international tax lawyer minnesota

Taxation of Royalties Ceases Under Estonia-UK Tax Treaty | MN Tax Lawyer

On January 18, 2017, the HM Revenue & Customs announced that the withholding tax on royalties under the 1994 Estonia-UK tax treaty has been eliminated retroactively as of October 16, 2015.

Under the original Estonia-UK tax treaty, the rates had been 5 percent for industrial, commercial, and scientific equipment royalties and 10 percent in other cases. However, paragraph 7 of the Exchange Notes to the Treaty contains the Most Favoured Nation” (MFN) provision relating to royalties (Article 12). Under the MFN provision, UK tax residents only need to pay the lowest tax withholding rate ever agreed by Estonia in a Double-Taxation Treaty (DTA) it later agrees with an OECD member country that was a member when the UK-Estonia tax treaty was signed in 1994.

It turns that Switzerland was an OECD member country in 1994. In 2002, Estonia signed a tax treaty with Switzerland, but the treaty did not impact the UK withholding tax rate at that time. In 2014, however, Estonia and Switzerland signed an amending protocal to the 2002 Estonia-Switzerland tax treaty. Under the protocol, the treaty was revised to provide for only resident state taxation of royalties.

It was this provision in the 2014 protocol to the Estonia-Switzerland tax treaty that triggered the 1994 MFN provision of the Estonia-UK tax treaty. Therefore, when the 2014 protocol entered into force on October 16, 2015, it effectively eliminated tax withholding on royalties not only in Switzerland (wth respect to Estonia), but also in the United Kingdom. While the taxation of royalties under the Estonia-UK tax treaty ceased on October 16, 2015, the HM Revenue & Customs waited for more than a year to announce it on January 18, 2017.

It should be pointed out that MFN provisions, such as the one in Estonia-UK tax treaty, quite often have an important impact throughout the treaty network of a country. This ripple effect of the MFN provisions creates enormous opportunities for international tax planning that is often utilized by international tax lawyers, including US international tax law firms such as Sherayzen Law Office, Ltd.

IRS 2016 Standard Mileage Rates for Business, Medical and Moving

On December 17, 2015, the IRS issued its 2016 standard mileage rates to calculate deductible automobile operation costs for business, charitable, medical or moving purposes.

The 2016 standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

54 cents per mile for business miles driven, down from 57.5 cents for 2015
19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
14 cents per mile driven in service of charitable organizations

These 2016 standard mileage rates are effective January 1, 2016 and they are optional; taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

There are some circumstances where a taxpayer cannot use the business standard mileage rate. These exceptions include where a vehicle is depreciated using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. Furthermore, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

The 2016 Standard Mileage Rates apply to the vehicles that the taxpayers own or lease (though, there may be additional complications if the vehicle is leased). In addition to standard mileage rates, taxpayers may also deduct, as separate items: parking fees and tolls attributable to the use of a car for business purposes; interest related to the business purchase of a car; state and local personal property taxes (to the extent allowed by IRC Sections 163 and 164).

Parking fees and tools are also available for deduction, as separate items, for the use of a car for charitable, medical, or moving expense purposes. The interest related to the purchase of a car and state/local property taxes are not deductible as charitable, medical or moving expenses; however, they may be deducted as separate items to the extent allowed by IRC Sections 163 and 164.

IRS Notice 2016-01 contains the 2016 standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

FBAR Tax Attorney St Louis: Another Swiss Banker Pleads Guilty to Tax Evasion

On March 12, 2014, the IRS and the DOJ announced that Andreas Bachmann, 56, of Switzerland, pleaded guilty to conspiring to defraud the Internal Revenue Service (IRS) in connection with his work as a banking and investment adviser for U.S. customers. It appears (at least from the perspective of an FBAR Tax Attorney St Louis) that Mr. Bachmann helped his U.S. customers conceal assets in secret Swiss Bank Accounts and other tax havens.

FBAR Tax Attorney St Louis: Background Information

In a statement of facts filed with the plea agreement, Mr. Bachmann admitted that between 1994 and 2006, while working as a relationship manager in Switzerland for a subsidiary of an international bank, he engaged in a wide-ranging conspiracy to aid and assist U.S. customers in evading their income taxes by concealing assets and income in secret Swiss bank accounts. Moreover, Mr. Bachmann traveled to the United States twice each year to provide banking services and investment advice to his U.S. customers (note from FBAR Tax Attorney St Louis: this could have been critical information for building the IRS case against Mr. Bachmann).

According to the IRS, Mr. Bachmann also engaged in cash transactions while traveling in the United States. In the course of arranging meetings with U.S. customers, some clients would request that Mr. Bachmann either provide them with cash as withdrawals from their undeclared accounts or take cash from them as a deposit to their undeclared accounts. As part of that process, Mr. Bachmann agreed to receive cash from U.S. customers and used that cash to pay withdrawals to other U.S. clients.

The IRS describes how, in one instance, Mr. Bachmann received $50,000 in cash from one U.S. customer in New York City and intended to deliver the money to another U.S. client in Southern Florida. Airport officials in New York discovered the cash but let Mr. Bachmann keep the money after questioning him (note from FBAR Tax Attorney St Louis: by that time, the IRS was probably already taking interest in Mr. Bachmann). The client in Florida refused to take the money after the client learned about the questioning by New York airport officials, and Mr. Bachmann returned to Switzerland with the $50,000 in cash in his checked baggage. Mr. Bachmann advised the executive management of the subsidiary about the incident with the cash.

