The court decided Garcia's contract with his sponsor TaylorMade had attributed
too much of the money to royalty payments for image rights, which the treaty
exempts from US tax. p
http://i.forbesimg.com tMove down
Mickelson
capped a dominant fortnight in Scotland by shooting a final round 66 to come
from behind and win The Open Championship. He also won the Scottish Open the
previous week. For his two weeks of play, earned £1,445,000, or about
$2,167,500.
The United Kingdom, which has
authority to set Scotland’s tax rate until 2016, graduates to a 40% tax rate
when income hits £32,010 then 45% when it reaches £150,000.
Mickelson will pay £636,069 ($954,000, or 44.02%) on his Scottish earnings.
But that’s not all. The UK will tax
a portion of his endorsement income for the two weeks he was in Scotland. It
will also tax any bonuses he receives for winning these tournaments as well as
a portion of the ranking bonuses he will receive at the end of the year, all at
45%.
The good news for Mickelson is that
he can take a foreign tax credit on his US return so he is not double-taxed at
the federal level on this income. The bad news is that the credit does not
cover self-employment taxes (2.9%) or the new Medicare surtax (0.9%).
Additionally, California does not have a foreign tax credit so he will have to
fork out 13.3% there as well. Although he receives federal deductions for his
California tax and half of his self-employment tax, these deductions do not
benefit him on this income because as they reduce his federal tax they reduce
his foreign tax credit.
Without considering expenses,
Mickelson will pay 61.12% taxes on his winnings, bringing his net take-home
winnings to about $842,700. When expenses are considered (10% to caddy Jim
“Bones” Mackay, airfare, hotel, meals, agent fees on endorsement
income/bonuses—all tax deductible here and in the UK), his take-home will fall
closer to 30%.
Professional Golfers & Athlete's Need Professional Tax Advice!
Don't Let The Taxing Authorities put you in the Ruff!
Need a Scratch Tax Attorney! Contact the Tax Lawyers at Marini & Associates, P.A.
Under the Tax Reform Act of 1986, U.S. partnerships are required to withhold income tax on "effectively connected taxable income" deemed allocable to foreign partners.
The U.S. partnership must file a Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, to show the amount of effectively connected taxable income and the total tax credit allocable to the foreign partner for the partnership's tax year.
Foreign partners must attach this form to their U.S. income tax returns to claim a withholding credit for their shares of the Section 1446 tax withheld by the partnership.
New Advise Regarding Foreign Partners?
Contact the Tax Lawyers at Marini & Associates, P.A.
Petitioner challenged the IRS's determination that the gross income petitioners reported in 2003 and 2004 based on their ownership of a controlled foreign corporation should have been taxed at the rate of petitioners' ordinary income rather than the lower tax rate they had claimed.
At issue was whether amounts included in petitioners' gross income for 2003 and 2004 pursuant to 26 U.S.C. 951(a)(1)(B) and 956 (collectively, "section 951 inclusions") constituted qualified dividend income under 26 U.S.C. 1(h)(11).
The court concluded that section 951 inclusions did not constitute actual dividends because actual dividends required a distribution by a corporation and receipt by a shareholder and these section 951 inclusions involved no distribution or change in ownership; Congress clearly did not intend to deem as dividends the section 951 inclusions at issue here; and petitioners' reliance on other non-binding sources were unavailing.
Credit Suisse and Zurich Cantonal,
have obtained government approval to send the US Department of Justice (USDoJ)
lists of American clients who have moved assets out of their accounts to another
bank.
The so-called 'leaver lists' do not identify clients but do name the
destination banks, which the USDoJ will then pursue with further disclosure
notices.
The Swiss government announced a new approach allowing banks to hand over
data to U.S. authorities in a bid to solve a dispute over undeclared assets and
forestall further indictments by the Department of Justice.
The government is proposing
banks apply for individual authorization to surrender records intended to yield
information on Americans who cheated on their taxes, Finance Minister Eveline
Widmer-Schlumpf said in the capital, Bern, Wednesday.
The
government took the step in a bid to shield more banks from being charged by
the U.S. after Parliament last month voted down a bill that would have enabled
the transfer and established more legal protection for bank employees. The
decree, dubbed plan B by politicians, comes after Wegelin & Co. pleaded
guilty in January to helping Americans dodge taxes.
Client data isn’t covered by the
authorization, according to the government. That information can only be handed
over in response to a request for administrative assistance by the U.S. under
existing double-taxation agreements, it said.
Switzerland is the biggest
center for global offshore wealth with $2.2 trillion, or about 26 percent of
the market, according to Boston Consulting Group.
The government has already
issued similar authorizations for banks including Credit Suisse Group AG last
year. The lender is among a group of at least 12 financial institutions already
subject to a U.S. probe.
So-called
leaver lists of clients who left for another Swiss bank can be transmitted as
long as they don’t include any personalized data, Widmer-Schlumpf said.
The
Swiss government recently announced it is negotiating individual agreements
with each bank to allow them to pass on this information, which would otherwise
be a gross breach of Swiss privacy laws. However, these agreements will not
allow the banks unrestricted powers of disclosure. In particular, the so-called
'leaver lists' will not identify clients by name. But they will give details of
the assets moved, and crucially they will name the destination banks.
