Due to heightened corrupt practices throughout businesses in the early to late 1970s, the US Securities and Exchange Commission partnered with the US Congress to enact rules that would cover the internal control structure in companies throughout the United States. As a result, the private sector initiated what is called the Committee of Sponsoring Organizations of the Treadway Commission (otherwise known as “COSO”) to provide a framework that would help implement a strong system of internal controls in mid-1985.
There has been much publicity lately regarding large multi-national companies and their offshore tax planning strategies, which has led many business owners to wonder how they could employ similar strategies. This article will focus on things small- to medium-sized business owners should know when considering tax planning strategies related to offshore expansion.
Most small- to medium-sized entities (SMEs) have relatively simple tax structures when opening a foreign subsidiary. When expanding into international markets, SMEs with a foreign subsidiary typically treat the entity as a controlled foreign corporation, foreign partnership, or a disregarded entity. This article does not get into the differences between these structures, however it will give you a high level overview as well as reporting requirements.
Clayton & McKervey, P.C. is committed to audit quality. We dedicate considerable resources to making sure our audits meet the highest standards. The importance of commitment to quality has been highlighted with the recent release of the US Department of Labor’s (DOL) Audit Quality Study.
The DOL recently released its report of results from a nationwide study conducted on the quality of employee benefit plan audit work performed by certified public accounting firms. The study looked at a sample of 400 retirement plan audits by 232 CPA firms for the 2011 Form 5500 annual filing (plan years beginning in 2011). There are approximately 80,000 benefit plan filings made per year with the DOL.
- What is deductible?
- What do I need to keep in terms of records?
Meals and Entertainment Expenditures
Generally, to qualify as a deduction, an expenditure must meet all of the following criteria:
- It must not be lavish or extravagant. Consider: Is it reasonable given the facts and circumstances?
- The taxpayer or taxpayer’s employee must be present when the meals are furnished or the entertainment occurs.
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Department of Treasury by electronically filing Form FinCEvN 114, Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Estate planning is not an easy process. When considering the issues that need to be addressed and the questions that need to be answered, it is easy to become overwhelmed. Perhaps not surprisingly, this process becomes even more difficult when viewed from an international perspective.
An essential part of estate planning is understanding the taxation of wealth transfers. In the United States, wealth transfer taxes include:
- Gift tax
- Estate tax
- Generation skipping transfer tax
In September 2014, the IRS issued final regulations regarding the treatment of funds spent on tangible property. In addition to impacting how businesses will file their upcoming tax returns, the new regulations also influence accounting policies currently in place. The biggest change the regulations make is adding clarity around the definitions of what should be capitalized vs. expensed with regard to repairs, maintenance, and supplies.
For tax years beginning on or after January 1, 2014, all taxpayers are required to follow the new rules. Since these rules are changes to current accounting methods, formal elections will be required, and failure to reflect these formal changes will likely increase a company’s audit risk, and could lead to penalties and fines.
In our last article, we discussed the basics of FATCA, as well as considerations for non-financial domestic entities and foreign entities. FATCA withholding began July 1, 2014, and we find many clients still wonder what it all means and why they should care.
Who should be concerned about FACTA requirements?
Any US company that remits withholdable payments to a foreign entity should be in compliance with FATCA. IRC §1473(1)(A) provides that a “withholdable payment” means:
- Any payment of interest, (including original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodic gains, profits, and income, if such payment is from sources within the United States, and
I just returned from the SelectUSA Investment Summit held in Washington DC March 22-24, 2015, and thought I would provide this re-cap of foreign direct investment interest and activity at a national level.
The Summit was spearheaded by the US Department of Commerce and attracted over 2,700 people from around the globe as well as economic development organizations from every corner of the United States, high-level government officials, and others working to facilitate foreign direct investment into the United States.
The Transatlantic Trade and Investment Partnership, commonly referred to as TTIP, is a proposed trade agreement between the United States and the European Union. The idea of creating a trade agreement between the two largest economies in the world is not new and has been discussed for several decades. However, over the last five years, the idea has gained steam and many predict it will become a reality in the near future. The goal of TTIP is to strengthen both the US and European economies by increasing trade and investment, as well as employment.