Renunciation trends in Auckland
I received an email yesterday from a contact in New Zealand. Renunciations in the Auckland Consulate are apparently way, way up compared to last year.
I had occasion to speak with an NZ woman who was managing our file because they had messed up on something. She said that there were only 5 renunciation appointments in the last FY (2012-10 — 2013-09), but that they already had 25 appointments for the first quarter of this FY. I didn’t ask if that was number of persons or number of appointments. Anyway, if that trend continues, what is that, a 2,000% increase in one year?
This a large increase. Starting from a low base (five in the prior fiscal year) the statistics are deceiving. Don’t read too much into the percentage increase.
The absolute numbers are small. But I am hearing anecdotally that numbers are up dramatically at other Consulates and Embassies, too. Thus, the trend line may indicate what is happening worldwide. I just don’t have numbers from other countries.
The government’s secret plan is working. Citizens are expensive and they want stuff from Uncle Sam. The new strategy is to print lots of money and force people out of the country. That will help the Federal government balance its budget. /sarcasm.
Voluntary Disclosure and Frozen Swiss Bank Accounts
I have been long silent on this topic but for those of you who need the information, here it is.
The Swiss government and banks are folding like a bunch of cheap patio chairs. Banks have started and will continue to hand over over information about their U.S. customers to the IRS. Expect this to continue, and expect the contagion to spread to other countries.
That’s not news.
Some Swiss banks are now freezing 50% of the account balance of their American customers until the customers give proof that they have solved their U.S. tax problems.
I don’t see people talking about this too much. You need to know this is happening.
Let it roll around in your brain for a moment. Swiss banks are arbitrarily freezing half of their customers’ accounts, leaving the customers with a tough choice: enter the voluntary disclosure program or kiss their money goodbye. This tilts the legal strategy calculus dramatically.
My professional advice to you is “Don’t f___ around.” Make a decision on what to do. Make the decision fast. If you get to the point where your Swiss banker tells you that half the account is frozen, you have probably waited too long.
This more or less forces you into the voluntary disclosure program. That might be the right move for you or it might not. But your options are narrowing.
Why I Have Been Silent on OVDI
I have been silent because our office burned out on voluntary disclosure program cases. We no longer do them. We have one case lingering from the 2009 program, and that’s it. That one should be finished pretty soon.
So I’m not looking for new business here. If you want help, let me know and I will be happy to help you make a connection to someone. Ping me an email. I want you to be able to sleep well at night.
It’s Not Rocket Science
But really, a voluntary disclosure case is commodity legal work and takes relatively little skill. There are very few moving parts, and you can buy this service almost anywhere. (Well, don’t turn off your brain when you do this, but the basic idea still stands. You don’t need a rocket scientist tax lawyer.)
When I turn off Adblock I see that lawyers are buying advertising from Google, FFS. When a legal service is sold through Google AdWords, that’s when you know it is a commodity.
Except When It Is
Some of you out there do have tough facts. It’s hard to make a decision about what to do. Well, I should say it is easy to make the reflexive decision to use the voluntary disclosure program.
But if you are at all thoughtful and if you refuse to take government PR as the gospel, there is a judgment call to be made: use the voluntary disclosure program or find another method to solve the problem.
Frankly, in the vast, vast majority of situations the likelihood of criminal prosecution is nil. If you are talking to a lawyer about your situation and you are getting a steady diet of “Prison!” and “Fear!” you should ask for damned good reasons. And expect a couple of decades of experience in criminal tax defense to back up those reasons.
I am not saying there is a zero risk. Each case is different. I’m just saying that unless you are Dr. Evil Incarnate and big money is involved, you should assess your risks dispassionately and with the help of an experienced professional.
Tax cases are either money problems, or money + prison problems. I am telling you that very few tax cases are prison problems.
It’s a Money Problem
Most of these cases come down to money–minimizing the penalty risks and doing the tax returns right to minimize tax. Analyze your situation by looking at every possible strategy–even the dumb ones. What is the expected economic outcome of each alternative strategy? Assuming that prison risks are off the table, you are making a “minimize my expense” decision.
Well, that’s not strictly true. You have a money problem and an emotional problem. Some strategies for cleaning up your messes will have uncertainty built into them. If you can’t stomach the uncertainties, you should throw more money at the situation until you have certainty. And that usually means the voluntary disclosure program–this is the only way to buy immediate closure.
What We Do Now
As I said, we don’t do voluntary disclosure program cases anymore. We got sick of putting grandmothers on the government’s conveyor belt to oblivion.
But we haven’t walked away entirely from helping people who find themselves in a jackpot. We have taken a slightly different role in the process: we are the back office team.
Now we work with criminal tax defense lawyers on messy, problematic, high-stakes cases. You hire a criminal tax defense lawyer (I know who you should call) to deal head-on with the government. You want someone who is in semi-constant contact with the Department of Justice. Strategies are decided here.
We do the hard technical tax analysis and prepare the tax returns. Your tax returns will get looked at. The best thing you can do for yourself is to have those tax returns get a hostile audit and come back with a “no change” result. That gives your defense lawyer the best leverage for negotiating a favorable result.
That’s what we do now. It is the combination of experienced international tax lawyers and three in-house CPAs that makes the difference. We can (and do) have three, four or five of our people at projects for months at a time. They have had experience in dozens of cases just like yours. That’s power.
Tax returns are how you talk to the government about money. I don’t know anywhere else that combines the skill-sets of forensic accounting, tax accounting, tax return preparation, and hard-core international tax expertise to make those tax returns deliver the right message.
And you know what? We’re having fun with it.
San Francisco – tonight – 345 Stockton
Last chance. We are having a meetup tonight December 5, 2013) in the OneUp Lounge in the Grand Hyatt at 345 Stockton in San Francisco. Let’s say 7:00 pm to 8:30 pm-ish.
