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Washington DC Tax Law Blog

Two new tax laws impact Olympic Medalists

Victory at the Olympics comes with more than just a medal and prestige, it also comes with a big bonus paycheck. The amount awarded varies depending on the medal. Gold winners will win $37,500 at the Winter Olympics this year, Silver medalists earn $22,500 while a Bronze wins $15,000.

The Internal Revenue Service (IRS) taxed these winnings in a manner similar to lottery winnings or work bonuses. That has recently changed.

How does the new tax law impact expats?

Recent tax reform has changed tax obligations. These changes impact not just those currently living in the United States, but also those living abroad. Some changes that will specifically impact expats include adjustments to exclusion rates and corporate taxes.

Exclusion rates and expats: Some things remain the same, some change

Willful violations and the FBAR

The Report of Foreign Bank and Financial Accounts (FBAR) is generally required for United States citizens and residents that have an interest in foreign accounts. A failure to properly report these assets can result in fees and other penalties, including imprisonment.

The severity of the penalty generally depends on the details of the violation. Willful violations come with more severe penalties than non-willful.

Could OVDP provide Bitcoin amnesty?

To report or not to report? That question has likely crossed the minds of any investor that owns cryptocurrency. Those who ask this question should note that the Internal Revenue Service (IRS) has now trained agents on how to pursue digital currencies like Bitcoin.

Unfortunately, there is not currently an official amnesty program for those who have yet to report such assets. This seems to leave cryptocurrency holders with two options: amend prior tax filings and face whatever repercussions the IRS deems fit or take the chances that come with waiting for an amnesty program. Those that choose the later could find themselves the subject of an audit — not a pleasant experience.

FBAR case and statute of limitations: Court win for taxpayers

The Foreign Bank Account Reporting Form (FBAR) is required for taxpayers that hold certain foreign accounts. The Internal Revenue Service (IRS) has pushed for compliance with reporting requirements in recent years. The agency has come down hard on those who fail to comply and has moved forward with investigations and penalties against those who violate these requirements. Penalties have included hefty fines and imprisonment.

But just how far back can the IRS investigate? That was the issue in a recent case decided by the Tax Court.

Offshore accounts in a post-FATCA market

The Foreign Account Tax Compliance Act (FATCA) went into effect in 2010. This law requires all foreign institutions outside of the United States to report assets and identities of account holders that are United States citizens. Failure to comply can result in serious ramifications, including steep financial penalties.

How has this law impacted the industry? According to a recent piece in the International Adviser, the law has led to one big change: specialization. After the passage of FATCA banks could not simply take on clients with citizenship in the United States without knowledge in these laws. 

China passes new tax law to lure in business

President Donald Trump’s recent tax law appears to have sparked change not just in the United States, but throughout the world. China recently announced that it would grant tax exemption to both local and foreign companies operating within their borders. A piece by CNBC discussed the new law, noting the move signals China’s “determination to gain an edge in global competitiveness.”

China is not alone. The United Kingdom, France, Norway and Argentina are also posturing to structure their tax regimes in a manner that would translate to an increase in investments and jobs. The National Review notes the British plan to cut corporate income tax by five percent while both Canada and Germany are preparing for the likely negative impact to their own economies as businesses shift to take advantage of these changes. 

Territorial taxes: How will this impact multinational businesses?

President Donald Trump signed the GOP tax bill into law before the end of 2017. The bill changes a number of areas of tax law. This piece will discuss the shift to a more territorial system of taxation and how this will impact multinational businesses and international tax issues.

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