A researcher gets a grant award direct from an institution or university. The grant is not paid as wages, but is paid as a stipend or maybe as a scholarship. The payment might not be subject to income tax. Compare that to a grant is awarded to an institution and the institution pays a researcher… Continue reading Wages for Foreign Researcher Are Taxable
Category: International Tax
Defense Contractor Able to Exclude Foreign Income
United States citizens pay tax on their worldwide income. This general rule can result in double taxation–with the United States imposing tax on the same income that was already taxed by a foreign government. The United States has tax treaties with many countries that help avoid this type of double taxation. The United States also… Continue reading Defense Contractor Able to Exclude Foreign Income
Foreign Trust Owner Liable for 35% IRS Penalty
The IRS shifted its focus to international issues about ten years ago. This included having the penalty group within the IRS’s Small Business/Self-Employed division focus on international reporting penalties. This is in addition to the Treasury’s FBAR filing requirements. The SB/SE division’s focus on penalties started with a few penalty notices. The number of these… Continue reading Foreign Trust Owner Liable for 35% IRS Penalty
Foreign Corp Tax Returns Must Be Filed Timely
The IRS refocused its efforts on international tax issues about ten years ago. This effort has yielded scores of transfer pricing, foreign tax credit, and similar tax disputes. While not as prominent as transfer pricing and foreign tax credit disputes, the IRS has also focused on U.S.-sourced income that is not reported. The IRS has… Continue reading Foreign Corp Tax Returns Must Be Filed Timely
Can the IRS Get Records from Foreign Corps that do Business in the U.S.?
In CCA 2019060408545121, the IRS asked its tax attorneys whether a foreign corporation that conducts business with a limited partner in the U.S. had to produce records. Our tax laws provide address this very topic, as noted in the CCA. The CCA serves as a reminder that failing to provide records for transactions with foreign… Continue reading Can the IRS Get Records from Foreign Corps that do Business in the U.S.?
LLC Cannot Use Crewman’s Exemption for Employment Taxes
Can a U.S. citizen who owns and operates a vessel outside of the U.S. avoid paying U.S. employment taxes for its crewmen by using a foreign legal entity? The court considered this issue in DAF Charters LLC v. Commissioner, 152 T.C. 14, for a single member LLC formed in the U.S. that was owned by… Continue reading LLC Cannot Use Crewman’s Exemption for Employment Taxes
Can Foreign Government Use U.S. Court to Collect From U.S. Person?
If a U.S. person commits tax fraud under the laws of a foreign county, can the foreign country’s tax collector use the U.S. court system to collect from the U.S. person? The court recently addressed this in In re SKAT Tax Refund Scheme Litigation, No. 18-md-2865 (LAK) (S.D.N.Y. 2019). Facts & Procedural History The plaintiff… Continue reading Can Foreign Government Use U.S. Court to Collect From U.S. Person?
U.S. Taxpayer With U.S. Residence Cannot Exclude Foreign-Earned Income
There are a number of tax issues that U.S. citizens and residents who live abroad have to consider. One of these is whether they qualify to exclude their foreign-earned income in computing U.S. income taxes. This exclusion has resulted in a number of tax disputes. The Leuenberger v. Commissioner, T.C. Summary Opinion 2018-52, case addresses the… Continue reading U.S. Taxpayer With U.S. Residence Cannot Exclude Foreign-Earned Income
FBAR Not Limited to $100,000, Willfulness Upheld
There have been a number of recent court cases involving foreign bank account or FBAR reporting penalties. This is likely due to the significant amount of the penalty and that many do not fully appreciate the amount of the liability they face if caught not complying with the FBAR rules. The recent Norman v. United… Continue reading FBAR Not Limited to $100,000, Willfulness Upheld
Payments to Foreign Student Studying in U.S. Subject to Tax
We get quite a few questions from students who are in the U.S. on student visas as to whether their research awards are taxable in the U.S. The answer depends in large part on the terms of the applicable tax treaty and whether the awards are compensation for services or pure grants. The recent Dovzhenok… Continue reading Payments to Foreign Student Studying in U.S. Subject to Tax