October 2019
The State of Ohio ceases acceptance of tax payments in cryptocurrency.
The Ohio Treasurer’s Office suspends OhioCrypto.com, it's portal for tax payments using cryptocurrency.
September 2019
US Taxpayers Can Claim Refunds for French Taxes
If you pay taxes in both the US and France, you may be due significant refunds for French taxes paid! For years, a battle has been working its way through the US courts concerning two French taxes, the French Contribution Sociale Généralisée (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS). The reason for the battle? Relief against double taxation. In some instances, US taxpayers who also pay taxes in France may claim foreign tax credits (FTCs) on their US tax returns. This helps to obtain relief from double taxation. One caveat, however, is that this relief applies only to income taxes, not to social taxes. For years, the US Internal Revenue Service (IRS) has maintained that the CSG and CRDS are social taxes, not income taxes. And cannot be used to claim foreign tax credits. Now, the IRS has changed its position. What Changed? The decision in the US Tax Court case Eshel v. Commissioner and 2019 diplomatic negotiations between the US and France changed things. Before then, the IRS maintained a policy of challenging taxpayers who tried to claim foreign tax credits for the CSG and CRDS. This June, diplomatic negotiations bore fruit. The IRS reached an agreement with the French government not to challenge foreign tax credits for certain types of tax payments in France. This is excellent news for US taxpayers who are or were assessed these French taxes on French wages. It is also great news if you have substitute income, professional fees, statutory family benefits, and investment income. It means that the French CSG and CRDS taxes are eligible for the US foreign tax credit and you may be due refunds for French taxes. You May be Eligible for US Tax Refunds US taxpayers who did not previously claim foreign tax credits for CSG and CRDS taxes on their US individual income tax returns (Forms 1040 and 1116) can now file amended US returns. This will help them to obtain refunds for French taxes. In most cases, US taxpayers can only obtain refunds for the last three tax years, but in this case, the IRS has made a special exception. It is allowing individuals to go as far back as the tax year 2009 to amend their tax returns (IRS Forms 1040X and 1116) for this issue. What Do I Need to Do to Obtain My Refunds for French Taxes? Since the IRS is allowing you to go back more than three years to obtain your refunds, you must follow the correct steps. Otherwise, your older refund claims may be denied. Most important, at the top of each amended tax return, you should write the following in red ink: French CSG/CRDS Taxes. Taxpayers amending tax returns between 2009 and 2018 for this issue should maintain the following documentation for each year at issue in case of audit or exam of foreign tax re-determination: Avis d’impôt sur le revenue—French Income Tax Return Déclaration des revenus—Income Statement Bordereau de situation—Statement of Payments Bulletin de paie—Earnings [...]
Bipartisan IRS Reform Bill Approved—The Taxpayer First Act
Great news for US taxpayers—Congress passed, and the President signed an expansion and strengthening of taxpayer rights (on July 1, 2019). The Taxpayer First Act (TFA), also known as H.R. 3151, represents three years of bi-partisan work. It contains numerous provisions and updates that affect both the IRS and taxpayers in general. TFA includes a focus on cyber-security and protection from identity theft for taxpayers. What is The Taxpayer First Act? TFA is an amendment to the Internal Revenue Code of 1986. It contains four sections. Title I–Putting Taxpayers First Title II–21st Century IRS Title III–Miscellaneous Provisions Title IV–Budgetary Effects The purpose of the act is “to modernize and improve the Internal Revenue Service.” Below you will find more details on each of the four sections. Details on Taxpayer First Act, Title I: Increased Transparency This section of the Taxpayer First Act addresses the following topics: Appeals, Customer Services, Enforcement, Organizational Structure, Low-Income Taxpayers, Seizure Rules, Whistleblower Reforms, and Misdirected Refund Deposits. Independent Office of Appeals The IRS now reports to an Independent Office of Appeals. The Chief of Appeals will run this office. The Chief will be appointed by and report directly to the Commissioner of the IRS. The goal of the office is to resolve tax controversy matters without going to court. TFA provides the broad strokes of how this will run. For taxpayers, the two biggest takeaways of this section are as follows: (1) the IRS will have to provide notice to a taxpayer if they are denied access to this new office and (2) if a conference is scheduled with this office upon request, the non-privileged portion of their case file will be provided to a taxpayer within 10 days. This is a significant change in the usual method of exchange of information between the IRS and a taxpayer. This increased transparency will allow taxpayers (and their designated representatives) to quickly and more accurately gauge the specific tax controversy matters at issue and potential methods for resolution. In turn, this should hopefully reduce representation time, representation fees, and eliminate wasteful communications between the IRS and taxpayers. Improved Customer Service TFA mandates that the Secretary of the Treasury submit a “written comprehensive customer service strategy” for the IRS within one year, i.e., by July 1, 2020. In essence, this strategy should “pull back the curtain” to allow taxpayers full transparency on how to detail with the IRS based on their issue(s). TFA provides a Gantt chart timeline of three-, five-, and 10-year plans to improve customer service. TFA closes on this topic by indicating within two years, i.e., July 1, 2021, formal guidance and training materials are issued to IRS employees. Modernization of the IRS TFA mandates that the IRS must respond within 90 days to any Taxpayer Advocate Directives. There can be only one of three responses: (1) accept the directive with modifications, (2) rescind the directive, or (3) accept the directive in full and ensure compliance. In summary, the IRS cannot leave the Taxpayer Advocate [...]
Welcome, Baby Sussex! And Welcome to US Foreign Non-Grantor Trust Beneficiary Rules!
