Money and people are constantly moving across borders – and every shift creates new tax complications. We understand and solve the issues that occur when multiple governments want to tax the same people and businesses. We also buy, hold, lease and sell U.S. real estate for non-resident investors.
Who: Debra Rudd, CPA
What: Passive Foreign Investment Companies (PFICs) are subject to special and punitive tax treatment in the United States. This session will examine two of the three possible tax treatments (Mark-To-Market and Default), with a detailed explanation of how to perform the calculations, fill out Form 8621, and report income or loss on a tax return. The presentation will track a single PFIC’s treatment under these two regimes over a five-year period and will include a side-by-side comparison of the tax results during that time.
When: Friday, February 13 at 12:00PM Pacific Time
Where: HodgenLaw PC
This week’s question comes from someone who was flummoxed by ambiguity and the IRS’s inability to answer questions. I will quote the whole email because it make me happy.
Dear Phil H,
Thank you for helping me navigate through the murky waters of expatriation. Your writings have been both a ray of illumination and a catalyst for the fight or flight response. You have been infinitely clearer than the folks at the IRS, helplines, Embassies, etc.
Thinking that I was at last free from the unreasonable demands of a country I have not lived in for many decades, and relieved that my financial accounts/career/financial security/etc. have been saved from FATCA inspired oblivion, I was propelled into another few hours of frenzy by something you wrote in this week’s newsletter… about a FinCen 114 being due for the year of expatriation. To confirm your information, I sent an email to this IRS recommended address: FBARquestions@irs.gov. Here follows the reply I received. Its beauty might appeal to you. It is a record of incomprehension and increasing anxiety from both parties. I am being told that the FinCen 114 is not needed in the year of expatriation.
I’ve been left with the impression that my command of English is inadequate, and that I have seen ambiguity where none exists. Alas, it is the only language I speak with fluency. Perhaps, as a lawyer, you will be able to clearly see what I could not.
The question is whether, in the year of expatriation, you must file the dreaded FBAR, now named FinCen Form 114.
Saturday morning in Singapore I will be talking to about 30 entrepreneurs about tax stuff – a bit for themselves, but mostly about their businesses. And that means talking about cross-border tax strategies. “Can I do what Apple does?”
The answer is yes. It’s just not cost-effective until you are operating at scale. For younger companies, the better strategy is to optimize for simplicity. Spend less money on tax brains and pay a bit more in tax. Stay away from the shiny.
Simplicity will make your business nimble, and your time and attention will be directed toward what really matters: creating customers. An entrepreneur’s time and attention is worth far more than taxes saved.
You don’t get wealthy by paying less tax. You get wealthy by creating customers. Look at Apple. Of course Apple is saving tax with clever international tax strategies. But first, painfully and over a long time, they created customers.