Theofficial reason cited for
disclosing leaver analysis information to the US authorities is that it will
help them assess the size of the penalties to be imposed on each bank.
However,
some observers, such as Geneva lawyer Douglas Hornung, have a different theory.
They believe the USDoJ will assume that the destination banks for these asset
switches have deliberately solicited them in order to help the clients keep
their untaxed assets hidden. These banks will thus become new targets for
so-called group disclosure requests issued by the USDoJ, and will in turn be
exposed to further criminal investigations.
In
order to frame good group requests, the US authorities need to be able to
identify the Swiss banks involved.
With
the leaver list information, they could identify the banks who actively
promoted US tax evasion and thus who should be targets for additional group
requests and perhaps even criminal prosecution in the US.
This
strategy has already worked once, when UBS was forced to yield up a leavers'
list under heavy US pressure. The money trail derived from this list appears to
have revealed that much of the departing funds went to Bank Wegelin, which
immediately became a target for US investigators. Wegelin had to pay the US
authorities a USD58 million penalty and as a result was forced to cease
operations earlier this year.
Scott Michel, a partner and President of Caplin & Drysdale, a DC-based law firm, advises that on July 10, 2013, the Hong Kong Legislative Council moved to enable Hong Kong to enter into stand-alone Tax Information Exchange Agreements and, more importantly for U.S. persons who have financial accounts there, to sign an “intergovernmental agreement” (IGA) with the U.S. for implementation of the Foreign Account Tax Compliance Act (FATCA).
It is expected that the U.S. and Hong Kong will agree on an IGA, and that financial institutions in Hong Kong will begin to comply with FATCA’s due diligence and automatic disclosure provisions next year.
The implications are profound for any U.S. citizen, green card holder or tax resident who has non-U.S. financial accounts or other financial assets, such as life insurance, retirement plans and the like. FATCA will require banks and other entities to ascertain which clients are subject to the U.S. tax system, to ask them to sign a W-9 form making their account transparent to the IRS and a waiver of domestic bank secrecy or confidentiality rules, and to begin in 2014 to share data with the IRS regarding their assets.
To the extent affected Americans have not complied with U.S. tax rules, they should consider their options in order to try to spare them from the most extreme enforcement measures available to the IRS.
Automatic Information Exchange Comes to Central The towering skyscraper financial firms in Central hold trillions of dollars in funds among millions of account holders and offer wealth and trust management services, insurance and annuity products, retirement plans, and the like.
Many clients of these entities have a U.S. passport or green card. Maybe it is time to reconsider their U.S. Citizenship and Expatriate?
Need FATCA or Expatriation Advise? Contact the Tax Lawyers
Steven Mopsick has an interesting view of how well or poorly the IRS has preformed in it's Offshore Voluntary Disclosure Program (OVDP). It should be obvious to practitioners and taxpayers alike that the IRS offshore voluntary disclosure program first announced in 2009, is not for everyone. It is expensive, time consuming and sometimes nerve-wracking.
What has been your experience as to how the IRS has preformed in it's Offshore Voluntary Disclosure Program? Please feel free to add your comments! Also, feel free to advise the IRS directly, since they are currently seeking comments on Offshore Voluntary Disclosure Program!
There are currently 17 states offering sales tax holidays where state sales tax charges
are temporarily dropped on back-to-school items such as clothing, footwear, classroom supplies, computers and certain other products, according to CCH.
“What’s really important for consumers to know is the specific information about products that qualify for each state’s holiday in order to maximize sales tax savings,” said CCH senior state tax analyst Carol Kokinis-Graves in a statement. “Typically several restrictions will apply and each state usually provides official, highly detailed rules on specific items that do or do not qualify for state sales tax exemptions on designated dates.”
Florida: On Aug. 2-4, the following are exempt: clothing with a sales price of $75 or less per item and school supplies with a sales price of $15 or less per item; and personal computers and related accessories with a sales price of $750 or less purchased for noncommercial use. The holiday exemption does not apply to sales of such items made within a theme park, entertainment complex, public lodging establishment or airport.
For a complete listing of State Sales Tax Back to School Holidays see AccountingToday.
The U.S. Internal
Revenue Service is pursuing tax enforcement cases against companies over the
issue of "stateless income," a senior agency official said on
Wednesday Jul 24, 2013 in a reference to corporate profits that are not taxed by any
country. Erik Corwin, an IRS deputy chief counsel, said there were international tax
disputes with companies, "most involving consequences of complex
restructurings designed either to create stateless income or to affect a tax
efficient repatriation." "So those are a family of cases that are in the pipeline and being looked
at," he told tax lawyers in a speech in Washington. Asked by reporters later to elaborate on any litigation, Corwin declined to
comment. But tax lawyers said the references to stateless income and profits
held offshore could signal a new enforcement approach by the IRS. "I have not heard the IRS use the term before," Edward Kleinbard, who coined the "stateless income" phrase in a 2007 research paper, said in a telephone interview.
