime later. Now you may want to know what rules may apply to other U.S. territories such as Puerto Rico, U.S. Virgin Islands, and Guam.
Unlike normal exchanges, it follows a more restrictive order. In its private letter rulings for instance, the IRS has made known that properties in Virgin Islands can be regarded as like-kind in an exchange with properties in the U.S. if it is income producing.
Now if you want to make an exchange outside of the United States (meaning the fifty states and Washington, DC) – you have to make sure that that the property you are selling and your replacement property are regarded as ‘like-kind’. You can also request the IRS to give you a private letter ruling.

How To Fill Up W-8ben Form From Commision Junction (non-us Resident)

This tutorial only applicable for NON-US RESIDENT only.

I am pretty sure some of you stumble upon the W-8BEN FORM, when u finished registering Commission Junction or any other Affiliating programs.

Well, this is the tutorial here help you to fill up the form 😀

Basically, W-8BEN form is the “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding”. It is required by the U.S. based company so that they don’t need to report to the U.S. tax office about any income paid to you.

Filling the W8 form

Part 1: Identification of Beneficial Owner

You just need to fill in the following fields:

* 1. Name of Individual or prganization that is the beneficial owner — Your full name.
* 2. Country of incorporation or organization — Your Country
* 3. Type of beneficial owner — tick “Individual”
* 4. Permanent residence address (street, apt. or suite no., or rural route). — Your mailing address, with city/town, state, postal code, and country

Ps: Just leave the rest empty, don’t worry about it.

Part 2: Claim of Tax Treaty Benefits

Below the “9 I certify that (check all that apply):”

Just tick the “a” empty box

“a The beneficial owner is a resident of ______within the meaning of the income tax treaty between the United States and that country.” Do write your country in that blank field.

Part 3: Notional Principal Contracts

Just tick the empty box next to 11, “I have provided or will provide a statement that identifies those notional principal contracts from which the income is not effectively
connected with the conduct of a trade or business in the United States. I agree to update this statement as required..”.

Part 4: Certification

Sign your signature at “Sign Here” and fill in the Date. The date should be in the MMM-DD-YY format, month comes first before date. Example: 06-25-08.

Moreover, please take note that “Capacity in which acting” = “Who are you?” i.e.: owner; operator; chairperson, President; father; mother; shareholder; attorney; friend of the court…

You’re done! Fax or mail the W8 form back to the specific company. They should have provided the fax number and company mailing address. Note that the country code for U.S. is 1 (One).

How Tax Planning Between Israel and the United States Can Significantly Reduce Your Taxes

This article is the first of two that will provide an overview of U.S. and Israeli personal income tax and estate tax (taxes paid at the time of death). The article is intended for people who live, or plan to move to Israel, and to US parents with children in Israel. It is also relevant for business people with activity in the U.S. who are neither U.S. citizens or green card holders.

As a general rule, U.S. citizens and residents pay tax on their worldwide income. Thus the U.S. taxes of an Israeli citizen residing in the U.S. and a U.S. citizen living in Israel are basically the same. Both must file annual tax returns in the U.S. and report their worldwide income and foreign bank account.

On the other hand, non-citizens of the U.S. who are not residents of the US pay taxes only on income that is generated in the United States. The income that may be subject to Federal income tax fall into two categories: income that is tied to a business in the U.S., or “passive” income, such as interest, dividends, etc.

Obviously, for a non-citizen/non-resident with significant income outside the U.S., the question of when and whether that person will be considered a U.S. resident has very important tax implications. Most non-citizens may think that the term “resident” means what it does in the world of Immigration law. However, this is not the case. For tax purposes, a person who is either a citizen or green card holder indeed pays tax on world wide income. However, non-citizens without a green card will generally be considered residents if they meet the following criteria:

a. Was in the U.S. 31 days during the year in question, and
b. Was in the U.S 183 days during the 3-year period, from the year in question and 2 years before that. However, in making the calculations, days present in the U.S. the year in question are counted as full days. Days present in the first year before that are counted as 1/3 days. Days present in the second year before that are counted as 1/6 days. So if the person was in the U.S. in 2009 the total of 93 days, and 120 days in 2008 and 120 days in 2007, the sum is 153 days. This person will not be considered a resident in 2009 for U.S. income tax purposes.

To summarize, if you have substantial income outside the US and are neither a citizen or green card holder, you need to count your days carefully. Proper planning options are available.

On the other hand, if a significant part of your worldwide income is generated in the U.S., and you are a non-citizen, non-resident, then it may be preferable to be considered a resident for tax purposes. Why? Because non-citizen non-residents pay a relatively high flat tax on the gross amount of income received and the amount of deductions they can claim to reduce their income is limited. Thus the income on which the flat tax is imposed is high.

