Yearly Archives: 2016

IRS has made several corrections in Notice 2016-8, Timing of Submitting Preexisting Accounts and Periodic Certifications; Reporting of Accounts of Nonparticipating FFIs; Reliance on Electronically Furnished Forms W–8 and W–9 .  

In the revised version, IRS has now indicated that participating FFIs and reporting Model 2 FFIs must not only certify to IRS that they have complied with the due diligence procedures for preexisting accounts within the applicable timeframe, they must also certify that they did not have practices and procedures to assist account holders in the avoidance of chapter 4.

In the revised version, IRS has deleted the reference to a registered deemed-compliant FFI and now only states that under Reg. § 1.1471-4(d)(2)(ii)(F), a participating FFI that maintains an account of a nonparticipating FFI (including a limited branch and limited FFI treated as a nonparticipating FFI) must provide transitional reporting to IRS of all foreign reportable amounts paid to or with respect to the account for each calendar year 2015 and 2016.

Do You Have Undeclared Income from a Foreign Bank ?

 

 

Is Your Name Being Handed Over to the IRS?

 

Want to Know if the OVDP Program is Right for You?

 

Contact the Tax Lawyers at 

Marini& Associates, P.A.  

 

for a FREE Tax Consultation

at: www.TaxAid.us or www.TaxLaw.ms or

Toll Free at 888-8TaxAid (888) 882-9243

Sources:

Thomson Reuters Checkpoint

Bloomberg DTR

Kluwer International Tax Blog

A medical technology company and its subsidiaries lost their bid to challenge the Internal Revenue Service’s adjustments that increased their income by about $3.5 billion when the U.S. Tax Court ruled Monday, February 29. 2016 that the IRS acted well within its authority.
The deficiencies and the accuracy-related penalty flow from respondent's transfer pricing adjustments under section 482 that increased the income of Guidant Corp. and its U.S. subsidiaries (collectively, Guidant group) by approximately $3.5 billion. The Guidant group filed consolidated Federal income tax returns, and respondent's adjustments stem from transactions that the Guidant group engaged in with the group's affiliated foreign entities.

In consolidated cases, the Tax Court, denied taxpayers' summary judgment motion, and concluded that, when making transfer pricing adjustments under Code Sec. 482, IRS isn't required,
contemporaneously with such adjustments, to determine the true separate taxable income (STI) of each controlled taxpayer in a consolidated group. Further, IRS is allowed to aggregate one or more related transactions instead of making specific adjustments under Code Sec. 482 with respect to each type of transaction.

Respondent determined for purposes of ascertaining the Guidant group's consolidated taxable income (CTI) that all of the adjusted income was the separate taxable income (STI) of Guidant Corp. Respondent did not determine that any of the adjusted income was the STI of one or more of the Guidant group's U.S. subsidiaries. Respondent also did not determine the specific amount of the adjustments that related to tangibles, to intangibles, or to services.

1. Respondent did not determine the “true separate taxable income” of each controlled taxpayer in the Guidant group as required by section 1.482-1(f)(1)(iv), Income Tax Regs., and
2. Respondent did not make specific adjustments with respect to each transaction involving an intangible, a purchase and sale of property, or a provision of services.

Judge David Laro denied Guidant’s motion for partial summary judgment, saying that the IRS has broad discretion to allocate income among controlled enterprises to either reflect income clearly or prevent tax evasion, and is not statutorily required to determine the true separate taxable income of each controlled taxpayer in a consolidated group while making transfer pricing adjustments.

Judge David Laro also stated that the IRS is also allowed to aggregate one or more related transactions instead of making specific adjustments for each transaction type.

In addition, the petitioners did not maintain financial records in a way that would have allowed them to readily track income and expenses by the place of manufacture and they were not able to tie income and expenses in a business unit’s financial statements to particular product lines, the judge said.

 

Sources:

Law360

BNA DTR

IRS Wins Major Decision in $3.5B ‘Guidant' Case

The IRS scores a major victory as the U.S. Tax Court rules that the agency isn't obligated to determine the separate taxable income of each taxpayer in a consolidated group when making a transfer pricing adjustment.

The court denies a motion for partial summary judgment filed by Guidant LLC in its $3.5 billion transfer pricing dispute. Guidant maintained that the IRS abused its discretion when it failed to determine the separate taxable income for each controlled taxpayer in the group, even though the company admitted that it had refused to produce critical financial data the IRS requested.

Everyone from London lawyers to Swiss trust companies are getting in on the act, helping the world's rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.

GATCA reporting if the US is treated as a Participating Jurisdiction and the assets do not even have to be located in the US. Since this structure requires a US-resident trustee, the trust could also be structured to avoid US taxation.

The Economist adds that America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money. The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong.

No one knows how much undeclared money is stashed offshore. Estimates range from a couple of trillion dollars to $30 trillion. What is clear is that America’s share is growing.

Need Legal Advise? 

 

Contact the Tax Lawyers at
Marini & Associates, P.A.

for a FREE Tax Consultation

at: www.TaxAid.us or www.TaxLaw.ms or

Toll Free at 888-8TaxAid (888 882-9243).

 
 
 
 
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