By “stateless
income,” I mean income derived by a multinational group from business
activities in a country other than the domicile of the group’s
ultimate parent company, but which is subject to tax only in a jurisdiction
that is not the location of the customers or the factors of production through
which the income was derived, and is not the domicile of the group’s parent
company. Stateless income thus can be understood
as the movement of taxable income within a multinational group from high-tax to
low-tax source countries without shifting
the location of externally-supplied capital or activities involving third
parties. Stateless persons wander a hostile globe, looking for asylum; by
contrast, stateless income takes a bearing for any of a number of zero or
low-tax jurisdictions, where it finds a ready welcome.
As an
example, a U.S. firm that sells software in Germany earns stateless income when
through structuring the added value from the sales to German consumers is taxed
in Ireland rather than
Germany
or in the U.S. where the parent company resides. The
same analysis would apply to a German firm whose income from sales to U.S. or
French customers comes to rest for tax purposes in Luxembourg.
Concern over stateless income was raised in May when the Senate Permanent Subcommittee on Investigations released a report that found Apple Inc avoided $9 billion in U.S. taxes in 2012 using a strategy involving three offshore units with no discernible tax home or "residence."
Companies that avoid taxes say they are doing nothing illegal, but are taking
advantage of breaks offered by governments to create jobs and business.
The repatriation of profits has been a top concern for U.S. companies, which
collectively have more than $1.5 trillion sitting offshore. Most say they keep
the money there to avoid the taxes they would face by bringing it home.
The IRS official's comments came days after the G20, a group of leading world
economies made up of 19 countries plus the European Union, voiced support for a
fundamental reassessment of the rules on taxing multinational corporations.
On July 19, the Organization for Economic Co-operation and Development, which
advises the G20 on tax and economic policy, released an action plan that said
existing national tax enforcement regimes do not work. The plan took aim at
loopholes used by companies such as Apple and Google Inc to avoid billions of
dollars in taxes.
"We must address the persistent issue of 'stateless income,' which
undermines confidence in our tax system at all levels," U.S. Treasury
Secretary Jack Lew said in a statement on July 19 following the OECD report.
WASHINGTON, July 24 (Reuters) - The U.S. Internal Revenue Service
is pursuing tax enforcement cases against companies over the issue of
"stateless income," a senior agency official said on Wednesday in a
reference to corporate profits that are not taxed by any country.
Erik Corwin, an IRS deputy chief counsel, said there were
international tax disputes with companies, "most involving consequences of
complex restructurings designed either to create stateless income or to affect
a tax efficient repatriation."
"So those are a family of cases that are in the pipeline and
being looked at," he told tax lawyers in a speech in Washington.
Asked by reporters later to elaborate on any litigation, Corwin
declined to comment. But tax lawyers said the references to stateless income
and profits held offshore could signal a new enforcement approach by the IRS.
"I have not heard the IRS use the term before," Edward
Kleinbard, who coined the "stateless income" phrase in a 2007
research paper, said in a telephone interview.
He is a former chief of staff to the congressional Joint Committee
on Taxation and now a professor at the University of California.
Concern over stateless income was raised in May when the Senate
Permanent Subcommittee on Investigations released a report that found Apple Inc
avoided $9 billion in U.S. taxes in 2012 using a strategy involving three
offshore units with no discernible tax home or "residence."
Companies that avoid taxes say they are doing nothing illegal,
but are taking advantage of breaks offered by governments to create jobs and
business.
The repatriation of profits has been a top concern for U.S.
companies, which collectively have more than $1.5 trillion sitting offshore.
Most say they keep the money there to avoid the taxes they would face by
bringing it home.
The IRS official's comments came days after the G20, a group of
leading world economies made up of 19 countries plus the European Union, voiced
support for a fundamental reassessment of the rules on taxing multinational
corporations.
On July 19, the Organization for Economic Co-operation and Development,
which advises the G20 on tax and economic policy, released an action plan that
said existing national tax enforcement regimes do not work. The plan took aim
at loopholes used by companies such as Apple and Google Inc to avoid billions
of dollars in taxes.
"We must address the persistent issue of 'stateless
income,' which undermines confidence in our tax system at all levels,"
U.S. Treasury Secretary Jack Lew said in a statement on July 19 following the
OECD report. (Reporting by Patrick Temple-West; Editing by Howard Goller and
Andre Grenon)
Liechtensteinische Landesbank is close to reaching a settlement with the
US Department of Justice, which is threatening to prosecute it for allegedly
abetting tax evasion by American clients.
LLB would become the third European bank, after Switzerland's UBS and Wegelin, to settle with U.S. authorities clamping down on offshore banks they accuse of helping wealthy Americans to avoid paying tax.
The tiny European principality of Liechtenstein has been quicker than Switzerland to succumb to pressure on its banking secrecy laws, but its banks have struggled with the resulting drop in client assets.
LLB now expects the settlement to
cost it up to CHF47 million (USD50 million), rather than the CHF16 million
originally budgeted.
In March it announced plans for a 25 per cent staffing cut
following the closure of its Swiss operation.
The court decided Garcia's contract with his sponsor TaylorMade had attributed
too much of the money to royalty payments for image rights, which the treaty
exempts from US tax. 
