Sherayzen Law Office Ltd | US International Tax Law Firm

Sherayzen Law Office PLLC hereby gives notice that, as of January 1, 2018, its official owner is Sherayzen Law Office, Ltd (“Sherayzen Law Office Ltd”). Sherayzen Law Office Ltd will continue to utilize “Sherayzen Law Office” as its trade name. Furthermore, Sherayzen Law Office Ltd will continue to maintain the disregarded entity (for tax purposes) Sherayzen Law Office PLLC for an indefinite period of time.

This means that Sherayzen Law Office Ltd is the official name of our international tax law firm as of January 1, 2018. Sherayzen Law Office Ltd has assumed all assets, liabilities, rights and duties of Sherayzen Law Office PLLC as of January 1, 2018.

The change in the corporate structure of Sherayzen Law Office occurred for marketing purposes. “PLLC” is a highly specified form of doing business which is not recognized outside of the United States, whereas “Ltd” is a very common form of doing business worldwide.

Sherayzen Law Office Ltd is an international tax law firm owned by attorney Eugene Sherayzen, Esq., who specializes in US international tax law. In particular, Mr. Sherayzen is a leading expert in the area of offshore voluntary disclosures (IRS Offshore Voluntary Disclosure Program (“OVDP”), Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquent International Information Return Submission Procedures, Delinquent FBAR Submission Procedures, Reasonable Cause Disclosures, et cetera), FATCA compliance (including Form 8938, W8-BEN-E, et cetera), FBAR compliance, international tax compliance (including information returns for the ownership of a foreign business – Forms 5471, 8865, 8858, 926, et cetera), foreign trust US tax compliance (Forms 3520 and 3520-A), foreign inheritance reporting, foreign gift reporting, PFIC compliance (Form 8621), international tax planning and others.

Additionally, Sherayzen Law Office Ltd is helping its clients with domestic tax compliance, IRS audits, appeals to the IRS Office of Appeals and tax litigation.

Sherayzen Law Office Ltd operates worldwide. In fact, since 2005, Sherayzen Law Office has helped hundreds clients from close to 70 countries from every continent: Australia, North America (Canada, Mexico and the United States), South America (Argentina, Brazil, Chile and Colombia), including Central American countries like Barbados, Belize, Costa Rica, Nicaragua and Panama, Africa (Ethiopia, Ivory Coast, Nigeria), the Middle East region of Asia (Egypt, Iraq, Iran, Israel, Kuwait, Lebanon, United Emirates and so on), Southeast Asian countries (China, India, Thailand, et cetera), Far Eastern region of Asia (Japan) and the great majority of European countries (Western, Eastern, Northern and Southern Europe) including Great Britain and Ireland as well as Russia.

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El Salvador Tax Amnesty Program | International Tax Lawyer & Attorney

On October 10, 2017, the Salvadorian Congress enacted the Legislative Decree No. 804, “La Ley Transitoria para el Cumplimiento Voluntario de Obligaciones Tributarias y Aduaneras”. After noting the experience of the past El Salvador voluntary disclosure options, the Decree announced a three-month long El Salvador Tax Amnesty Program. Let’s briefly explore the main contours of this new El Salvador Tax Amnesty Program.

The Duration of El Salvador Tax Amnesty Program

The Decree specifies that the program will become effective on October 27, 2017 and it will end on January 27, 2018.

The Terms of El Salvador Tax Amnesty Program

El Salvador Tax Amnesty Program basically allows El Salvadorian taxpayers to voluntarily come forward, correctly declare their income and pay any undeclared or understated taxes. In return for doing so, all penalties, charges and interest will be waived by the tax authorities of El Salvador, la Dirección General de Impuestos Internos. This Salvadorian voluntary disclosure program compares very favorably with the IRS OVDP (which is not really an amnesty program and imposes a significant penalty for prior noncompliance).

The El Salvador Tax Amnesty Program is also very broad. The voluntary disclosure program is applicable to all taxpayers with outstanding tax liabilities that were due prior to October 27, 2017. The program covers understated taxes, undeclared taxes, withholding taxes, VAT, real estate transfer taxes and basically all other situations. The program is applicable to taxpayers irrespective of whether they ever filed their tax returns. El Salvador Tax Amnesty Program will even allow the taxpayers to simply pay their tax liability without any penalties, even if the income was already declared and taxes assessed.