With regard to Israeli taxation, Israel, like the United States, taxes its residents on a world-wide basis. Regardless of citizenship, an Israeli resident is taxed on income worldwide. Also like that U.S., Israel taxes non-residents only on income generated in Israel.

Does this mean that people end up being clobbered by taxes in both countries?

If this were the case, obviously few are the people that would move or invest abroad. Treaties to avoid double taxation solve this. The goal of the Treaty is to provide a tax credit in his/her country of residence for taxes paid in the other country. For example, a U.S. based taxpayer with $50,000 taxable income in Israel would be taxed in Israel at 17.5%. The U.S. taxpayer would only be required to pay additional taxes in the U.S. if his/her tax rate on the $50,000 is higher than 17.5%, in which case, the person would pay the I.R.S. only the difference. In the reverse case, the Israel-resident taxpayer is required to pay the 17.5% to the U.S., and then a Cap up to the marginal tax rate in Israel.

The most interesting scenario involves U.S citizens or residents who move or return to Israel. Under the above analysis, it would appear that this person pay Israeli taxes on worldwide income, and receive a credit for any income taxes paid in the U.S.

This is not the case, however, due to very special circumstances. First, Israel has granted substantial tax exemptions to Olim Hadashim and veteran ex-pats to attract them to move to Israel. The essence of these exemptions are that people moving or returning to Israel are exempt from taxation for a period of 10 years for all income that is generated outside of Israel. (Legislation providing investment benefits for this group is being finalized, and worth while exploring as well).

Given, however, that the person is a U.S. Citizen or resident, one would think that this income would still be taxed in the U.S. In some cases, this is the case. However significant loop-holes exist. With proper planning, the U.S. citizen with either an active U.S. business or passive income can move to Israel, and with proper planning, be exempt from taxes in the U.S. as well. This is true with regard to various types of investment income, capital gains, and most significantly, for salaries and several other related expenses paid to that person by a U.S. business, whether it is owned by that tax payer or not.

Will this income be taxed in Israel as Israel-sourced income? A complex question. Clearly, income generated in Israel is subject to Israeli tax. Yet proper planning can be highly effective. Clearly, the aim is to be fully exempt in both countries.

To summarize, the status of taxation between Israel and the U.S. is very fact specific, and depends on the status of each and every person and family. Non-U.S. taxpayers who maintain some business activity in the U.S. should plan their U.S. actions carefully and count days. With regard to U.S. Citizens and residents living in Israel or planning to do so, and with regard to families of such people, there are significant areas where proper planning can be most beneficial. And for the person or family before or after the move to Israel, the importance of having a healthy monthly stream of income in U.S. Dollars to support live in Israel cannot be overestimated. Financial security is often a key factor in determining if and how a person will enjoy the life they hoped for in Israel. Proper planning can help and have a great beneficial for all parties involved.

And as this article provides an overview of the subject, nothing in it should be construed as providing legal or other advice for any specific case.

Article Source: http://EzineArticles.com/4853383

United States Tax Court and Corruption

It came to my attention last month while in Tax Court in Tampa Florida, that the government today seems to have the opinion that their rules are more important that substantial justice. I do not believe that is the way our founding fathers envisioned our government to operate. If it had been, the Constitution would not have been so specific as to the rights of the people.

Even the Supreme Court in one of its more honest decisions, placed substantive law above the rules of court. The United States Tax Court however, does not share the high Court’s view, and in its defiance of the spirit of justice has sent a disturbing message to the Internal Revenue Service agents that they too can defy the rule of law. IRS agents are bound by the Regulations prescribed by the Secretary of the Treasury and their Manual. Taxes other than Subtitle A, are in fact under the direction and control of the Attorney General of the United States acting as Secretary under the code.

As the Supreme Court stated in California Banker’s v Schultz, without the regulation the statute does nothing, so the examiner has no authority to enforce any statute without the guidance of the Secretary’s official position on the interpretation of that statute or code section. The Reform and Restructuring Act of 1998 made it mandatory that Internal Revenue officer, employees and agents follow the Secretary’s Regulations and their published Internal Revenue Manual. Such mandatory guidance should have clipped the wings of aggressive agent behavior that the Tax Court Judges and field counsel have fostered by their arrogance and defiance of pro se litigant’s rights. Unfortunately, Congressional guidance has been ignored generally, in every court today.

