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House Passes Tax Bill With Deep Cuts For Businesses & Territorial Tax for Multinationals

According to Law360, House Republicans on Thursday succeeded in passing wide-reaching tax legislation, overcoming Democrats’ criticisms that it would significantly lower taxes for corporations and the wealthy while short-changing middle-income earners.

The Tax Cuts and Jobs Act, or H.R. 1, was approved by a vote of 227-205 just two weeks after it was introduced. The legislation would have a significant impact on a wide range of industries including technology, energy, pharmaceuticals and real estate, but lawmakers must first iron out differences between the House bill and a companion version under consideration in the Senate.

Democrats dubbed the tax plan a “tax scam” that is being rushed through the legislative process to provide the most benefits to corporations, upper-income earners and President Donald Trump himself. House Republican leaders, meanwhile, said the bill would benefit the middle class, grow the economy and boost jobs.

“This bill is about — for the first time in decades — providing the American people with a simple and fair tax system,” House Ways and Means Chair Kevin Brady, R-Texas, said. “It’s about finally rewarding hard work, growing jobs and paychecks, and allowing Americans to keep more of their hard-earned money to use on whatever is important to them.”

The vote took place after Trump, who has pushed for the bill’s passage, delivered private remarks to the House Republican Conference at the U.S. Capitol.

The House bill would lower the top corporate rate of 35 percent to a flat 20 percent. Pass-through businesses, which pass their income on to owners to be taxed at individual rates as high as 39.6 percent, would see 30 percent of qualified business income taxed at a top rate of 25 percent.

A new 9 percent rate would also be introduced for the first $75,000 of pass-through business income earned by owners or shareholders making less than $150,000.

For multinational corporations, the bill would implement a territorial tax system, under which income earned abroad by U.S. parent corporations would not be taxed within the U.S. A company’s “foreign high returns,” which are frequently attributable to intangible property and risks, would be taxed at 10 percent, and a 20 percent excise tax would be imposed on payments from U.S. companies to foreign affiliates, with a credit for foreign taxes paid contingent upon the foreign affiliate's agreement to have those payments treated as effectively connected with a U.S. trade or business.

To encourage multinational corporations to bring already existing offshore profits to the U.S., a one-time repatriation tax of 14 percent for cash and 7 percent for illiquid assets would be permitted.

On the individual side, the bill would collapse the existing seven income tax brackets to four, with rates of 12 percent, 25 percent, 35 percent and 39.6 percent, and it would roughly double the standard deduction. The bill would also limit the home mortgage interest deduction to $500,000 for newly purchased homes; cap state and local property tax deductions at $10,000 while eliminating the deductions for other state and local taxes; and double estate tax exemptions for seven years before fully repealing the tax in 2025.

The bill would add approximately $1.44 trillion to the deficit, according to the Joint Committee on Taxation, Congress’ official nonpartisan scorekeeper for tax bills.

The ranking member of the House Ways and Means Committee, Rep. Richard Neal, D-Mass., labeled the bill as “H.R. 1 percent” before the vote and said that the benefits the richest 1 percent of the population would receive under the plan would not trickle down to middle-class workers.

“Republicans have produced a deeply flawed bill that will hurt the teacher who spends his own money to buy school supplies for their students, students trying to responsibly pay back their student loans, the wife trying to afford her husband’s Alzheimer’s care and the janitor who wants to retire with dignity so he can spoil his grandchildren,” Neal said.

 
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Read more at: Tax Times blog

Americans Renunciating Citizenship is Heading for Record Year!

Now nearly 1,400 Americans renounced their citizenship in the third quarter of 2017, according to US Treasury Department data. The trend suggests the total for 2017 will be more than 6,800: 26 per cent above the 2016 total and 56 per cent higher than 2015.  

Americans are on pace to renounce their citizenship in record numbers in 2017, according to the latest quarterly report from the Treasury Department. 
 

  • Some 5,411 U.S. citizens expatriated in 2016, a record high that topped 2015's numbers by 26 percent. 
  • 2017 is currently on track to beat those figures, Bloomberg News reported, estimating a total of 6,813 by the end of the year if the fourth quarter is similar to 2016's.

  • 2011 was the first year in which more than 1,000 people chose to terminate their American citizenship, according to the Federal Register. 

Under federal law, Americans are taxed according to their nationality, which causes U.S. citizens living outside the country to face taxation from both the U.S. and their nation of residence. The pace of Americans jumping ship started to accelerate in 2010, when the Foreign Account Tax Compliance Act (Fatca) became law. The act was intended to stem tax evasion of U.S. citizens living or working abroad by basically requiring foreign institutions holding assets for American expats to report those accounts or withhold a 30 percent tax on them.

 
2016 q4 annualThe graph to the left is based solely on IRS data and shows the number of published expatriates per year since 1998.
 
The connection between the list of expatriates and the IRS implies a link to tax policy.
 
The U.S. is one of a very small number of countries that tax based on nationality, not residency, leaving Americans living abroad to face double taxation.
 
The escalation of offshore penalties over the last 20 years is likely contributing to the increased incidence of expatriation.
 
