January 2023
Nicole LaCava
Areas of Expertise Tax implications of international operations IRS Streamlined/Amnesty Programs US resident and expatriate taxation Foreign asset reporting International entities Certifications/Credentials CPA, licensed in New York Education MS, Professional Accountancy, The State University of New York at Albany BS, Accounting, The State University of New York at Albany Languages Spoken English Senior Tax Manager Nikki is a CPA and Senior Tax Manager at The Wolf Group, who specializes in assisting entrepreneurs, high-net-worth individuals, and multinational businesses with their international tax planning and tax preparation needs. She regularly advises clients on tax-efficient structuring of international transactions, proper reporting of global income and assets, effective use of tax treaties, and ways to reduce worldwide tax burdens. Specific focus areas include tax concepts pertaining to Controlled Foreign Corporations (CFCs) and other foreign entities, such as attribution matters, Subpart F income, and exceptions, Global Intangible Low-Taxed Income (GILTI), Earnings and Profits (E&P) calculations, §962 elections, Previously Taxed Earnings & Profits (PTEP) ordering and calculations, and §986(c) foreign currency gain/loss calculations with regard to PTEP. In addition, Nikki advises high-net-worth individuals with complex, cross-border issues or foreign asset reporting needs. In this capacity, she analyzes foreign pensions, grantor trusts, non-grantor trusts, business interests, and other assets to determine the proper US reporting requirements and helps clients navigate the IRS’s Voluntary Disclosure, Streamlined, and other Amnesty programs. Before joining The Wolf Group in 2022, Nikki had nearly a decade of experience in public accounting and tax advisory, including 7 years supporting ultra-high-net-worth individuals as part of Goldman Sachs Ayco Personal Financial Management’s international tax division. When not in the office, Nikki enjoys outdoor activities and spending time with family and friends.
December 2022
2022 Entity Tax Return Engagement Letter (E-R)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state income tax returns with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities, regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Information Gathering and Submittal Process You are responsible for fully and accurately disclosing to us all relevant facts affecting your returns. To help you assemble the information needed for your returns, we will provide you with a questionnaire, organizer, and/or other documents requesting specific information. Once your information is assembled and organizers/questionnaires are complete, you will submit your complete information to us. Please know that failure to provide information via completed questionnaires and organizers may require an extraordinary effort on our part, which may be reflected in our fee for service. We will not audit or otherwise verify the information you provide us; however, we may ask for additional clarification of some information. You should maintain the documentation necessary to support the data used in the preparation of your tax returns should you be required to produce them upon examination by the taxing authorities. Client Due Diligence We will provide you with guidance on the timeline for submitting your tax information to us. It is your responsibility to provide your complete tax information to us in a timely manner so that we can prepare [...]
2022 Entity Tax Return Engagement Letter (E-CR)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state income tax returns with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities, regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Information Gathering and Submittal Process You are responsible for fully and accurately disclosing to us all relevant facts affecting your returns. To help you assemble the information needed for your returns, we will provide you with a questionnaire, organizer, and/or other documents requesting specific information. Once your information is assembled and organizers/questionnaires are complete, you will submit your complete information to us. Please know that failure to provide information via completed questionnaires and organizers may require an extraordinary effort on our part, which may be reflected in our fee for service. We will not audit or otherwise verify the information you provide us; however, we may ask for additional clarification of some information. You should maintain the documentation necessary to support the data used in the preparation of your tax returns should you be required to produce them upon examination by the taxing authorities. Client Due Diligence We will provide you with guidance on the timeline for submitting your tax information to us. It is your responsibility to provide your complete tax information to us in a timely manner so that we can prepare [...]
2022 Entity Tax Return Engagement Letter (E-G)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state income tax returns with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities, regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Information Gathering and Submittal Process You are responsible for fully and accurately disclosing to us all relevant facts affecting your returns. To help you assemble the information needed for your returns, we will provide you with a questionnaire, organizer, and/or other documents requesting specific information. Once your information is assembled and organizers/questionnaires are complete, you will submit your complete information to us. Please know that failure to provide information via completed questionnaires and organizers may require an extraordinary effort on our part, which may be reflected in our fee for service. We will not audit or otherwise verify the information you provide us; however, we may ask for additional clarification of some information. You should maintain the documentation necessary to support the data used in the preparation of your tax returns should you be required to produce them upon examination by the taxing authorities. Client Due Diligence We will provide you with guidance on the timeline for submitting your tax information to us. It is your responsibility to provide your complete tax information to us in a timely manner so that we can prepare [...]