As you know by now, Prince Harry and Meghan Markle, the Duke and Duchess of Sussex, welcomed their first-born son, Archie, on May 6, 2019. In a prior blog post, we discussed the US tax consequences (individual income tax, international informational, and Expatriation Tax) to Meghan Markle, a US citizen, of marrying a non-US citizen and British royal. We will now explore what it means (from a US tax perspective) for Meghan and baby Archie to receive specific financial support from the Royal Family Trust. It's all related to US foreign non-grantor trust beneficiary rules. Assumptions For this article, we are making certain assumptions to illustrate several essential points. Those assumptions include: That the Duchess of Sussex is still a US citizen. That baby Archie is also a US citizen under INA 301(g) – born abroad in wedlock to a US citizen and an alien. (Note: we always advise that you seek the professional opinion of a US immigration attorney for these types questions). That (as indicated in the Panama Papers) Meghan and Archie are now beneficiaries of the Royal Family Trust, which is a foreign trust for US tax purposes. That in this day and time the trust pays the income tax on for the earnings in the trust and therefore, it is a “non-grantor” trust for US tax purposes. US Tax Consequence #1 Foreign non-grantor trust taxation is one of the most complex and burdensome areas of the US tax code. If a trust accumulates income and fails to pay this income annually to beneficiaries, it will have undistributed net income (UNI). Should this income be distributed to Meghan and/or Archie in the future, it will be subject to the US “throwback tax rules,” as an “accumulation distribution.” It is unlikely that any Royal Trusts will keep their financial statements based on US tax principles. Therefore 100% of any distributions to Meghan and Archie would be treated as distributions of UNI or accumulation distributions. Generally, accumulation distributions are taxed at the highest marginal rates available (rather than at preferential long-term capital gains or qualified dividend rates). Furthermore, since the income was not paid out (and taxed by the US IRS) annually, the tax owed is also subject to many years’ worth of back interest charges. The longer the income has accumulated, the harsher the effect of the throwback taxes and associated interest charges. US Tax Consequence #2 For each year that Meghan and/or Archie receives a distribution from a Royal Trust, they would be required to file IRS Form 3520 (one form per trust that issued a distribution). Failure to file the form can result in a $10,000 penalty or 35% of the gross value of the distributions received (whichever is higher). US Tax Consequence #3 If Meghan were to expatriate from the US in the future, she would likely be considered a “covered expatriate” under IRC 877A. The IRS provides guidance for expatriation provisions. This guidance indicates that if Meghan were to receive a distribution from a [...]
IRS division confirms training of officers in detection and seizure of cryptocurrency.
Darren Guillot, IRS Small Business/Self-Employed (SB/SE) commissioner, states that over the past calendar year the IRS has been training SB/SE revenue officers on how to detect, evaluate, value, and, if necessary, seize cryptocurrency assets for unpaid taxes.
August 2019
New Zealand legalizes payment of employee salaries with cryptocurrency.
The Inland Revenue Department (IRD) of New Zealand makes it legal for employers to pay their employees in cryptocurrencies starting September 1, 2019.
Big Israeli banks halt cash deposits related to cryptocurrency trading.
The Israel Tax Authority indicates that it is aware of approximately $86 million of unpaid taxes from cryptocurrency sales. Four Israeli banks indicate that they will no longer accept cash deposits related to cryptocurrency trading.
July 2019
The Wolf Group, PC and Wolf Group Capital Advisors Proudly Announce Rebranding
The Wolf Group, PC (TWG), a global tax advisory firm, and Wolf Group Capital Advisors (WGCA), a personal wealth management firm, today proudly announce a major rebranding to modernize and more accurately reflect their firms’ mission, vision, and values. Len Wolf, CPA, Founder and Managing Director of The Wolf Group, PC says, “We are proud to be a best-in-class practice, responsive and dedicated to our clients for over 35 years. Evolving our brand identity has been an exciting process. Although the face of our ‘brand’ now looks different, our mission and dedication to consistently providing our valued clients superior global tax strategies and solutions remain the focus of all that we do.” Bob Len, CPA and Managing Director of Wolf Group Capital Advisors, adds, “Over the past 23 years since WGCA was founded, we’ve proudly built a solid reputation for advising with integrity and respect. We are optimistic about the future, and our new branding is reflective of this and our core values of curiosity, integrity, teamwork, service, and excellence.” The TWG and WGCA rebranding is part of the sister firms’ joint strategy to more fully leverage their respective businesses and to create a foundation for new opportunities. The companies remain committed to collaboration and serving their clients with the highest degree of integrity and professionalism. The rebranding initiative includes new websites for TWG (in progress, launching in November 2019) and WGCA (launched in May 2019). It also includes new logos, graphics, communications, and correspondence. Both firms’ new brand assets feature clean, bold, and modern graphics that convey trust, high quality, reliability, and experience. Contact Information: Name: Lori B. Pohlman, Marketing Communications Manager Organization: The Wolf Group, PC Company URLs: www.thewolfgroup.com Address: 4401 Fair Lakes Court, Suite 310, Fairfax, VA 22033 Phone: 703.502.9500
Interested in the Rehabilitation Tax Credit? Details to Know
For those considering properties in areas of historical significance, and income tax benefits, the Federal Historic Rehabilitation Tax Credit (HTC) may be of interest to you. where the proper conditions are met, business taxpayers can claim a non-refundable 20% tax credit for “rehabilitation” expenditure over a five-year period. To qualify for the credit, however, both the building and the expenditure must meet several requirements (for both the structure and the expenditure).
IRS begins sending letters to specific taxpayers regarding cryptocurrency reporting.
The IRS announces (IR-2019-132) that it has started sending letters to taxpayers who conducted virtual currency transactions but potentially failed to report income and pay tax. The IRS estimates that roughly 10,000 letters will be sent out by the end of August 2019.
