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Monthly Archives: June 2020

FOIA Requests From 3rd Party Does Not Need Requester’s Signature

In a memo, the IRS has provided interim guidance regarding accepting Freedom of Information Act (FOIA) requests from third parties that provide valid authentication documents but do not contain signatures on the actual FOIA request.

This memorandum issues Disclosure policy on accepting third-party FOIA requests without signatures, under certain circumstances, until IRM 11.3.13, Disclosure of Official Information, Freedom of Information Act, is updated. This policy applies to all Disclosure caseworkers who process IRS FOIA requests.

This Interim Guidance (IG) provides an update for accepting FOIA requests from third parties that provide valid authentication documents, but do not contain signatures on the actual FOIA request, per 26 CFR § 601.702(c)(4)(i)(A). FOIA requests for records requiring specific protections by statute (i.e. tax records protected under 26 USC § 6103) currently require the signature of the requester to verify against an ID, notarized statement or penalty of perjury statement. 

Third-party requests must contain appropriate authorization documents (i.e. Form 2848, Power of Attorney and Declaration of Representative) which already contain legal penalty of perjury agreements and signatures. Therefore, IRS accepts the signature applied to the authorization document as having met the signature requirement of 26 CFR § 601.702(c)(4)(i)(A) as long as the authorization meets the requirements of 26 CFR § 601.702(c)(5)(iii)(C).

The following note will be added to IRM 11.3.13.3(4):

Note: If a request is received from a third party, seeking records protected by specific statutes (i.e. IRC §6103 protected tax records), regardless of the method the request was received such as mail/fax or the FOIA online portal, and the request contains

1) A signature of the requesting individual, which meets the requirement of 26 CFR § 601.702(c)(4)(i)(A) and

2) The handwritten signature of the appropriate individual or business that the protected records pertain to, which meets the requirement of 26 CFR § 601.702(c)(5)(iii)(C)

Then IRS accepts the signatures applied to the authorization document as having met the IRS FOIA signature requirement. Do not imperfect third-party requests which meet these requirements unless the request is also missing information required to perfect a FOIA request per 26 CFR § 601.702 and as shown below in IRM 11.3.13.3(4)(b) through (g).

Effect on Other Documents: This guidance will be incorporated into IRM 11.3.13, Disclosure of Official Information, Freedom of Information Act (FOIA) by July 31, 2020. Effective Date: May 5, 2020.

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IRS Issues FAQs for NRA's Claiming the Medical Condition Exception in 2020

The TRS has issued FAQs for nonresident aliens who wish to avail themselves of the Medical Condition Exception or the Medical Condition Travel Exception to the substantial presence test, i.e., the test under which nonresident aliens are taxed as U.S. residents.

The virus that causes COVID-19 has created a global outbreak (the COVID-19 Emergency) during which some alien individuals, who are present in the United States, have fallen or may fall ill with COVID-19 or experience other medical conditions or medical problems. Some of these individuals may have intended to leave the United States but were unable to leave due to a medication condition or problem, as described in section 7701(b)(3)(D)(ii). These individuals may be eligible to claim the medical condition exception to exclude certain days of U.S. presence from the substantial presence test, described in section 7701(b)(3), provided they meet the requirements described in section 7701(b)(3)(D)(ii) and section 301.7701(b)-3(c) (Medical Condition Exception). Alien individuals who are eligible to claim the Medical Condition Exception generally must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition, to obtain this exception, which requires a signed statement from a physician or other medical official that the alien individual was unable to leave the United States due to a medical condition or medical problem.