2022 WGCA Client Tax Return Engagement Letter
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. We strive to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Tax Filings for Dependent or Minor Children In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or [...]
2022 Individual Tax Return Engagement Letter (CR)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. We strive to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Tax Filings for Dependent or Minor Children In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or [...]
2022 Individual Tax Return Engagement Letter (R)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. We strive to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Tax Filings for Dependent or Minor Children In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or [...]
2022 Individual Tax Return Engagement Letter (G)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter and attached “Additional Engagement Terms” is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can endeavor to delight you with high-quality, seamless services. We strive to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. Returns Covered under the Engagement With this letter, you are engaging us to prepare your 2022 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, please let us know, and we would be pleased to prepare the required nonresident state tax return(s). In addition, you may have a filing requirement or tax liability in a foreign country. Generally, you are responsible to determine whether you must file and pay taxes in a foreign country; however, upon request, we would be pleased to assist you in making these determinations. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely for filing with the Internal Revenue Service (“IRS”) and applicable state and local tax authorities. Our work is not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless with respect to any and all claims arising from the use of the tax returns for any purpose other than filing with the IRS, state and local tax authorities regardless of the nature of the claim, including the negligence of any party. This engagement is limited to the professional services outlined above. Tax Filings for Dependent or Minor Children In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or [...]
Michelle Jacobs
Areas of Expertise Client Services Project Coordination Tax Operations Education AA, Business Language English Document Management Team Supervisor Michelle is a Document Management Team Supervisor at The Wolf Group, responsible for overseeing the client experience for both US and foreign national clients. She works closely with tax technical professionals and reaches out to clients to ensure the smooth flow of information and high-quality services. Michelle largely supports US citizens abroad, foreign nationals residing in the US, global mobility clients, high-net-worth individuals with foreign assets, and other individuals with international tax complexity. She keeps clients abreast of new developments, facilitates communications with tax preparers, monitors the progress of engagements, and coordinates services. In addition, she helps those who are new to the US tax system to understand the filing process and what to expect. In her tenure with the firm, Michelle has supported all aspects of tax operations. Before joining The Wolf Group in 2013, Michelle worked as the Global Sourcing Coordinator for a major manufacturing company. Outside of work, Michelle enjoys cruising, traveling, writing, playing piano, and spending time with children and grandchildren.
Pam Torrico
Areas of Expertise Client relations Project management Intercultural communications Education BS, Business Management, George Mason University Languages Spoken Portuguese English Spanish Project and Resource Manager Pam is a Project and Resource Manager at The Wolf Group, responsible for overseeing the client experience for both US and foreign national clients. She works closely with tax technical professionals and reaches out to clients to ensure the smooth flow of information and high-quality services. Pam largely supports high-net-worth individuals whose tax planning and tax returns involve significant international complexities (Forms 5471, 5472, 8865, 8621, 3520/3520-A, etc.). She keeps clients abreast of new developments, facilitates communications with tax technical staff, monitors the progress of engagements, and coordinates services. In addition, she helps those who are new to the US tax system to understand the filing process and what to expect. Before joining The Wolf Group in 2022, Pam worked in the J-1 visa cultural exchange industry, supporting exchange participants and host families, troubleshooting issues, and handling program billing matters. She also has prior experience working in a Brazilian accounting firm. A native of Brazil, Pam speaks fluent Portuguese, English, and some Spanish. Outside of work, she enjoys traveling, cooking, and spending time with her family.