Only a narrow category of taxpayers is not eligible to participate in El Salvador Tax Amnesty Program: the taxpayers already under a criminal investigation initiated by la Dirección General de Impuestos Internos and la Dirección General de Aduanas.

US Taxpayers May Participate in El Salvador Tax Amnesty Program and US Voluntary Disclosure at the Same Time

If you are a US taxpayer who has not declared his Salvadorian income in the United States and El Salvador, you may be eligible to participate in the voluntary disclosure programs of both countries at the same time.

It is important to remember, however, that these voluntary disclosures should be coordinated by your US and Salvadorian lawyers. The main reason for this coordination is a concern that an information disclosed under El Salvador Tax Amnesty Program may be automatically disclosed to the IRS by la Dirección General de Impuestos Internos, leading to an investigation that may prevent you from going through a voluntary disclosure in the United States.

New 11 IRS Compliance Campaigns | International Tax Lawyer & Attorney

On November 3, 2017, the IRS Large Business and International Division (“LB&I”) announced the rollout of additional 11 IRS Compliance Campaigns in addition to the 13 already existing campaigns. Most of these campaigns directly address the IRS concerns with respect to US international tax law compliance. Let’s explore these new 11 IRS Compliance Campaigns.

New 11 IRS Compliance Campaigns: What Does This Mean for Taxpayers?

The issue-based IRS Campaigns is the brand-new strategy of the IRS to maximize the utility of its strained resources. Unlike previous efforts, a Campaign basically focuses on a specific issue that may carry a significant non-compliance risk and, then, applies a variety of solutions (called “treatment streams”) to increase the compliance with respect to this issue. The treatment streams range from development of an externally published practice unit, potential published guidance to issue-based examinations.

From a taxpayer point of view, the new strategy means that, if the IRS announces a new campaign, US taxpayers associated with the risk issue at the heart of a new campaign are at increased audit risk.

New 11 IRS Compliance Campaigns: General Emphasis on International Tax Compliance

Seven out of total eleven campaigns are focused on international tax compliance. This means that the IRS continues to give priority to international tax enforcement. Hence, US taxpayers who own foreign assets or are involved in international business transactions are likely to be affected by the IRS campaigns and should make sure they are in full US tax compliance.

Let’s briefly describe each of the new 11 IRS Compliance Campaigns.

New 11 IRS Compliance Campaigns: 1120-F Chapter 3 and Chapter 4 Withholding

This campaign focuses upon verification of the withholding credits before the claim for refund or credit is allowed. To make a claim for refund or credit to estimated tax with respect to any U.S. source income withheld under chapters 3 or 4, a foreign entity must file a Form 1120-F. Before a claim for credit (refund or credit elect) is paid, the IRS must verify that withholding agents have filed the required returns (Forms 1042, 1042-S, 8804, 8805, 8288 and 8288-A).

In other words, this campaign is designed to verify withholding at source for 1120-Fs claiming refunds.

New 11 IRS Compliance Campaigns: Swiss Bank Program

A non-surprising new addition to campaigns that will focus on tax and FBAR noncompliance of US beneficial owners of Swiss bank and financial accounts. The IRS will draw on the materials supplied to the DOJ by Swiss Banks as part of the Swiss Bank Program.

New 11 IRS Compliance Campaigns: Foreign Earned Income Exclusion

This campaign is likely to affect US taxpayers who reside overseas. The campaign will focus on taxpayers who claimed Foreign Earned Income Exclusion, but did not meet the requirements for claiming them. The IRS will address noncompliance through a variety of treatment streams, including examination.

New 11 IRS Compliance Campaigns: Verification of Form 1042-S Credit Claimed on Form 1040NR

The campaign’s goal is to ensure the amount of withholding credits or refund/credit elect claimed on Forms 1040NR is verified and whether the taxpayer has properly reported the income reflected on Form 1042-S.