Due to considerations unique to the COVID-19 Emergency, it may be difficult to obtain a signed statement by a physician or other medical official attesting to the alien individual's inability to leave due to a medical condition. Accordingly, these FAQs modify the requirements for completing Part V of Form 8843 for certain alien individuals claiming the Medical Condition Exception during calendar year 2020. These FAQs also provide information regarding relevant record keeping requirements for persons filing Form 8843 without a physician's statement, either pursuant to these FAQs or the relief granted in Rev. Proc. 2020-20.  Rev. Proc. 2020-20, published on May 11, 2020, provides relief for certain nonresident alien individuals stranded in the United States due to the COVID-19 Emergency; it describes procedures for Eligible Individuals to claim the COVID-19 Medical Condition Travel Exception, pursuant to which an Eligible Individual can exclude a single period of up to 60 consecutive calendar days of presence in the United States for purposes of applying the substantial presence test.


Q 1. Will an alien individual who intended to but is or was unable to leave the United States on the individual's planned departure date due to a medical condition or medical problem in calendar year 2020 be required to obtain a physician's statement as required by Part V of Form 8843?

A1. Any alien individual who is eligible and fulfills the requirements to claim the Medical Condition Exception may file the Form 8843 without a physician's statement to cover a single period of up to 30 consecutive calendar days in calendar year 2020 (30-Day Medical Condition). This FAQ does not modify the eligibility requirements to claim the Medical Condition Exception, only the procedures for claiming the exception on Part V of Form 8843 and only with respect to a single period of up to 30 consecutive calendar days of presence in the United States in calendar year 2020.

Pursuant to the Medical Condition Exception, any days of presence for which an alien individual is eligible and claims a 30-Day Medical Condition will be excluded for purposes of the substantial presence test. The exemption from the Form 8843 requirement to obtain a physician's statement for a 30-Day Medical Condition can be claimed in addition to the relief provided in Rev. Proc. 2020-20. The instructions to Form 8843 for 2020 will reflect the 30-Day Medical Condition contemplated by this FAQ.

Q2. What types of documentary evidence should alien individuals retain to support their eligibility for the 30-Day Medical Condition?

A2. In lieu of a physician's statement, alien individuals claiming the 30-Day Medical Condition should retain documentary evidence that substantiates their medical condition, their inability to leave due to the medical condition, and the period of the medical condition, such as (i) evidence of consultations with a heath care provider (for example, a phone bill or a text message or email from the health care provider), (ii) receipts related to healthcare purchases, (iii) evidence of canceled or changed travel reservations, or (iv) official medical records or written healthcare correspondence that the individual received (for example, automated responses instructing an individual to self-isolate). These documents should not be submitted with the Form 8843, but alien individuals claiming the 30-Day Medical Condition should be prepared to produce these records if requested by the IRS.

Q3. How should alien individuals who only claim the 30-Day Medical Condition complete Part V of Form 8843 (the section of the form applicable to individuals claiming the Medical Condition Exception)?

A3.For those claiming a 30-Day Medical Condition without claiming relief under Rev. Proc. 2020-20 or any other excluded days pursuant to the Medical Condition Exception, the alien individual should write "30-Day Medical Condition" and then describe in detail the 30-Day Medical Condition that prevented the alien individual from leaving the United States under Line 17a in Part V of Form 8843. When determining the information to include in line 17a, an alien individual should provide relevant information so that the individual can clearly demonstrate qualification for the Medical Condition Exception if the Form 8843 is later reviewed by the IRS with the corresponding documentary evidence discussed in FAQ 2, as applicable. Lines 17b and 17c should be completed consistently with the form's instructions. Line 18 of the form should be left blank. As described in FAQ 2, third-party documentary evidence of an alien individual's medical condition should not be submitted with the form, but should be retained by the alien individual.

Q4. How should alien individuals who claim multiple Medical Condition Exceptions complete Part V of Form 8843?