October 2022
September 2022
May 2022
Executive Order: US Professionals Can No Longer Provide Services to Clients inside the Russian Federation
As of June 7, US companies and individuals will be prohibited from providing services to anyone located within the Russian Federation, including US citizens living in Russia. Background On April 6, 2022, President Biden signed Executive Order 14071, prohibiting new investment and services to those inside the Russian Federation, in response to “Continued Russian Aggression.” Then, on May 8, 2022, the Department of Treasury’s Office of Foreign Assets Control (OFAC) issued additional guidance related to the order. Details Who is prohibited from providing services? US Citizens and lawful permanent residents Companies and entities organized under US laws or jurisdictions (including foreign branches) Any person in the United States , Which services are prohibited? Per Executive Order Section 1(a)(ii): (ii) the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any category of services as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, to any person located in the Russian Federation (emphasis added). OFAC defines “any category of services” as “accounting, trust and corporate formation, and management consulting services to any person located in the Russian Federation.” As indicated in the OFAC announcement, Today’s action means that the Russian Federation and Russian elites will no longer benefit from U.S. companies’ valuable accounting, trust and corporate formation, and management consulting services. Who qualifies as "any person located in the Russian Federation"? Services cannot be provided to anyone located in the 22 republics that constitute the Russian Federation: 1. Adygea, 2. Altai, 3. Bashkortostan, 4. Buryatia, 5. Chechnya, 6. Chuvashia, 7. Crimea, 8. Dagestan, 9. Ingushetia, 10. Kabardino-Balkaria, 11. Kalmykia, 12. Karachay-Cherkessia, 13. Karelia, 14. Khakassia, 15. Komi, 16. Mari El, 17. Mordovia, 18. North Ossetia–Alania, 19. Sakha, 20. Tatarstan, 21. Tuva, 22. Udmurtia. Services cannot be provided to: Individuals, regardless of citizenship, residing in any of the 22 republics Companies, regardless of ownership, located in any of the 22 republics Sanctioned individuals and executives related to Russian banks, companies, and political figures, regardless of location of residence Certain specifically listed companies, subsidiaries, financial organizations, media organizations, etc., with Russian ties Services can be provided to: Citizens of Russian Federation countries who reside permanently outside of the Russian Federation (assuming they are not sanctioned or listed, as indicated above) Entities located in the Russian Federation that are owned or controlled, directly or indirectly, by a US person (assuming that the US person resides outside of the Russian Federation) Entities that are winding down or divesting of entities located in the Russian Federation so long as they are not owned or controlled, directly or indirectly, by a Russian person. When Does This Mean for US Professionals? The prohibition takes effect starting on June 7, 2022, and remains in place indefinitely. Failure to abide by this Executive Order is a “strict-liability” offense. This means that sanctions can be imposed even if US persons were not aware that their [...]
March 2022
Maureen Burgy
Areas of Expertise US resident taxation US nonresident taxation International organization taxation Certifications/Credentials CPA, licensed in Maryland Education BS, Accounting, Pennsylvania State University Languages Spoken English Tax Supervisor Maureen is a CPA and Tax Supervisor at The Wolf Group. She is responsible for providing specialized tax services to clients with international concerns, including expatriates, inpatriates, and high-net-worth individuals with global assets, as well as international organization employees and retirees, and entrepreneurs with foreign interests. In this capacity, Maureen assists U.S. citizens, green card holders, and foreign nationals with their individual income tax matters. Before joining The Wolf Group, Maureen worked with public accounting firms in the field of federal consulting and auditing. Maureen also previously worked for a small accounting firm preparing individual income tax returns. Outside of work, Maureen enjoys hiking with her family, playing tennis, gardening, and reading.
