“Carried interests” of hedge fund and private equity fund managers remain a political hot potato. They are a form of “profits interests” in partnerships. Andrew Mitchel LLC has put up a great chart explaining the mechanics of how these things are taxed.
I have likened the government’s brutal penalties for trivial failures to report offshore bank accounts to “shooting jaywalkers.” U.S. Citizens posted abroad for work or living abroad find penalties in the tens of thousands, or even hundreds of thousands of dollars, for failing to file the “FBAR” Form TD 90-22.1. The IRS is proposing these penalties even for taxpayers who attempted to come into compliance in the 2009 “amnesty” for FBAR penalties.
Now Andrew Mitchel reports that renunciation of U.S. citizenship is soaring:
The FBAR rules require U.S. citizens to file an FBAR report whenever they have a foreign bank account with a balance that rises over $10,000 in a year. Penalties can be up to half the account balance for each year the account is not reported. Americans who have move abroad after getting married, or who have taken overseas jobs, have found themselves in violation of a rule that many had never heard of. No wonder many Americans abroad have decided that it’s just too risky and expensive to remain U.S. citizens.
The IRS is conducting another FBAR amnesty. We can only hope this one is better-run than the last one. Meanwhile, an organization called American Citizens Abroad is collecting FBAR horror stories in an attempt to change government policy towards minor FBAR violators.
Update, 3/10/2011: The TaxProf has more.
If you have an offshore margin account, you just might have to withhold and remit U.S. taxes on interest paid to your stockbroker. Andrew Mitchel explains.
The IRS has adjusted the housing exclusion numbers for overseas residents (Notice 2011-8). Andrew Mitchel explains.
Mom knitted us all giant Christmas stockings — so big it seemed like we could always find another piece of chocolate down there somewhere.
The new tax law signed last week is sort of like that. We’ll be finding goodies for weeks, probably. Unfortunately, it’s like a stocking with a few scorpions in the bottom too.
For payroll providers, the first challenge will be dealing with the 2011 2 percentage-point reduction in employee (but not employer!) FICA. The IRS has issued guidance (IR-2010-124), including an option for employers who can’t get their systems updated in time for their first 2011 payrolls to withhold at the old rates and refund the overpayment during the first quarter.
Meanwhile, the tax blog world is digging down into the stockings:
Roger McEowen summarizes the thing, as does Robert D. Flach.
Peter Pappas covers the payroll tax relief provisions.
Roni Deutch compares the FICA tax break to the now-defunct “making work pay” credit.
Kay Bell explains the choices available to people who die this year — well, to their executors.
Linda Beale calls for death to the fascist insect who preys on the life of the working people.
Andrew Mitchel reminds us that the rule that allows controlled foreign corporations to not treat interests, dividends, rents and royaltes received from another CFC as foreign personal holding company income.
You can find our discussion here.
Nobody is really going to come to you from across the ocean with a risk-free opportunity to make a bunch of money. Sadly, the belief in financial unicorns leads many to grief, as Andrew Mitchel notes:
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Sobering statistics from international tax attorney Andrew Mitchel show that Americans are turning in their passports in record numbers.
It could be just a coincidence that this increase occurs as Treasury steps up its shoot-the-jaywalkers approach to international tax compliance, but I doubt it.
Related: FBAR est FUBAR
Andrew Mitchell explains what a “reverse hybrid” is in “Hybrid Entities and Reverse Hybrid Entities.”
Roger McEowen provides details on the recently-enacted “jobs” legislation, including the forgiveness of employer FICA and the $1,000 tax credit for “qualified” new employees.
Andrew Mitchell has more on the international tax “shoot the jaywalker” $10,000 penalties for failing to disclose foreign assets:
The accuracy related penalty under Code
International tax lawyer Phil Hodgen files a report from his recent trip to Asia that should give us pause to consider how we deal with taxes of our offshore taxpayers:
Here
Today the Treasury Department published the names of individuals who renounced their United States citizenship (
Andrew Mitchel reminds us that the 16th Amendment, which paved the way for the modern income tax, is 97 years old today. Unless you are one of those folks who think it hasn’t been born yet (and good luck with that).
That means it’s time to hear from the Old 97s:
Andrew Mitchel explains:
Under Code
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