Taxmasters files for bankruptcy protection.
Maybe now they can actually settle for Pennies on the Dollar?
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Taxmasters files for Bankruptcy Protection
March 20, 2012
Bearer Notes – Non Deductible, Ordinary Income Rates and Not Qualify as Portfolio Debt.
March 9, 2012
Notice 2012-20 provides guidance relating to the portfolio interest exception, the short term debt exception under section 1.6049-5(b)(10), and the excise tax under section 4701 in connection with the repeal of section 163(f)(2)(B)(the bearer debt repeal).
Notice 2012-20 will be published in the Internal Revenue Bulletin 2012-13, dated March 26, 2012.
Issuers of debt obligations that are required to be in registered form but are not issued in registered form are subject to the disallowance of interest deductions under section 163(f) and the imposition of an excise tax under section 4701. Any gain on the sale or other disposition of such an obligation is generally treated under section 1287 as ordinary income rather than capital gain, and, under section 165(j), no deduction is permitted for any loss sustained. In addition, the exception from tax for U.S. source, portfolio interest received by a nonresident alien or foreign corporation under section 871(h) and section 881(c) (portfolio interest exception) is generally not available with respect to interest paid on debt that is not issued in registered form (bearer debt).
The foregoing rules generally do not apply with respect to bearer debt that complies with the foreign-targeting rules of section 163(f)(2)(B) and the regulations thereunder. However, section 502 of the HIRE Act generally eliminated the various exceptions for foreign-targeted bearer debt, effective for obligations issued after March 18, 2012. As a result of this change in law, with respect to obligations issued after March 18, 2012, the portfolio interest exception will be available only for obligations issued in registered form.
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Tax on Foreign Business With One Telecommuter Affirmed by New Jersey Appeals Court
March 9, 2012
Applying the New Jersey Corporation Business Tax Act to a foreign corporation that employs one employee to telecommute full-time from her New Jersey residence does not violate the federal Constitution, the Superior Court of New Jersey Appellate Division held March 2 (Telebright Corp. Inc. v. Director, New Jersey Division of Taxation, N.J. Super. Ct. App. Div., No. A-5096-09T2, 3/2/12).
Addressing the due process clause, Judge Susan Reisner said, “[t]axing a business based on its employing one full-time employee in the taxing state does not violate the Due Process Clause.” She added the corporation, Telebright Corp. Inc., “has sufficient ‘minimum connection' with this State to permit taxation consistent with the Due Process Clause.”
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Senate Accepts Levin Tax Havens Measure to Combat Offshore Tax Abuses
March 8, 2012
The Senate adopted an amendment to the surface transportation bill (S. 1813) by voice vote March 8 that would prohibit foreign financial institutions from having access to the U.S. financial system if they are found to be aiding tax evasion.
Under Section 311 of the Patriot Act, Treasury can take a range of measures against foreign governments or financial institutions that engage in money laundering. The senators’ amendment gives Treasury the same tools to combat foreign governments or financial institutions that significantly impede U.S. tax enforcement. For example, Treasury could prohibit U.S. banks from accepting wire transfers or honoring credit cards from banks found to significantly hamper U.S. tax enforcement efforts.
Modifications made earlier in the day to the amendment (S. Amdt 1818) by Sen. Carl Levin (D-Mich.) made the amendment more amenable to senators of both parties by saying Treasury could stop the transactions of tax havens and financial institutions that “significantly impede” U.S. tax enforcement.
The final version of the amendment also added language noting that if a jurisdiction or financial institution is cooperating with the United States, that fact may be favorably considered in evaluating whether it is significantly impeding enforcement. Staff said the amendment would raise $900 million over 10 years.
“Each year the United States loses literally tens of billions of dollars from people using offshore tax havens to dodge their tax obligations,” Levin said on the Senate floor.
A final vote on the measure is expected on March 13, 2012. Then it is off the the Republican controlled House of Representatives, where is may not receive such a warm reception.
It’s time to put an end to offshore tax abuses that allow tax cheats to profit at the expense of honest taxpayers,” said Whitehouse. “I’m proud to support Senator Levin’s amendment, which will give the U.S. Treasury greater powers to crack down on offshore tax abusers and the banks that aid them.”
Stay tuned... Same Tax Times... Same Tax Channel!
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