Why your Schedules K-1 may arrive later than usual this year
If you typically receive a Schedule K-1 from a partnership or S corporation, you may receive it later than usual this year. The IRS has created two new forms, Schedules K-2 and K-3, that many partnerships and S corporations must file this year at the same time that they produce their Schedules K-1. The new filing requirements are delaying their ability to file their business tax returns and to issue Schedules K-1 to partners and shareholders. The delays are taking place for multiple reasons: The IRS announced in 2021 that these forms would not be ready until at least late March 2022 at the earliest and that many businesses and entities would need to file an extension for their returns. The new forms are 14 to 20 pages each, so they require much more detail than businesses previously provided. The guidance on the forms continues to evolve. The IRS released Frequently Asked Questions on Schedules K-2 and K-3 in mid-February 2022, which clarified that the filing requirements apply to far more businesses than originally expected. Furthermore, the IRS is working to address ongoing questions and pushback from businesses and tax practitioners on these new forms. The forms carry severe penalties for failure to file or incomplete filing. The penalties apply both at the entity level and at the individual partner or shareholder level. The IRS and tax software providers are still programming the technology to allow businesses and individuals to e-file these forms. To learn more about the new Schedule K-2 and K-3 requirements, whether they apply to you, and how they may affect the timing of your returns, check out our Frequently Asked Questions (FAQs): FAQs for individuals waiting on K-1s FAQs for individuals filing Form 8865, to report an interest in a foreign partnership FAQs for partnerships filing Form 1065, Partnership Tax Return FAQs for S corporations filing Form 1120-S, S Corporation Tax Return We expect that the IRS’s requirements and guidance will continue to evolve over the coming weeks. At The Wolf Group, we are monitoring these developments and continuing to evaluate the approaches that are in the best interest of our clients. If you have questions on the new Schedules K-2 and K-3 or need assistance complying with the additional foreign reporting, please contact us. The Wolf Group has assisted clients with foreign disclosures and related tax form preparation for nearly four decades. Pursuant to Circular 230, promulgated by the Internal Revenue Service, any US tax advice contained in the body of this writing is not intended or written to be used, and cannot and should not be used, by any recipients as specific tax advice related to their facts and circumstances. Taxpayers should consult their local tax professional and/or attorney to obtain specific tax advice related to their facts and circumstances.
New Schedules K-2 & K-3 – FAQs for Individuals Who Receive K-1s
Will the new Schedule K-2 and K-3 filing requirements affect me? Although these new requirements mostly affect certain partnerships and S corporations, they may affect you if you are: An individual who receives a Schedule K-1 from a partnership or S corporation. In this case, you may not receive your K-1 (and new K-3, if applicable) until later than usual. This could delay your individual tax return filings. An individual who typically files Form 8865 as part of your individual income tax return to report ownership in a foreign partnership. If you file Form 8865, you are required to include the new schedules with your returns this year. See our Frequently Asked Questions for filers of Form 8865. What are Schedules K-2 and K-3? Schedule K-2 is a new 14- to 19-page form with up to 11 sections. It is filed as part of the partnership or S corporation tax return. It reports items of international tax relevance from the operation of the business. Since this form gets filed as part of the business return, you won’t see a copy unless you see the complete business tax returns. Schedule K-3 is a 15- to 20-page form with up to 13 sections. It is basically an expansion of Schedule K-1 to provide greater detail to you on your share of the business’s international tax items. It is needed for the preparation of your individual income tax returns. This schedule is provided to both you and the IRS, and it reports your share of income, deductions, credit, and international informational reporting items. It may also include data needed for you to file certain international informational forms (such as Forms 5471, 8858, 926, 8621, and 8992) as part of your Form 1040, Individual Income Tax Return. Many of these forms have a $10,000 penalty for failure to file. Even if the partnership or S corporation does not have foreign income or foreign assets, it may still need to file Schedules K-2 and K-3, which could delay your individual tax filings. Why is the IRS requiring these? Formerly, Schedule K (on the business tax return) and Schedule K-1 (issued to you) did not require any specific format to provide international information. As a result, many details needed for the accurate preparation of your individual income tax returns were either lumped together on a few lines of Schedule K-1 or missing altogether. Plus, information on international informational filing requirements (such as IRS Forms 5471, 926, 8992, 8865, and 8621, which carry large penalties) was often referenced in a footnote with unintelligible details and a caveat to “see your tax preparer.” Per the IRS, this resulted “…in what could be a confusing array of statements attached to the schedules K and K-1. The new schedules K-2 and K-3 provide greater certainty and consistency, helping partners and shareholders to voluntarily comply with their filing and reporting obligations.” Now, the IRS is requiring the more detailed Schedules K-2 and K-3 to provide this clarity, and it is motivating [...]