 
 
 Should I Stay or Should I Go?
 
http://2.bp.blogspot.com/-gpZUZK6-jMY/UgVUIPb77LI/AAAAAAAACHk/jJDlvL_8SSk/s400/Tax+Problems.jpg

 
 
Need Advise on Expatriation ... 

 
http://4.bp.blogspot.com/-KyLqQN2UM7k/U-UWwgfXK_I/AAAAAAAADgo/iukRiYWCndc/s200/Expatriation.jpg 
 
 
 
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Sources:

Read more at: Tax Times blog

Sen. Bernie Sanders Call For Senate Investigation of the Offshore Paradise Papers Leak

We had previously posted on October 30, 2017 Another Offshore Law Firm Gets Hacked! where we discussed that Appleby, an Offshore Law Firm/Corporate Agent's Recent Data Breach is yet Another Example of How the IRS Can Discover your Unreported Foreign Account and how the Super-rich clients of offshore law firm Appleby are bracing themselves for the exposure of their financial secrets, after the firm admitted data had been stolen in a cyber attack last year. Today we posted More Then 31,000 US Taxpayers Exposed in Paradise Papers! which discusses that the International Consortium of Investigative Journalists (ICIJ) has issued the Paradise Papers which is a global investigation into Appleby's the files and which reveals information regarding more then 31,000 US Taxpayer' s offshore structures!

Now Sen. Bernie Sanders (I-VT) called for the U.S. Senate to investigate offshore tax evasion following the revelations of the Paradise Papers, adding to the growing voices in Congress who have called for government to take action to address the investigation’s findings.

In a letter to Senate Budget Committee chair Mike Enzi (R-WY), Sanders called on the budget committee to launch a bipartisan investigation to determine how much the use of offshore havens has contributed to the U.S. national debt.

“The Paradise Papers reveal how corporations, billionaires and senior officials in the Trump Administration use complicated financial maneuvers to hide their income from the Internal Revenue Services,” Sanders wrote. “The Budget Committee has a responsibility to U.S. taxpayers to get to the bottom of this serious issue.”

Sanders joins Senate Minority Leader Charles Schumer (D-NY) and several other members of Congress who have called for further examination of Paradise Papers revelations and their implications for a tax bill recently proposed by Republicans that would significantly reduce corporate taxes.

“These documents pull back the curtain on a complex shell game, where corporations’ staggering profits disappear offshore and rematerialize when the time is right and the tax liability is the lowest,” said Senator Sheldon Whitehouse (D-RI) and Congressman Lloyd Doggett (D-TX), as they called on Congress to reexamine the Stop Tax Haven Abuse Act
they introduced in April.

“Middle-class American families can’t set up their own Grand Cayman subsidiaries.  Instead, they’re left paying a bigger share of taxes than they should.”

 Marini & Associates, PA has assisted several hundred clients with coming into U.S. tax compliance and avoiding the draconian penalties that the IRS may impose on U.S. persons with undisclosed foreign accounts.

Do You Have Undeclared Foreign Income?
 
 
   Want to Know if Which OVDP Program is Right for You?
 


 
Contact the Tax Lawyers at 
Marini & Associates, P.A.  
 
 

for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243

Source

ICIJ

Read more at: Tax Times blog

More Then 31,000 US Taxpayers Exposed in Paradise Papers!

We had posted on October 30, 2017 Another Offshore Law Firm Gets Hacked! where we discussed that Appleby, an Offshore Law Firm/Corporate Agent's Recent Data Breach is yet Another Example of How the IRS Can Discover your Unreported Foreign Account and how the Super-rich clients of offshore law firm Appleby are bracing themselves for the exposure of their financial secrets, after the firm admitted data had been stolen in a cyber attack last year.

Now the International Consortium of Investigative Journalists (ICIJ) has issued the Paradise Papers which is a global investigation into Appleby's the files.
 

The International Consortium of Investigative Journalists and 95 media partners explored 13.4 million of these leaked files which were obtained by the German newspaper Süddeutsche Zeitung.

The Paradise Papers include Nearly 7 Million:
  •  Loan Agreements,
  • Financial Statements,
  • EMails,
  • Trust Deeds and
  • Other Paperwork 

which represents nearly 50 years of records at Appleby, a leading offshore law firm with offices in Bermuda and beyond. The documents also include files from a smaller, family-owned trust company, Asiaciti, and from company registries in 19 secrecy jurisdictions.
 

The records range from complex, 100-page corporate transaction sheets and dollar-by-dollar payment ledgers to simple corporate registries of countries, such as Antigua & Barbuda, that do not publicly list names of company shareholders or directors.
As a whole, the Paradise Papers files expose offshore holdings of political leaders and their financiers as well as household-name companies that slash taxes through transactions conducted in secret. Financial deals of billionaires and celebrities are also revealed in the documents.
The Paradise Papers Files Include Far More Information About U.S. Taxpayers, At least 31,000 of Them,
Than Previous ICIJ Investigations!
ICIJ collaborated with more than 380 journalists working on six continents in 30 languages. Many team members spent a year using online platforms to communicate and to share documents.
 
Journalists tracked down court records, obtained financial disclosures of politicians in Africa, Europe, and Latin and North America, filed freedom of information requests and conducted hundreds of interviews with tax experts, policymakers and industry insiders.   

 
Marini & Associates, PA has assisted several hundred clients with coming into U.S. tax compliance and avoiding the draconian penalties that the IRS may impose on U.S. persons with undisclosed foreign accounts.

Do You Have Undeclared Foreign Income?
 
  

 Want to Know if Which OVDP Program is Right for You?


 
Contact the Tax Lawyers at 
Marini & Associates, P.A.  
 
 

for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog