Category Archives: Cross Border Taxation

Articles in Cross Border Taxation are focus on inheritance of the multi national family
and on small business with a presences in more than one country.

How to Prepare Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests

Form 8288, form 8288-b

Preparing Form 8288-B, Application for Withholding Certificate for Dispositions by Foreign Persons of U.S. Real Property Interests

The non-resident alien, foreign LLC and foreign corporations all have one common international tax problem- the U.S. 15% real estate sale price withholding tax.

Additionally, states have a  withholding tax.

For example, Hawaii is a five percent withholding tax of the sales price.  As a result, a whooping 20% of the sales price is withheld.

The seller is personally responsible for this tax and so is the escrow company or law firm handling the sale.   It is what we call, in America, as a “hot potato”.   Every person connected with the sale proceeds is personally responsible.

I am sorry.  I have more bad news about Form 8288-B FIRPTA Certificate.  Congress slashed funding for the IRS.  The other day, an IRS International Tax Attorney told me that the IRS has “limited resources”.   This means a longer, much longer, wait for your FIRPTA Certificate   (click here to learn how to get a fast refund of the tax). 

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International Tax CPA PLanning for Citizens of UK, Sweden, Belgium, Canada, Luxembourg & Austria

Here are the magic Tax Treaty words for your tax CPA for these lucky citizens of The UK, Sweden, Belgium, Canada, Luxembourg, Austria, Thailand and Tunisia:

“An individual who is a United States citizen or an alien admitted to the United States  for permanent residence (a “green card” holder) is a resident of the United States only if the  individual has a substantial presence, permanent home or habitual abode in the United States and if that individual is not a resident of a State other than the name for other country for the purposes  of a double taxation convention between that State and the name for other country.”

Tax Treaties with these words allow U.S. resident aliens to legally not pay U.S. income taxes on their foreign income.   For example,  Mr. Bond, a U.K. citizen has a substantial presence in the U.S.  He does not have a green card.  He is in the U.S. on an investor visa. Mr. Bond only pays U.S. income tax on his U.S. income.  The income from his U.K. business and all other foreign companies or investments is U.S.

Mr. Bond only pays U.S. income tax on his U.S. income.  The income from his U.K. business and all other foreign companies or investments is U.S. tax free.

IRS Publication 519 “states that the U.S. domestic rules that determine if a non-U.S. citizen is a U.S. resident do not override tax treaty definitions of residency.”

Below is our e-book of IRS Publication 519 explaining international tax planning for Sam, a U.K. citizen living in the U.S.

The example applies to citizens of other countries with a tax treaty containing these magic words.  If you have overpaid your American taxes or just need help, then call me, Brian Dooley, CPA, MBT at 949-939-3414.

International Tax Accountants Are Watching for the New Form 1120F and Form 5471

A great debate over the United States corporate tax reform is underway.   Foreign tax accountants are waiting to see how this will change the Form 1120F (reporting for an international company with U.S. income)  and the Form 5471 (reporting for a controlled foreign corporation).

The Form 1120F includes the Branch Profits Tax.  A tax on U.S. equity and foreign interest expense.

Form 1120F’s Branch Profits Tax is a surprise attack tax.   Small international businesses rarely spend the time needed to avoid this tax.  Quarterly proforma tax returns are required to manage this tax.   Corporate minutes are needed to justify the retention of liquid assets on the U.S. branch.

The word “branch” is misleading.  A foreign corporation does not need a branch (such as an office or a factory) for this tax to apply.  The tax is on U.S. equity that is not necessary for an active U.S. business.

The second part of the branch profits tax is in the method of the corporation’s debt financing.

Foreign tax accountants are expecting the new Form 1120F to include an easy to use worksheet for computation of the interest expense portion of the branch profits tax.

International and Global Tax Strategies as the U.S. reduces the business tax rate.

The best international and global tax structure includes an IRS approved Nevada Self-directed trust.

Optimizing your tax savings requires thinking outside the box. Using a foreign trust for tax planning and asset protection will keep you and your family safe.

Optimizing your tax savings requires thinking outside the box. Using a foreign trust for tax planning and asset protection will keep you and your family safe.

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Tax Pirates Invade America

Wikimedia Commons, modified by Gretchen McCulloch

Wikimedia Commons, modified by Gretchen McCulloch

Avast me matey!   Tax pirates have found a new tax haven.

They exploit the IRS mistake on the Form W-9  and uses the Delaware LLC to evade taxes.  Wyoming and Nevada are also popular, as explained in this footnote1.

It started in 1996 when the IRS changed the law on limited liability companies (LLC).   The LLC is an invisible corporation. It does not file a tax return!
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