The New FinCEN Beneficial Ownership Disclosures: What You Need To Know
The US Government is seeking to increase transparency around the “true” beneficial owners of U.S. entities or entities doing business in the US. In particular, the US wants to: Cut through all the layers of company ownership to identify the individuals or companies that ultimately own or control the company, and Determine whether any of them are foreign individuals or foreign entities. As a result, beginning in 2022, the US will require entities to file a new informational form to disclose their “beneficial owners.” Here is what you need to know regarding the new mandatory filings. Which owners are being targeted by the new disclosure requirements? The new disclosure requirements specifically seek to obtain information on beneficial owners who are: Non-resident aliens (including individuals living inside the US on tax-exempt visas, such as A, F, G, J, and M visa holders), or Foreign entities. “Beneficial owners” are those who “directly or indirectly, through any contract, arrangement, understand, relationship, or otherwise” (1) exercise substantial control over the entity, or (2) own or control at least 25% of the entity. Beneficial ownership information does not need to be provided for US tax residents, such as individuals who meet the Substantial Presence Test for residency, green card holders, and US citizens. Who needs to file the new beneficial ownership information forms? Certain types of entities (see below) must file the new forms to disclose details on any beneficial owners who are foreign individuals or foreign entities. Since many of the entities in question are small businesses or LLCs, this means that it will fall to the owners themselves to do the filings. For what types of entities must ownership information be provided? US entities, including Corporations LLCs LPs, LLPs, LLLPs Business trusts Other “similar entities” created by filing a document with a US state Foreign entities that have filed and registered to do business in the US, including Corporations LLCs Limited and limited liability partnerships Trusts Other “similar entities” formed under the laws of a foreign country The new requirements affect not only small businesses but also: LLCs and other US entities created solely to hold property or other assets LLCs and other entities that hold rental properties LLCs and other entities created to conduct consulting work or small business activities Are there any exceptions? Yes, the proposed regulations include 23 different exceptions. If an entity meets one of those exceptions, the new forms need not be filed to disclose ownership. The two primary exceptions are: Exempt organizations (non-profits) that fall under Internal Revenue Code §501(c), and Large operating companies with more than 20 employees, with gross receipts over $5 million, and a physical presence in the US What information must be reported on the new forms? Three types of information must be reported: Information on the entity itself, including Official name and trade names Address information Jurisdiction where the entity was formed Unique identifier numbers Information on beneficial owners, including Legal name Date of birth Address information Unique identifying numbers from acceptable [...]
Why the US is the 2nd Largest Tax Haven in the World
For years, the IRS has complained about “tax havens” like Switzerland whose secrecy laws have enabled wealthy US citizens to hide assets offshore and (illegally) shelter their foreign income from US taxation. Since 2009, the US has made great strides in chipping away at these barriers to find out what Americans have been hiding. Meanwhile, the US hasn’t been so transparent at home. It turns out that the US itself is one of the most secretive tax havens in the world. Foreign investors and private citizens can easily set up companies in the US without having to disclose the true “beneficial owners” of those companies. In many US states, less information is required to form a new company than is required to obtain a bank account or even a driver’s license. As a result, many non-US individuals, businesses, and trusts open “businesses” in the US, often in the form of US limited liability companies (LLCs). Because the true “beneficial owners” of these companies are not disclosed, foreign actors can hide behind these structures and use them to conceal income and assets from their home governments. They ultimately route substantial amounts of money through the companies to avoid paying tax in their home countries. And the use of US tax havens has been growing. On October 3, 2021, the International Consortium of Investigative Journalists (ICIJ) reported on the “Pandora Papers,” nearly 12 million leaked documents that disclose the confidential use of offshore tax havens by celebrities, wealthy citizens of numerous countries, and prominent global political figures. In its report, the ICIJ pointed out that use of US tax havens has grown while remaining somewhat under the radar: “Over the past decade, South Dakota, Nevada and more than a dozen other U.S. states have transformed themselves into leaders in the business of peddling financial secrecy. Meanwhile, most of the policy and law enforcement efforts of the world’s most powerful nations have stayed focused on ‘traditional’ offshore havens, such as the Bahamas, the Caymans, and other island paradises.” It’s easy to understand how foreign countries would be upset by the double standard concerning the US’s lack of transparency. In the last two rankings of “financial secrecy” by the FACT Coalition and Tax Justice Network, the US has been 2nd in the world (after Switzerland in 2018 and after the Cayman Islands in 2020). “This is not a ranking in which the US wants to be number one or even number two,” according to Gary Kalman, Executive Director of the FACT Coalition from 2016 to 2019. Despite the US being a member of the international anti-money laundering “Financial Action Task Force on Money Laundering (FATF)” for more than a decade, the US has made little progress in improving its transparency. The ICIJ points out that “the US is the country best situated to bring an end to offshore financial abuses,” but it has shown little interest in doing so: “The U.S. has refused to join a 2014 agreement supported by more than 100 jurisdictions, [...]