New 11 IRS Compliance Campaigns: Agricultural Chemicals Security Credit

The first of the new four domestic campaigns. The Agricultural chemicals security credit is claimed under Internal Revenue Code Section 45O and allows a 30 percent credit to any eligible agricultural business that paid or incurred security costs to safeguard agricultural chemicals. The credit is nonrefundable and is limited to $2 million annually on a controlled group basis with a 20-year carryforward provision. In addition, there is a facility limitation as outlined in Section 45O(b). The goal of this campaign is to ensure taxpayer compliance by verifying that only qualified expenses by eligible taxpayers are considered and that taxpayers are properly defining facilities when computing the credit. The treatment stream for this campaign is issue-based examinations.

New 11 IRS Compliance Campaigns: Deferral of Cancellation of Indebtedness Income

This is an interesting addition and a correct one to the campaigns; I also believe that this area suffers from high rate of noncompliance. This issue stems from the Great Recession of 2008; in 2009 and 2010, a lot of US taxpayers elected to defer their cancellation of indebtedness (“COD”) income incurred as a result of reacquisition of debt instruments at an issue price less than the adjusted issue price of the original instrument. Such taxpayers should have reported their COD income ratably over a period of five years beginning in 2014 through 2018.

Furthermore, whenever a taxpayer defers his COD income, any related original issue discount (OID) deductions on the new debt instrument, resulting from debt-for-debt exchanges that triggered the original COD must also be deferred ratably and in the same manner as the deferred COD income.

The goal of this campaign is to ensure taxpayer compliance by verifying that taxpayers (who properly deferred COD income in 2009 and 2010) actually properly reported it in subsequent years beginning in 2014. The campaign will also look at situations where an accelerating event occurred and required earlier recognition of income under IRC § 108(i). The treatment stream for this campaign is issue-based examinations. The use of soft letters is under consideration.

New 11 IRS Compliance Campaigns: Energy Efficient Commercial Building Property

The goal of this campaign is to ensure taxpayer compliance with the section 179D (Energy Efficient Commercial Building Deduction). Section 179D allows taxpayers who own or lease a commercial building to deduct the cost or portion of the cost of installing energy efficient commercial building property (EECBP). If the equipment is installed in a government-owned building, the deduction is allocated to the person(s) primarily responsible for designing the EECBP. The treatment stream for this campaign is issue-based examinations.

New 11 IRS Compliance Campaigns: Economic Development Incentives Campaign

The goal of this campaign is to ensure taxpayer compliance with respect to a variety of government economic incentives. These incentives include refundable credits (refunds in excess of tax liability), tax credits against other business taxes (for example, payroll tax), nonrefundable credits (refunds limited to tax liability), transfer of property and grants. The common problems targeted by this campaign are situation where taxpayers improperly treat government incentives as non-shareholder capital contributions, exclude them from gross income and claim a tax deduction without offsetting it by the tax credit received. The treatment stream for this campaign is issue-based examinations.

New 11 IRS Compliance Campaigns: Section 956 Avoidance

This campaign focuses on situations where a CFC loans funds to a US Parent (USP), but nevertheless does not include a Section 956 amount in income. The goal of this campaign is to determine to what extent taxpayers are utilizing cash pooling arrangements and other strategies to improperly avoid the tax consequences of Section 956. The treatment stream for this campaign is issue-based examinations.

New 11 IRS Compliance Campaigns: Corporate Direct (Section 901) Foreign Tax Credit

Domestic corporate taxpayers may elect to take a credit for foreign taxes paid or accrued in lieu of a deduction. The goal of the Corporate Direct Foreign Tax Credit (“FTC”) campaign is to improve return/issue selection (through filters) and resource utilization for corporate returns that claim a direct FTC under IRC section 901. This campaign will focus on taxpayers who are in an excess limitation position. The treatment stream for the campaign will be issue-based examinations. The IRS emphasized that this is just the first of several FTC campaigns. The IRS further specified that future FTC campaigns may address indirect credits and IRC 904(a) FTC limitation issues.

New 11 IRS Compliance Campaigns: Individual Foreign Tax Credit (Form 1116)

This campaign addresses taxpayer compliance with the computation of the foreign tax credit (“FTC”) limitation on Form 1116. Due to the complexity of computing the FTC and challenges associated with third-party reporting information, some taxpayers face the risk of claiming an incorrect FTC amount. The IRS will address noncompliance through a variety of treatment streams including examinations.