Take for instance the SFR’s (Substitute for Return) which the IRS examiner creates under the authority of Internal Revenue Code section 6020(b). Not only is the Return not authorized outside of 27 C.F.R. § 53 and 70 which is Alcohol, Tobacco and Firearms. The return contains a zero dollar amount, which even the Tax Court in Cabirac v Commissioner admitted that; the majority of courts, including the Tax Court, have held, generally, a return that contains only zeros is not a valid return. It is interesting, however, how federal prosecutors have charged, what they term “Illegal tax protestors” with willful failure to file, when they filed a zero return, but the Tax Court allows the IRS agents to create and file “dummy” zero returns claiming the authority of 26 U.S.C. § 6020(b) that has the effect of opening, otherwise closed accounts, for one reason, to allowing IRS agents to circumvent the Constitutional mandate of probable cause, before prying into the private affairs of citizens of the Union States where they scheme to extort money and property by making adjustments, and assess penalties and interest under “color” of law.

There is certainly a double standard in our court system today, that must be corrected, if freedom is to prevail. The courts are our last hope for freedom. When justice is withheld freedom is lost.

Article Source: http://EzineArticles.com/4004802

Us Real Estate Tax & Foreign Investment

US Real Estate Tax is a major consideration for foreign investors. While the US market is currently viewed as offering the best opportunity for profitable investments, how a sale is structured and taxed determines the true amount of profit to be had.

There are really three areas concerning tax that an investor needs to consider; income, capital gains and inheritance tax. The laws are quite complex and require a good international tax attorney, but here is a brief overview.

Income Taxes: Should you rent your property, you’ll be required to pay income tax. As a foreign real estate investor, you can simply choose to have the gross income taxed, currently at a rate of 30%. Should you choose this basic flat rate, there are no deductions allowed for maintenance, mortgage interest, utility payments, etc.. Nevertheless, your country may have special treaties with the USA where the flat rate is actually less than 30%.

A better, and more popular alternative, is to treat investments in US real property as a trade or business. This allows you to be taxed on net income rather than gross, which can greatly reduce your US Real Estate Tax bill.

Capital Gains Tax: When you sell your real estate, capital gains tax is due. The US government has created FIRPTA (Foreign Investors Real Property Tax Act) to ensure compliance with payment. It requires the buyer to take 10% from the sales price and send it directly to the Internal Revenues Service as down payment for taxes due. Once a return is filed, the money is used toward the taxes owed, or refunded if necessary.

There are some instances where FIRPTA does not apply. For instance, if you choose to exchange your property for another similar property in the US, called a 1031 exchange, you would be exempt. Another common scenario which allows a FIRPTA exemption is when the buyer is going to use the property as their personal residence and the sales price is less than $300,000.

Inheritance Tax: If, by chance, you pass away whilst owning real estate in the US, your estate will have a significant inheritance tax burden. Foreign individuals are not allowed the usual exclusion given to US residents. However, you can avoid this tax by establishing entities offshore to own the property.

There exist certain investment structures which can be put into place to help reduce or eliminate the amount of tax paid. The key is to find a skilled International tax accountant, and discuss the US Real Estate Tax, as well as the pros and cons of each structure, prior to investing in the market.

Getting A Casino Tax Refund For Non Usa Citizens

It can be difficult to get a casino tax refund for non USA citizens because they have no real recourse with the IRS, which is the agency that is in charge of collecting taxes in the United States. Therefore, those who are looking for a casino tax refund for non US citizens are best to use a service that will do this for them. This is much faster than trying to file for the refund from the IRS directly and can get someone money that they never thought that they would get back from the IRS.

Non US citizens who come to the United States and win money in one of the casinos are taxes by the IRS even if they are not obligated to pay income tax in this country. The reason for this is that the casinos have to take taxes from the winnings of those who win a certain amount, usually a thousand dollars or more, right off of the winnings themselves so insure that people pay taxes on the winnings. Those who win will usually also get a 1099 form that they will use to declare their earnings. While this is par for the course when it comes to US citizens who are used to filing with the IRS every year to declare their income, most people from other countries have no idea how to deal with the IRS and may not even realize that they can get a casino tax refund for non USA citizens.

A great deal of people who win money in US casinos take what they get and go on their way. However, they may wonder why they have to pay income taxes to a country where they do not live and cannot partake of any of the services that income taxes provide for. They may not know that they can get a casino tax refund for non US citizens until they learn about it. There are services out there that can help non US citizens get the money back that they have paid out in taxes from their winnings that they received from a US casino.

People in the United States do not want to deal with the IRS. It is a big agency and there is a lot of paperwork and bureaucracy in this organization that can be frustrating, making them difficult to deal with. Those who try to obtain the money on their own will usually meet with a barrage of forms that they have to complete and if they do not file properly will not see any of their money come back to them in the form of a refund, even if they are clearly due the money. To make matters worse, in some countries they may have to pay taxes on what they brought back into the country in which they live by form of income. Clearly, it is important to recoup any money paid in taxes that was not due. People in the United States file their income tax forms every year, usually with the help of someone who knows what they are doing so that they get the maximum refund. Those who do not live in the US and who have paid taxes due to gambling can also use a service to help them obtain their refunds.