February 2022
Yujie Deng
Areas of Expertise US resident taxation US nonresident taxation International organization taxation US payroll and business tax Certifications/Credentials CPA, licensed in Maryland Education Master of Accounting, University of Maryland BS, Accounting, Pennsylvania State University Languages Spoken English Mandarin Tax Supervisor Yujie is a CPA and Tax Supervisor on The Wolf Group team responsible for providing specialized tax services to clients with international concerns, including expatriates, inpatriates, and high-net-worth individuals with global assets, as well as international organization employees and retirees, and entrepreneurs with foreign interests. In this capacity, Yujie assists U.S. citizens, green card holders, and foreign nationals with their individual income tax matters. Before joining The Wolf Group, Yujie worked in both corporate accounting and public accounting. She prepared individual and business tax returns, resolved tax notices with the IRS, fulfilled internal accounting functions, and handled payroll filings and other tax compliance matters. While at the University of Maryland, she co-led the Volunteer Income Tax Assistance program to provide tax preparation support to those in need.
Tomi Dreni
Areas of Expertise US resident taxation US nonresident taxation International organization taxation Financial analysis and bookkeeping Education AAS, Accounting, US MBA & Master of Finance, Korce, Albania BS, Marketing, Korce, Albania Languages Spoken English Albanian Italian Senior Tax Specialist Tomi is a Senior Tax Specialist on The Wolf Group team responsible for providing specialized tax services to clients with international concerns, including expatriates, inpatriates, and high-net-worth individuals with global assets, as well as international organization employees and retirees, and entrepreneurs with foreign interests. In this capacity, Tomi assists U.S. citizens, green card holders, and foreign nationals with their individual income tax matters. Tomi has 15 years of experience in the financial services industry. Before joining The Wolf Group, Tomi held positions in finance, accounting, business administration, and marketing, in the US and Albania. He previously worked in public accounting in Albania, preparing tax returns, drafting financial statements, performing bookkeeping services, and corresponding with the tax authorities to resolve tax matters.
Thao Dao
Areas of Expertise US resident and expatriate taxation US nonresident taxation International organization taxation IRS Amnesty programs, including Streamlined Filings Certifications/ Credentials CPA, licensed in Maryland and Virginia Education BS, Accounting, University of Maryland BA, Economics, University of Maryland Languages Spoken English Vietnamese Tax Manager Thao is a CPA and Tax Manager on The Wolf Group team responsible for providing specialized tax services to clients with international concerns, including expatriates, inpatriates, and high-net-worth individuals with global assets, as well as international organization employees and retirees, and entrepreneurs with foreign interests. In this capacity, Thao assists U.S. citizens, green card holders, and foreign nationals with their individual income tax matters. She also assists clients in filing amended tax returns under IRS Amnesty programs, such as the IRS Streamlined Foreign and Domestic Filing Procedures. Before joining The Wolf Group, Thao interned at a public accounting firm, researching US tax laws for businesses and individuals, as well as assisting clients in resolving tax notices with the IRS. While at the University of Maryland, she participated in the Volunteer Income Tax Assistance program to provide tax preparation support to those in need. Outside of work, Thao enjoys traveling, baking, and playing with her dog. Thao is a big foodie and she will travel great distances for food.
Sachini Amarasinghe
Areas of Expertise US resident taxation US nonresident taxation International organization taxation Education BS, Accounting, George Mason University Languages Spoken English Sinhala Tax Specialist Sachini is a Tax Specialist on The Wolf Group team responsible for providing specialized tax services to clients with international concerns, including expatriates, inpatriates, and high-net-worth individuals with global assets, as well as international organization employees and retirees, and entrepreneurs with foreign interests. In this capacity, Sachini assists U.S. citizens, green card holders, and foreign nationals with their individual income tax matters. Before joining The Wolf Group, Sachini studied business, accounting, and finance and taught finance to undergraduate students.
January 2022
December 2021
November 2021
2020
The Firm moves into new offices in Fairfax, VA, setting the stage for future growth.
