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Green Card US Tax Residency Relationship | International Tax Lawyers Miami

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The definition of a US tax resident consists of various categories.  Among them are US Permanent Residents or “green card” holders.  This article explores Green Card US tax residency relationship.

General Rule: Green Card Holders are US Tax Residents

A lawful permanent resident of the United States is a US tax resident. IRC §7701(b)(1)(A)(i). IRC §7701(b)(6) defines the lawful permanent resident as: (1) the individual who has been “lawfully accorded the privilege of residing permanently in the United States as an immigrant in according with the immigrations laws” at any time during the calendar year, and (2) “such status has not been revoked (and has not been administratively or judicially determined to have been abandoned).”

Green Card US Tax Residency: Physical Presence in the United States Does Not Matter

As you can see from the definition above, the green card test does not depend on where the US permanent resident actually resides.  In other words, even if a green card holder spent very little time (just enough to maintain his green card) in the United States, he is still a US tax resident.

Green Card US Tax Residency: Entry into the United States is Critical

Contrary to the actual physical presence after becoming a US tax resident, the entry into the United States with a green card is a highly important event.  As the regulations explain, a green card holder is not a “resident alien” for US tax purposes until he actually enters the United States while holding his green card.  “The residency starting date for an alien who meets the lawful permanent resident test (green card test), described in paragraph (b)(1) of § 301.7701(b)-1, is the first day during the calendar year in which the individual is physically present in the United States as a lawful permanent resident.” §301.7701(b)-4(a).

This means that, if an alien receives a green card but never enters the United States, he will never be a “resident alien” for US tax purposes. Of course, presumably, the green card will eventually lose its validity for failure to maintain it.

However, once the alien enters the United States with his green card, he becomes a resident alien for US tax purposes exactly on that day.  His US tax residency will last until the green card is revoked or he is considered to have abandoned his US permanent residency either judicially or administratively.

Green Card US Tax Residency: US International Tax Implications

Since obtaining a green card is pretty much equivalent to becoming a US tax resident, we must explore the implications of becoming a US tax resident especially from the US international tax perspective.  In a previous article, I already explored in detail the differences between US tax obligations of a resident alien (for US tax purposes) versus nonresident alien. Here, I will highlight the most important of these obligations from the US international tax perspective.

The first obvious US tax consequence of getting a green card and becoming a US tax resident is worldwide income taxation.  The United States government taxes its tax residents on their worldwide income, irrespective of where they earn this income. It also does not matter whether the green card holder’s foreign income is subject to taxation in a foreign country, whether it has been repatriated to the United States, whether it comes from pre-US funds, et cetera.  The obligation to report foreign income on US tax returns is absolute (of course there may be some treaty-based specific exceptions).

Second, a US tax resident may have to report deemed income based on the various anti-deferral tax regimes, such as Subpart F rules, GILTI, et cetera.

Finally, a US tax resident must also comply with all of his US information returns obligations, such as FBAR (officially FinCEN Form 114, the Report of Foreign Bank and Financial Accounts), Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, Form 8938, Form 926, et cetera

Contact Sherayzen Law Office to Understand Your US International Tax Obligations as a Green Card Holder

If you have a green card and you wish to understand your US international tax obligations, you should contact the international tax law firm of Sherayzen Law Office.  We have extensive experience in advising green card holders concerning their US tax obligations, including compliance with US international information returns.  If you have not compliant with your US tax obligations, then we can help bring your US tax affairs into full compliance with US tax laws.

Contact Us Today to Schedule Your Confidential Consultation!

Miami Foreign Trust Attorney | International Tax Lawyers Florida

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If you live in Miami, Florida, and you are an owner or a beneficiary of a foreign trust, you need to secure the help of a Miami Foreign Trust Attorney to properly comply with US international tax laws.

You should consider retaining Sherayzen Law Office as your Miami Foreign Trust Attorney. Sherayzen Law Office is a leading US international tax firm concerning US tax compliance of US beneficiaries and owners of a foreign trust. Our experience covers US taxpayers with a beneficiary and/or ownership interest in most of the countries that allow for the creation of a trust, including such important jurisdictions as: Australia, the Bahamas, Bermuda, Canada, Cook Islands, India, Japan, Jersey, New Zealand, Saint Kitts and Nevis, the United Kingdom and others. We also have an experience dealing with trusts organized in the United States that are treated as foreign trusts and, vice versa, trusts organized outside of the United States but treated as US trusts.

Miami Foreign Trust Attorney: Foreign Trust Annual US Tax Compliance

Sherayzen Law Office is an experienced US international tax law firm that helps its clients to stay in full compliance with the US international tax reporting requirements concerning foreign trusts, including Forms 3520, 3520-A, 4970, 8938 and FBAR. This applies to both, US beneficiaries and US owners (including US grantors, US trustees and deemed US owners) of a foreign trust.

Miami Foreign Trust Attorney: Foreign Trust Offshore Voluntary Disclosure

Sherayzen Law Office also helps its clients to remedy past noncompliance with respect to reporting of their beneficiary and/or ownership interests in a foreign trust as well as income from a foreign trust.  The primary legal vehicle for remedying such past tax noncompliance is an offshore voluntary disclosure.

Since 2005, Sherayzen Law Office has developed a profound expertise in all forms of offshore voluntary disclosures, including: Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquent International Information Return Submission Procedures and Reasonable Cause voluntary disclosure (also known as “Noisy Disclosures” or “Statutory Disclosures”).   Due to its unique expertise, our firm is able to handle both, the legal and the accounting sides of an offshore voluntary disclosure; i.e. we prepare all of the legal documents and tax forms for you within one firm.

Miami Foreign Trust Attorney: Foreign Trust Tax Planning

Sherayzen Law Office assists its clients with all aspects of US tax planning concerning foreign trusts.  Foreign trust tax planning can be very complex and involve multiple tax jurisdictions, but it remains one of the most effective tools to ethically and legally reduce your current income tax compliance burden.

Miami Foreign Trust Attorney:  Challenging IRS Classification and IRS Penalties

Sherayzen Law Office represents its clients before the IRS with respect to challenging IRS classification of a foreign trust as well as high IRS penalties imposed for prior tax noncompliance concerning foreign trusts.

Contact Sherayzen Law Office for Professional Help With Your US International Tax Compliance Concerning Your Beneficiary or Ownership Interest in a Foreign Trust

Timing is highly important in cases involving a foreign trust. Hence, if you have a beneficiary or ownership interest in a foreign trust, you contact us in order to maximize the positive impact of our involvement.

We can help You! Contact Us Today to Schedule Your Confidential Consultation!

Florida Streamlined Disclosure Attorney | International Tax Lawyer

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Florida has a huge immigrant community with over 21% of the population foreign-born and another more than 12% of the population that has at least one immigrant parent. The top countries of original for immigrants are: Cuba, Haiti, Colombia, Mexico and Jamaica. Many of these new US taxpayers own assets in foreign countries and receive income generated by these assets. Unfortunately some of these taxpayers are not in compliance with their US international tax obligations and want to participate in Streamlined Domestic Offshore Procedures (SDOP) or Streamlined Foreign Offshore Procedures (SFOP). These individuals often look for a Florida streamlined Disclosure Attorney for professional help, but they do not understand what this term really means. In this essay, I would like to explain the definition of Florida streamlined Disclosure Attorney and outline who belongs to this category of lawyers.

Florida Streamlined Disclosure Attorney: International Tax Lawyer

From the outset, It is important to understand that all voluntary disclosures, including the Streamlined options, form part of US international tax compliance, because these options deal with US international tax laws concerning foreign assets and foreign income. The knowledge that SDOP and SFOP are part of US international tax law makes you better understand what kind of lawyer you are looking for when you search for a Florida streamlined Disclosure Attorney. In reality, when you are seeking help with the SDOP and SFOP filings, you are searching for an international tax lawyer.

Florida Streamlined Disclosure Attorney: Specialty in Offshore Voluntary Disclosures

As I stated above, SDOP and SFOP form part of a very specific sub-area of offshore voluntary disclosures. This means that not every international tax attorney would be able to conduct the necessary legal analysis required to successfully complete an offshore voluntary disclosure, including Streamlined Domestic Offshore Procedures and Streamlined Foreign Offshore Procedures. Only a lawyer who has developed expertise in a very narrow sub-field of offshore voluntary disclosures within US international tax law will be fit for this job.

This means that you are looking for an international tax attorney who specializes in offshore voluntary disclosures and who is familiar with the various offshore voluntary disclosure options. Offshore voluntary disclosure options include: SDOP (Streamlined Domestic Offshore Procedures), SFOP (Streamlined Foreign Offshore Procedures), DFSP (Delinquent FBAR Submission Procedures), DIIRSP (Delinquent International Information Return Submission Procedures), IRS VDP (IRS Voluntary Disclosure Practice) and Reasonable Cause disclosures. Each of these options has it pros and cons, which may have tremendous legal and tax (and, in certain cases, even immigration) implications for your case.

Florida Streamlined Disclosure Attorney: Geographical Location Does Not Matter

While the expertise and experience in offshore voluntary disclosures is highly important in choosing your international tax lawyer, the geographical location (i.e. the city where the lawyer lives and works) does not matter. I already hinted at why this is the case above: offshore voluntary disclosure options were all created by the IRS and form part of US international (i.e. federal) law. In other words, the local law has no connection whatsoever to the SDOP and SFOP.

This means that you are not limited to Florida when you are looking for a lawyer who can help you with your streamlined disclosure. Any international tax lawyer who specializes in this field may be able to help you, irrespective of whether this lawyer resides in Florida or Minnesota.

Moreover, the development of modern means of communications has pretty much eliminated any communication advantages that a lawyer in Florida might have had in the past over the out-of-state lawyers. This is the reality in today’s post-pandemic world which greatly reduced the number of face-to-face meetings.

Sherayzen Law Office Can Be Your Florida Streamlined Disclosure Attorney

Sherayzen Law Office, Ltd. is a highly-experienced international tax Minnesota law firm that specializes in all types of offshore voluntary disclosures, including SDOP, SFOP, DFSP, DIIRSP, IRS VDP and Reasonable Cause disclosures. Our professional tax team, led by attorney Eugene Sherayzen, has successfully helped our US clients around the globe, including in Florida, with the preparation and filing of their Streamlined Domestic Offshore Procedures disclosure. We can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Foreign Real Estate US Taxpayer Definition | International Tax Lawyer

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This essay seeks to identify those considered to be a “US Taxpayer” with respect to reporting foreign real estate or income from it to the IRS. In other words, today, I will discuss the foreign real estate US Taxpayer definition.

Foreign Real Estate US Taxpayer Definition: IRC §7701(a)

The definition of “US taxpayer” for the purposes of foreign real estate is equivalent to the definition of US tax resident or “US Person” in IRC §7701(a). “US Persons” are equivalent to “US taxpayers” for the purposes of this article.

Note that, under §7701(a)(1), a person “shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation”. In other words, a “person” may mean not only an individual, but also a business entity, trust or estate.

Foreign Real Estate US Taxpayer Definition: General Definition

Under §7701(a)(30), a “US Person” means a US citizen, US resident alien, domestic partnership, domestic corporation, any estate that is not a foreign estate and a trust that satisfies both conditions of §7701(a)(30)(E). Let’s discuss each of these categories of US Persons in more detail.

Foreign Real Estate US Taxpayer Definition: Individuals Who Are US Persons

As I stated above, all US citizens and US resident aliens are considered US Persons. In the vast majority of cases, it is fairly easy to determine who a US citizen is; most complications occur with respect to “accidental Americans” and Americans with only one parent who is a US citizen.

A US resident alien is a more complex term. It includes US Permanent Residents (i.e. “green card” holders) as well as all persons who satisfied the Substantial Presence Test (unless an exception applies) and all persons who declared themselves as US tax residents. This means that a person may be a US resident for tax purposes, but not for immigration purposes. This situation creates a lot of confusion among people who marry US persons or who come to the United States to work; many of them believe themselves to be Non-US Persons, but in reality they are US tax residents.

Foreign Real Estate US Taxpayer Definition: Domestic Corporations & Partnerships

Under §7701(a)(4), corporations and partnerships are considered US Persons if they are created or organized in the United States or under the laws of the United States or any of its states. In the case of partnerships, the IRS may issue regulations that provide otherwise, but the IRS has not done so yet. Conversely, a corporation or a partnership is a Non-US Person if it is not organized in the United States.