A 4. An alien individual may be able to claim multiple Medical Condition Exceptions and should file a single Form 8843 enumerating all the applicable Medical Condition Exceptions on line 17a. The alien individual should attach a separate statement with respect to each Medical Condition Exception being claimed along with the relevant corresponding information as outlined in Rev. Proc. 2020-20, in FAQ 3, or the existing instructions, as applicable. As an example, line 17a could read:

"Condition 1: COVID-19 MEDICAL CONDITION TRAVEL EXCEPTION;

Condition 2: 30-DAY MEDICAL CONDITION,"

Lines 17b and 17c of Part V should be left blank, but the relevant information for each applicable exception, as described in Rev. Proc. 2020-20 and in FAQ 3, along with the dates that would otherwise be reflected under line 17b and line 17c, would be included in each separate statement. Neither of these conditions require a physician's statement, and thus line 18 should be left blank. Note, however, if an alien individual is also claiming a Medical Condition Exception that requires a physician's statement, the signature and relevant information from line 18 should be included in the separate attachment related to that medical condition.

Q5. What types of documentary evidence should Eligible Individuals retain to support their eligibility for the relief provided under Rev. Proc. 2020-20?

A5. An Eligible Individual claiming relief under Rev. Proc. 2020-20 should retain evidence of the individual's presence in the United States during the individual's claimed COVID-19 Emergency Period (such as a Customs and Border Protection Form I-94 showing the individual's entries into the United States, hotel receipts, or travel reservations, including confirmation of changes or cancellations). If the Eligible Individual was actually ill or advised to self-quarantine in the United States during the individual's excluded days under the revenue procedure, he or she may also retain the documents described in FAQ 2 to demonstrate presence in the United States through U.S.-based medical records and treatments, though failure to document an actual illness will not affect eligibility to claim relief under Rev. Proc. 2020-20.

An Eligible Individual who does not qualify for the presumption of an intent to leave the United States outlined in section 4.02 of Rev. Proc. 2020-20 (meaning, the individual has applied, or otherwise taken steps, to become a lawful permanent resident of the United States but is not yet a lawful permanent resident), should also retain any documents that may support a "facts and circumstances" analysis of the Eligible Individual's intent to leave the United States under section 301.7701(b)-3(c)(2). These documents should not be submitted with the Form 8843, but Eligible Individuals claiming relief under Rev. Proc. 2020-20 should be prepared to produce these records if requested by the IRS. 

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Can’t File By July 15?

On March 24, 2020 we posted IRS Officially Extends Time to File To July 15 Because of Coronavirus, where we discussed that in Notice 2020-18, IRB 2020-15, IRS has made official the March 20 tweet by Treasury Secretary Mnuchin that postpones until July 15, 2020, the filing date for 2019 federal income tax returns and 2020 federal income tax estimates that would otherwise be due on April 15, 2020. The Notice also updates a previous Notice with respect to the amount of tax payment that can be postponed. 


Can’t File By July 15?
Use Free File to Get 
a Extension;
E-Pay and Payment Agreement
Options 
Available to People Who Owe Tax
The Internal Revenue Service reminded taxpayers that quick and easy solutions are available if they can’t file their returns or pay their taxes on time, and they can even request relief online. The IRS says don’t panic. Tax-filing extensions are available to taxpayers who need more time to finish their returns. 
Remember, This Is An Extension Of Time To File;
Not An Extension Of Time To Pay!

However, taxpayers who are having trouble paying what they owe may qualify for payment plans and other relief. Either way, taxpayers will avoid stiff penalties if they file either a regular income tax return or a request for a tax-filing extension by this year’s July 15 deadline. 

Taxpayers Should File, Even If They Can’t Pay The Full Amount Due. 

More Time to File
People who haven’t finished filling out their return can get an automatic extension until October 15, 2020. The fastest and easiest way to get the extra time is through the Free File link on IRS.gov. In a matter of minutes, anyone, regardless of income, can use this free service to electronically request an automatic tax-filing extension on Form 4868.

Filing this form gives taxpayers until Oct. 15 to file a return. To get the extension, taxpayers must estimate their tax liability on this form and should also pay any amount due.

By properly filing this form, a taxpayer will avoid the late-filing penalty, normally five percent per month based on the unpaid balance, that applies to returns filed after the deadline. In addition, any payment made with an extension request will reduce or eliminate interest and late-payment penalties that apply to payments made after April 15. The current interest rate is three percent per year, compounded daily, and the late-payment penalty is normally 0.5 percent per month.