The IRS further alleges that Mr. Bachmann also understood that a number of his U.S. customers concealed their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax haven entities, or structures, which were frequently created in the form of foreign partnerships, trusts, corporations or foundations.

FBAR Tax Attorney St Louis: IRS is Pleased

The IRS and the DOJ seem to be pleased with the result of their investigation. “Today’s plea is just the latest step in our wide-ranging investigations into Swiss banking activities and demonstrates the Department of Justice’s commitment to global enforcement against those that facilitate offshore tax evasion,” said Deputy Attorney General Cole. “We fully expect additional developments over the course of the coming months.”

Mr. Bachmann was charged in a one-count superseding indictment on July 21, 2011, and faces a maximum penalty of five years in prison when he is sentenced on August 8, 2014.

FBAR Tax Attorney St Louis: IRS and DOJ Are Stepping Up Criminal Enforcement of FBARs and International Tax Laws of the United States

As I predicted earlier, the IRS and the DOJ are in high gear of criminal enforcement of FBARs and international tax laws of the United States. As they work through the mountains of information that they received from the U.S. taxpayers participating in the Offshore Voluntary Disclosure Program and the defendants, like Mr. Bachmann, I fully expect the enforcement efforts to increase in the near future.

Moreover, with the new information disclosed by the Swiss banks as part of the U.S. Department of Justice (“DOJ”) The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”), the IRS will get an unprecedented new fountain of information that will allow it to reach ever further.

FBAR Tax Attorney St Louis: U.S. Taxpayers with Undisclosed Bank Accounts Should Consider Their Voluntary Disclosure Options As Soon As Possible

Given the fact that a large number of Swiss banks that participate in the Program will disclose all of their U.S.-held bank accounts by April 30, 2014 (assuming they have not already disclosed them), U.S. taxpayers with undisclosed accounts in Switzerland must act as soon as possible and consider their voluntary disclosure options. Failure to do so may result in the imposition of willful civil and even criminal penalties.

Contact Sherayzen Law Office for Help With Undisclosed Swiss Accounts

Sherayzen Law Office can help you with the voluntary disclosure of your Swiss accounts. Owner and attorney Eugene Sherayzen is an international tax expert in this field. He will thoroughly analyze the facts of your case and explain to you the available voluntary disclosure options. After you choose the voluntary disclosure option, our firm can prepare all legal documents and tax forms required for your voluntary disclosure, fully implement the ethically available strategies and rigorously defend your position against the IRS.

Contact Us to Schedule a Confidential Consultation NOW!

Tax-Filing Extension for Individuals Expires on October 15, 2013

Individual taxpayers who filed Form 4868 to request a six-month extension to file their 2012 tax returns should be cognizant of the fast-approaching October 15, 2013 final deadline to timely file these extended tax returns. This is also the last day the IRS will accept an electronically filed tax return for the year 2012.

The deadline equally applies to the extended 2012 tax returns for the taxpayers who reside in the United States and outside of the United States. It also applies to the filing of any required information tax returns such as Forms 3520, 8865, 5471, et cetera. Particular attention should be paid to Forms 8938 (the new forms created by the IRS in 2011 as a result of FATCA).

While this is not true in every situation, generally, the taxpayers who are in the Offshore Voluntary Disclosure Program should nevertheless attempt to file their extended 2012 tax returns timely.

Moreover, October 15, 2013, is the final deadline to fund a SEP-IRA or solo 401(k) for tax year 2012 if the taxpayer requested an automatic extension of time to file.

This essay is provided as a courtesy notice by Sherayzen Law Office, PLLC, a Minnesota international tax law firm for businesses and individuals; the essay does not constitute a legal or tax advice on your particular situation.

Minneapolis International Tax Attorney: Geography in Retainer Choice

If you were to search “Minneapolis international tax attorney”, Sherayzen Law Office, PLLC (which is based in Minneapolis) is likely to come out on the first page together with other Minneapolis international tax attorneys. The question is: should the geographical proximity of an attorney play a role in the retainer decision?

The answer depends on many factors. On the one extreme, if you are looking for a criminal law attorney in a murder case, then you may not have a choice but to find a local attorney. This is because local law and procedure would govern in this case, and only an attorney admitted to practice before the court of a local jurisdiction should handle the case. Of course, even in this case, there are exceptions because, sometimes, the unique qualities of an outside attorney are so desirable by the client that the court may accede in temporarily admitting this outside lawyer to practice just for one case.

If you are searching for a Minneapolis international tax attorney because you have undeclared offshore assets, then the pendulum swings to other extreme. Here, the knowledge of local law and procedure are likely to be of very little value. Instead, the experience and knowledge of an attorney in his area of practice (i.e. international tax law) will become the overriding factors in retaining an international tax attorney.

If you live in Minneapolis and you find a Minneapolis international tax attorney, then consider two other factors before hiring the attorney. First, international tax attorneys differ in their natural ability to identify problems and find solutions, creativity, advocacy and many other factors. Therefore, have a consultation with your Minneapolis international tax attorney before retaining him.

Second, in addition to differences in personal qualities, the experience of the international tax attorney in the international tax sub-area that you need and the ability to analyze the specific subject matter in the broader context are very important factors in retaining the attorney and should override the attorney’s particular geography.

Of course, the best outcome would be to find the international tax attorney in Minneapolis who you trust and who satisfies both issues above.

Contact Sherayzen Law Office Minneapolis International Tax Attorney for Help With International Tax Issues

If you have any international tax issues with respect to undeclared foreign assets, international tax compliance or international tax planning, contact the experienced international tax firm of Sherayzen Law Office for comprehensive legal and tax help.