Category Archives: From Live Blog

On July 24, 2018 we posted IRS Cost-Sharing Regulations Revived By Appeals Court where we discussed that the Ninth Circuit reversed a decision by the U.S. Tax Court that invalidated an Internal Revenue Service cost-sharing regulation in a dispute with an Intel Corp. subsidiary, saying the revenue agency did not exceed its authority in promulgating the rule.  In a 2-1 decision, the appeals court said the IRS is entitled to deference and was justified in issuing the rule under the Administrative Procedure Act, despite comments from the public that opposed the regulation.

The Tax Court had sided with Altera Corp., an Intel subsidiary, in the case in July 2015 after finding that the IRS had ignored significant evidence and public comments while issuing its rule requiring cost-sharing agreements between related parties to include the costs of stock-based compensation.

Now according to Law360 on August 7, 2018 the Ninth Circuit withdrew its July 24 decision against Intel Corp. subsidiary Altera, letting stand a U.S. Tax Court decision invalidating IRS regulations that require employee stock option expenses to be shared with foreign subsidiaries in cost-sharing arrangements.

The now-withdrawn Ninth Circuit opinion that went against Altera Corp., an Intel Corp. subsidiary, represented a rare win for the Internal Revenue Service in a transfer pricing case.

The ruling was also unusual in that one of the judges voting with the majority, Stephen Reinhardt, had died in March, months before the opinion was issued.

The now-withdrawn ruling said Judge Reinhardt had “fully participated” in the case and “formally concurred in the majority opinion” before his death.

The one-sentence order withdrawing the ruling stated that the majority and dissenting opinions “are hereby withdrawn to allow time for the reconstituted panel to confer on this appeal.”

The case is Altera Corp. and Subsidiaries v. Commissioner of Internal Revenue, case numbers 16-70496 and 16-70497, in the U.S. Court of Appeals for the Ninth Circuit.

Have a IRS Tax Problem? 

 

  
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On July 27, 2018 we posted 2nd Taxpayer Victory on a FBAR Penalty Case - FBAR Limited to $100M!  where we discussed US v. Dominique G. Colliot, case number 1:16-cv-01281, in the U.S. where a District Court for the Western District of Texas how that the maximum FBAR penalty was limited to $100,000 a year.

We also discussed that a second district court has determined that, despite a statutory change authorizing higher penalties, IRS couldn't impose penalties, for willfully failing to file a Report of Foreign Bank and Foreign Accounts (FBAR), in excess of the amounts provided in regs that were promulgated before the law change and that haven't been changed to reflect the increase in United States v. Wadhan, D. Colo. Dkt 17-CV-1287 Dkt Entry 5

Now on July 31, 2018 in Norman v. United States, Ct. Fed. Cl. Dkt 15-872, the Court held that the taxpayer Norman was liable for the FBAR willful penalty and this Court rejected the Colliot holding that the FBAR willful penalty was limited to a maximum of $100,000, because the regulations had not been changed to reflect the statutory amendment increasing the maximum FBAR willful penalty. 

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Congress’ Intent in Amending § 5321 The court stated that:

 
Finally, the court ruled that:

Have Undeclared Income from an Offshore Account?

 

 

Want to Know Make Sure You Are Not Over Penalized 
If You Do Not Enter The OVDP Program?
 
 

 

Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation Contact Us at:

www.TaxAid.com or www.OVDPLaw.com or

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

The Internal Revenue Service and the Department of the Treasury on August 1, 2018 issued proposed regulations on Section 965 of the Internal Revenue Code. The proposed regulations affect United States shareholders, as defined under section 951(b) of the Code, with direct or indirect ownership in certain specified foreign corporations, as defined under section 965(e) of the Code.

Section 965, enacted in December 2017, levies a transition tax on post-1986 untaxed foreign earnings of specified foreign corporations owned by United States shareholders by deeming those earnings to be repatriated. For domestic corporations, foreign earnings held in the form of cash and cash equivalents are generally intended to be taxed at a 15.5 percent rate for 2017 calendar years, and the remaining earnings are intended to be taxed at an 8 percent rate for 2017 calendar years.

The lower effective tax rates applicable to section 965 income inclusions are achieved by way of a participation deduction set out in section 965(c) of the Code.  A reduced foreign tax credit also applies with respect to the inclusion under section 965(g) of the Code.

Taxpayers may generally elect to pay the transition tax in installments over an eight-year period under section 965(h) of the Code. The proposed regulations contain detailed information on the calculation and reporting of a United States shareholder’s section 965(a) inclusion amount, as well as information for making the elections available to taxpayers under section 965.

Written or electronic comments and requests for a public hearing on this proposed regulation must be received within 60 days of publication in the Federal Register, which is forthcoming.

More information regarding the Tax Cuts and Jobs Act, as well as Section 965, can be found at the Tax Reform page.
  

 

The U.S. House of Representatives Committee on Financial Services scheduled a June 14th markup on the Counter Terrorism and Illicit Finance Act (HR 6068) (CTIFA),  which has been stripped of provisions that would require collection of beneficial ownership information at the time of company formation, a necessary step to address this widely-recognized and well-documented vulnerability in the U.S. AML regime. A November 2017 version of the same bill included a section to address this critical issue.

The CTIFA was originally introduced to compel national registration of beneficial owners of all US legal entities, has been amended by the deletion of all its transparency clauses.

It originally included an amendment to establish a national directory of beneficial owners of legal entities, corporations and limited liability companies, administered by the US Treasury's FinCEN (Financial Crimes Enforcement Network). Civil and criminal penalty provisions were included, to force compliance.

However, these clauses were eliminated from the bill on June 12th, just before it was passed to the House Financial Services Committee for 'mark-up'.

The new version of the bill merely requires the US Comptroller General to 'submit a report evaluating the effectiveness of the collection of beneficial ownership information under the Customer Due Diligence regulation, as well as the regulatory burden and costs imposed on financial institutions subject to it.'

The Customer Due Diligence regulation, which came into force in May this year, forces all US banks to verify the identity of new business customers' beneficial owners. It was introduced at the Treasury's behest to improve the US' legislative grip on beneficial ownership identification, but is acknowledged to leave considerable gaps, notably the need to make companies know and disclose their beneficial owners to the government at the time of company formation.

Maybe that's because Congress wants to keep the US as the 2nd Largest Tax Haven or maybe largest tax even in the world?

Sources

Global Financial Integrity

Wall Street Journal

FinCEN (CDD rule FAQs, PDF)