International Tax

As my year for blogging draws to a close, I am reminded that my daughter told me that I was too technical with my blogs. So I have tried to remain somewhat generic and less technical. But I must confess that if there is any parting advice I could give to my fellow CPAs, it would be to pay attention to the global aspect of our profession. Why not take a stroll through your closet and make note of the place where your clothes were made. My guess is that you will find a variety of countries, few, if any, being the USA. As we read the business news, we will see more and more foreign investment in the U.S. Even the smallest of practices and employers will be dealing with international commerce issues. This is a trend that will not be reversed, but will gain momentum with a rebounding economy.

In the most recent address by the IRS Commissioner, Doug Shulman, before the 23rd Annual Institute on Current Issues, spent his full time addressing international tax issues. The US government has hit a home run chasing down wealthy U.S. taxpayers who have hidden assets offshore. And with those efforts I will suggest to you that there has been much collateral damage. Many small U.S. taxpayers now have a high price to pay if they fail to cross the t’s and dot the i’s. Many of the basic returns have changed formats to include questions about international transactions and owners.

May I suggest that you consider the following terms: Technical fees, Form 1042, Form 5472, resident alien, foreign tax credit, transfer pricing, W8-BEN. Have any of these terms come up in your reading or research? Do any of your clients or employers hire non-U.S. persons? Do they make payments to vendors outside the U.S.? Do they have workers come to the U.S. for short periods of time? Are any of your clients or employers an LLC with a non-U.S. owner? Do any of your clients or employers have accounts outside the U.S. or have signature authority over a foreign checking account? Have any of your clients married non-U.S. persons? If you answered no to all of these, you may find that these terms may be ones you will see in the near future.

Today we find South Carolina conducting business in a global environment as never before. The world tax topography is changing quickly. The IRS used only one program to snag 18,000 non-compliant taxpayers in 2009. They will not stop there. As my year as your President draws to a close, allow me to share once more the need for a keen eye and a listening ear to the international flavor of your practice or employer. Failure to comply with the international tax laws generally starts with a minimum $10,000 penalty. Whether it be in the IFRS arena or the tax code, let’s make South Carolina proud and keep our profession on the cutting edge of global compliance.

Blogger: Charles ‘Eddie’ Brown, CPA

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About scacpa

The South Carolina Association of CPAs is a professional organization that provides support to all CPAs – whether in public practice, industry, government or education - with lifelong learning opportunities necessary for their success, the promotion of high ethical standards and legislative advocacy for both the public good and for the profession.
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