Pursuant to §7701(a)(9), the definition of the United States for the purposes of §7701(a)(4) includes only the 50 States and the District of Columbia. In other words, §7701(a)(9) excludes all US territories and possessions from the definition of the United States. For example, a corporation formed in Guam is a Non-US Person!

The biggest complication that one would encounter in this area of law is with respect to common-law partnerships. The determination of their US tax residency may be a lot more complex, because they are not officially organized under the laws of any state.

Foreign Real Estate US Taxpayer Definition: Domestic Trust

A trust is a US Person if it satisfies both tests contained in §7701(a)(30)(E). The first test is a “court test”: a court within the United States must be able to exercise primary supervision administration. The second test is a “control test”: one or more US persons must have the authority to control all substantial decisions of the trust. Failure to meet either test will result in the trust being a Non-US Person with huge implications for US tax purposes.

Foreign Real Estate US Taxpayer Definition: Domestic Estate

While all other definitions described above define a domestic entity and state that a foreign entity is not a domestic one, it is exactly the opposite with estates. Under §7701(a)(30)(D), an estate is a US Person if it is not a foreign estate described in §7701(a)(31).

§7701(a)(31)(A) defines foreign estate as estate “the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under subtitle A”.

Contact Sherayzen Law Office for Professional Help with Your Foreign Real Estate Reporting Obligations in the United States

If you are a US person who owns foreign real estate and you have questions concerning your US tax compliance concerning owning foreign real estate, selling real estate or reporting income generated by foreign real estate, contact Sherayzen Law Office for professional help. We have helped US taxpayers around the world with their foreign real estate US tax obligations, and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

§318 Double-Inclusion Prohibition | International Tax Lawyers Tampa FL

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In a previous article, I discussed the IRC (Internal Revenue Code) §318 general rule on the re-attribution of corporate stock; in that context, I mentioned that there are certain restrictions on §318 re-attribution. Today, I would like to discuss one of such restrictions – §318 double-inclusion prohibition.

§318 Double-Inclusion Prohibition: General Re-Attribution Rule

Before we discuss the §318 double-inclusion prohibition, let’s recall the general §318 re-attribution rule. Under §318(a)(5)(A), stock constructively owned by a shareholder under any of the §318 attribution rules is deemed to be actually owned for the purposes of re-attribution to others.

The problem with this rule is that it can allow the re-attribution of stock to spread uncontrollably to include persons who have little to no relationship to the actual stock owners. This is precisely why Congress chose to impose certain limitations on the general rule so that the §318 re-attribution applies only to related persons with a real connection to the actual owners. One of these limitations is the prohibition on double-inclusion.

§318 Double-Inclusion Prohibition: Re-Attribution is Counted Only Once

Under Treas. Reg. §1.318-1(b)(2), corporate stock held by any one person will be included only once in the computation of ownership. This is the §318 double-inclusion prohibition rule.

It is important to note, however, that even though the stock ownership is counted only once, it should be counted “in the manner in which it will impute to the person concerned the largest total stock ownership”. Id.

§318 Double-Inclusion Prohibition: Example

The best way to understand the §318 double-inclusion prohibition is to look at the following example. Assume that husband and wife, H and W, equally own a partnership P (i.e. 50% each); H also owns 100% of the outstanding stocks of a C-corporation X.

Under §318(a)(1)(A)(i), W constructively owns all of her husband’s shares of X. Since H and W are partners of P, under the partnership upstream attribution rules, all stock owned by them is attributed to P. Since each spouse owns 100% of X (one actually and one constructively), does it mean that P owns 200% of X? No, this absurd result is prevented by Treas. Reg. §1.318-1(b)(2), which limits the attribution of X’s shares from H and W to P to a total of 100%.

Contact Sherayzen Law Office for Professional Help With US International Tax Law Compliance

US international tax law is incredibly complex and the penalties for noncompliance are exceptionally severe. This means that an attempt to navigate through the maze of US international tax laws without assistance of an experienced professional will most likely produce unfavorable and even catastrophic results.

This is why you should contact Sherayzen Law Office for professional help with US international tax law. We are a highly experienced, creative and ethical team of professionals dedicated to helping our clients resolve their past, present and future US international tax compliance issues. We have helped clients with assets in over 70 countries around the world, and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!