Besides Free File, taxpayers can choose to request an extension through a paid tax preparer, using tax-preparation software or by filing a paper Form 4868, available on IRS.gov. Of the nearly 10.7 million extension forms received by the IRS last year, almost 5.8 million were filed electronically.


Easy Ways to E-Pay

Taxpayers with a balance due now have several quick and easy ways to electronically pay what they owe. They include:

  • Electronic Federal Tax Payment System (EFTPS). This free service gives taxpayers a safe and convenient way to pay individual and business taxes by phone or online. To enroll or for more information, call 800-316-6541 or visit www.eftps.gov.
  • Electronic funds withdrawal. E-file and e-pay in a single step.
  • Credit or debit card. Both paper and electronic filers can pay their taxes by phone or online through any of several authorized credit and debit card processors. Though the IRS does not charge a fee for this service, the card processors do. For taxpayers who itemize their deductions, these convenience fees can be claimed on Schedule A Line 23.

Taxpayers who choose to pay by check or money order should make the payment out to the “United States Treasury.” Write “2012 Form 1040,” name, address, daytime phone number and Social Security number on the front of the check or money order. To help insure that the payment is credited promptly, also enclose a Form 1040-V payment voucher.

More Time to Pay

Taxpayers who have finished their returns should file by the regular July 15 deadline, even if they can’t pay the full amount due. In many cases, those struggling with unpaid taxes qualify for one of several relief programs, including the following:

  • Most people can set up a payment agreement with the IRS. Those who owe $50,000 or less in combined tax, penalties and interest can use the Streamlined Procedure to set up a monthly payment agreement for up to 72 months. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS. 
  • Some struggling taxpayers may qualify for an Offer in Compromise  This is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay. 
Can't Pay Your Taxes?

Contact the Tax Lawyers at
Marini & Associates, P.A.
  
 
for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or 
Toll Free at 888-8TaxAid
 
 

Read more at: Tax Times blog

Netherlands to Introduce Withholding Tax on Dividends

The Dutch government announced on 29-05-2020 that it plans to introduce a withholding tax on dividends paid to tax havens in an effort to curtail tax abuse and dispel its image as a country that serves as a transit point for companies engaged in tax avoidance.

In 2024 the Dutch government is planning to introduce a new withholding tax on dividend flows to low tax jurisdictions. This will mark another big step in the fight against tax avoidance. 

The New Tax Will Come on Top Of The Withholding
Tax 
To Be Imposed on Interest and Royalties From 2021.

The New Tax Will Enable The Netherlands To Tax
Dividend Payments To Countries That Levy
Little or No Tax And Will Also Help Curb
The Use Of The Netherlands As A Conduit Country.


The measure will apply to financial flows to countries with a corporate tax rate of under 9% and to countries on the EU blacklist, even if the Netherlands has a tax treaty with them.


As State Secretary for Finance Hans Vijlbrief explains: ‘This additional withholding tax represents another major step in our fight against tax avoidance. Financial flows channeled from or through the Netherlands to another country where they are not or not sufficiently taxed, will soon no longer go untaxed. It’s now vital to make even better international agreements to prevent other countries being used for tax avoidance purposes.’


From 2021 interest and royalties will be subject to a withholding tax. This is one of the measures taken by this government in recent years to tackle tax avoidance. The effects of these measures are monitored wherever possible. This has revealed that, contrary to expectations, there are large dividend flows to countries that levy too little tax. 


In 2016 they totaled 35 billion euros, and not 22 billion euros, as announced earlier. The figures for 2018 show that this amount has now risen to nearly 37 billion euros. The reason the initial estimate was too low is that earlier surveys by SEO Amsterdam Economics only looked at dividends paid out from current-year profit, whereas the Dutch central bank (DNB) also tracks retained earnings that may be paid out in later years. The withholding taxes on interest, royalties and dividends will specifically target these financial flows.


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