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Monthly Archives: September 2016

US – Israeli Dual Nationals Lose FATCA Challenge in Israel.

September 16, 2016

An Israeli Supreme Court panel has thrown out a challenge to a tax information-sharing agreement with the U.S. and removed a temporary block on FATCA's implementation, rejecting arguments that the agreement violates the rights of Israelis.


The three-justice panel issued a brief ruling rejecting the challenge, with a more detailed opinion to follow, while also lifting an injunction issued late last month that had barred Israeli officials from implementing the law facilitating the U.S. Foreign Account Tax Compliance Act among Israeli financial institutions. The statute had been contested on concerns that it violates rights to property and privacy, and has inadequate protections for the information sent to the Internal Revenue Service.

In temporarily blocking the pact's implementation, Israel Supreme Court Justice Hanan Meltzer had in part cited concerns that there was inadequate time between the notification to people affected, U.S. citizens and those holding green cards, in August and the final implementation this month. The case was launched by U.S. citizen and Israeli resident Ritan Schreiber and the group Republicans Overseas Israel, protesting the legality of legislation intended to make Israeli financial institutions share information about accounts of U.S. citizens and green card holders with more than $50,000.

The group launched its suit against the Israeli government in December, claiming violations of rights to privacy, dignity and private property. The complaint raised concerns over the law’s automatic effect and lack of legislative input on implementation decisions.

Israel is not the first country whose government pushed back on FATCA’s requirements, as the Cayman Islands government ordered a delay in reporting dates earlier this summer, starting compliance reporting in August.

The case is Republicans Abroad in Israel v. Government of Israel, case number 8886/15, in the High Court of Israel. The appellate court overturned an earlier injunction against FATCA's implementation in Israel, on the basis that 'privacy in modern life is very limited'.

 
 
 


Prudent Action NOW Could Pre-Empt
Potentially Serious Legal Trouble Down the Road!
 

 

Contact the Tax Lawyers at 
Marini& Associates, P.A.  
 
for a FREE Tax Consultation
at: www.TaxAid.com or www.TaxLaw.ms
or www.OVDPLaw.com
or Toll Free at 888-8TaxAid (888) 882-9243

 

Read more at: Tax Times blog

Taxpayer is Entitled To Penalty Abatement Based on Mental Incapacity, Even Where Third-Party Has Durable Power of Attorney

September 14, 2016

In Chief Counsel Advice 201637012 the IRS has determined that whether a taxpayer qualifies for abatement of failure to timely file and pay penalties turns on whether the delinquencies were caused by her mental incapacity.

In so holding, the CCA found that the fact that another individual was authorized under a durable power of attorney (POA) to act on the taxpayer's behalf during the relevant time period was irrelevant to whether the penalties should be abated.

Have a Tax Problem? 

Need a Tax Penalty Abatement? 
 

 

Let US Help!

 

Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 

 

 

Read more at: Tax Times blog

Do You Have a FLP or LLC With Valuation Discounts? You Better Talk With Your Tax Advisor!

September 13, 2016

We previously posted Is This the End of Discounting Transfer Taxes with LLC's and FLPs? where we discussed that the Internal Revenue Service issued a proposed regulation which would beef up IRC Section 2704 of 1986 to preclude many of the presently available discounting techniques. In addition, this proposed regulation would expand the purview of section 2704 to include not only partnerships and corporations but LLCs, S corporations, and other family "business" transfer entities.

These long-awaited proposed regulations, released on August 2, 2016, would make sweeping and very significant changes to the valuation of interests in many family-controlled entities for estate, gift, and generation-skipping transfer tax purposes.  The primary focuses of the proposed regulations are treating the lapse of voting or liquidation rights as an additional transfer and disregarding certain restrictions on liquidation in determining the fair market value of a transferred interest.

When finalized, the proposed regulations would:

  1. Treat as an additional transfer the lapse of voting and liquidation rights for transfers made within three years of death of interests in a family-controlled entity, thereby eliminating or substantially limiting the lack of control and minority discounts for these transfers;
  2. Eliminate any discount based on the transferee’s status as a mere assignee and not a full owner and participant in the entity;
  3. Disregard the ability of most nonfamily member owners to block the removal of covered restrictions unless the nonfamily member has held the interest for more than three years, owns a substantial interest in the entity, and has the right, upon six months’ notice, to be redeemed or bought out for cash or property, not including a promissory note issued by the entity, its owners, or anyone related to the entity or its owners;
  4. Disregard restrictions on liquidation that are not mandated by federal or state law in determining the fair market value of the transferred interest; and
  5. Clarify the description of entities covered to include limited liability companies and other entities and business arrangements, as well as corporations and partnerships.
Where the Final Regulations are Similar to the Prop. Regs., Taxpayers Will Have Lost a Significant Estate Planning Tool and the Estate Tax Cost of Transferring Interests in Family Owned Entities Will Increase!
 

The proposed regulations would also make significant changes to the valuation for transfer tax purposes of interests in a family controlled entity that are subject to restrictions on redemption or liquidation that is, subject to limitations on the ability of the owner of the interest to require the entity or other owners to redeem or buy out that owner. 

The Overall Effect of Section 2704(b) is that Specified Restrictions are Disregarded in Valuing such an Interest for Gift or Estate Tax Purposes when that Interest is Transferred to a "Family Member". 

The Provisions of the Prop. Regs. Applicable to Voting and Liquidation Rights are Proposed to Apply to Rights and Restrictions Created After October 8, 1990, but Only to Transfers Occurring AFTER the Date the Regulations are Published as Final Regulations. 

The new rules regarding “Disregarding Certain Restrictions on Redemption or Liquidation” will not take effect until 30 days after the date the regulations are published as final regulations.

Taxpayers who are considering transferring interests in family-controlled entities that are not controlling interests and do not have liquidation rights should consider making the transfers as soon as possible. 

It is possible, however, that if the client dies within three years of the transfer and after the date that the proposed regulations become final, the client may be caught by the final regulations. 

The proposed regulations would also apply to determine and measure any gift component of transfers otherwise structured as sales.  So clients who have recently made transfers and die after the regulations are finalized but within three years of the transfer may be caught by the final regulations.

Need Help With a FLP or LLC?

Let US Help!

 

 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
 
 

 

Read more at: Tax Times blog

US Probe Resulted In EU Apple Tax Assessment

September 12, 2016

According to Law360 the European Commission’s probe into Apple, which resulted in an order for the tech giant to pay up to €13 billion ($14.5 billion) in back taxes to Ireland, was prompted by a U.S. Senate investigation, European Union Competition Commissioner Margrethe Vestager said on Friday.

Speaking to an audience at the Copenhagen Business School, Vestager said it was a Senate investigation into Apple Inc. and U.S. transparency rules “that tipped us off” that the company might have received illegal state aid. Vestager’s comments come after the EC in late August announced its order for Apple to pay Ireland $14.5 billion in back taxes, plus interest, a decision the Irish government has said that it will appeal.

 

“The story of the Apple investigation began in the United States,” Vestager said. “Because the U.S. Senate cares as much as we do about making sure companies pay their fair share of tax.”

While Vestager did not specify which Senate investigation prompted the EC to launch its own probe into Apple, the Permanent Subcommittee on Investigations in 2013 held a hearing on what it called its “examination of the structures and methods employed by multinational corporations to shift profits offshore.” Witnesses included representatives from the Department of the Treasury, the Internal Revenue Service and Apple, according to the subcommittee.

Have a Tax Problem? 
 

 

 

 

Let US Help!

 

Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).

 

 

 

 

Read more at: Tax Times blog

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