It will be a bunch of people who are speaking at or attending the CalCPA International Tax Conference on December 6, 2013 — not coincidentally to be held in the self-same Grand Hyatt.
Come by and hang out. Text me if you like at 626-nine-nine-nine-four thousand. I’m in SF right now.
Heh. See how I learned stuff from Craigslist for how to disguise a phone number from scraper bots?
2013 International Tax Conference Speaker Profile: James M. Hill
2013 CalCPA International Tax Conference
You should attend the 2013 International Tax Conference on December 6, 2013 in San Francisco.
Speaker Profile: James M. Hill
Jim Hill is one of our speakers this year. He is an attorney and CPA at Grant Thornton LLP in Los Angeles. He will be talking about transfer pricing from the perspective of middle-market companies.
Who are you, in 20 words or less
I am a transfer pricing specialist, but I would really rather be skiing.
What are you talking about at the 2013 CalCPA International Tax Conference?
Intercompany transfer pricing.
Why people should attend?
Transfer pricing touches every multinational company’s operations. Governments through out the world are using transfer pricing to protect their tax bases and increase local country tax revenues, particularly middle market companies. I am going to talk about the various points that you really need to address when involved with transfer pricing for middle market companies.
I am also a good presenter and I am funny. I might not be as funny as everyone’s favorite economist, Ben Stein, but I don’t make as much money as he does, either.
What do you need to know about economists in transfer pricing?
First Law of Economists: For every economist, there exists an equal and opposite economist.
Second Law of Economists: They are both wrong!
How To Attend the International Tax Conference
I know. You are saying to yourself, “Yes, Yes! I MUST ATTEND!” No worries. You can attend in person, or you can watch the whole thing on the web.
December 6, 2013 is a Friday. Be in SF on Thursday night, December 5, 2013. We will have totally unofficial little social gathering on Thursday night at the OneUp Restaurant and Lounge at the Grand Hyatt Hotel from 7 pm – 8:30 pm. Hang out with us a while. Have a beverage. Talk shop.
If you tell your significant other about this event, he/she is likely to tag along for a weekend in San Francisco during the Christmas season. Union Square will be festive. You can spend all day Friday soaking up the international tax goodness while your S. O. is out having fun. What a deal, right?
2013 CalCPA International Tax Conference 12/6/2013
New! Bring a Friend Discount
[EDIT: 27 Nov 2013] – I just received an email from Kay Phelan, the Director of Conferences at CalCPA. It went out to all currently-registered people, but will work for new registrations as well: bring a friend for 25% off. Note this is for in-person attendance only.
I’m writing to thank you for registering for the CalCPA Education Foundation’s 2013 International Tax and Business Conference, and to ask you to invite a client, colleague or friend to attend with you. They will save 25% off the registration price.
Why do we want you to invite someone?
- Your friends and colleagues will appreciate the invitation
- Everyone attending will have access to outstanding speakers
- General and concurrent sessions will meet the needs of a wide variety of practitioners
- Choice of basic and advanced concurrent sessions
- Consider inviting someone who is less experienced than you to share the experience.
- Consider inviting someone who is more experienced than you to take advantage of the advanced material!
- You and your friend can attend the “meet-up” Thursday night December 5, at the OneUP Lounge at the Grand Hyatt at Union Square. This is an informal no-host get-together to give you the opportunity to meet with other speakers and attendees before the conference on Friday.
Please forward this email, and ask them to use the code ITC13 at the time of registration to receive their discount. This discount is for new registrations only, and does not include the webcast.
Please take advantage of this unexpected offer. Join us in San Francisco on December 6, 2013.
The CalCPA International Tax Conference
The 2013 International Tax Conference sponsored by the California Society of CPAs will be held on December 6, 2013.
Here are the links to attend the 2013 CalCPA International Tax Conference in person, or to watch the sessions in a live webcast.
The beginning and ending sessions are for everyone, but in between there are five sessions divided into two tracks.
This year the Conference features an introductory curriculum. This is a track of sessions that will help you understand the big picture of international tax concepts. When you go back to your office and sit down with that Form 1040-NR or 1120F, these concepts will help you understand where the details fit in.
The Introductory track of sessions is the 30,000 foot fly-by view of international tax law, designed for practitioners starting out in international tax.
Thomas Neff, CPA of RINA Accountancy Corporation starts off the series of five sessions with “Fundamentals of U.S. International Tax“. Every intrepid explorer needs a compass when embarking on a new adventure. Tom will provide that compass.
Next, Charlotte Wall, CPA of Spott, Lucey & Wall, Inc. will give you 50 minutes of inbound corporate planning. Her session is titled “Foreign Business Investment in the U.S.: What You Need to Know.”
Charlotte’s session will give you the big-picture ideas you need to know for handling foreign business clients thinking about doing business in the United States.
Doug Wright, CPA of Burr Pilger Mayer, Inc. covers the reverse: U.S. companies expanding their business operations abroad. His topic is titled “Outbound International Tax Planning for U.S. Businesses“.
There is an infinitely deep pool of minutae that will confront you here, but Doug will focus you on the major concepts. If you know the principles, you can find the details.
Humans who change from nonresident to U.S. resident status face a whiplash-inducing pileup of tax and paperwork complexity. Are you a resident? What was the first day that you became a resident? What do you file? What about estate and gift tax questions?
Whether we are talking about immigrants or people who are merely in the United States temporarily, Cindy Hsieh, CPA of Rowbotham & Company LLP will highlight the things to look for in “Pre-Arrival Tax Planning for High Net-Worth Families and Executives.”
Finally, Andy Mattson, CPA of Moss Adams LLP will cover the tax issues facing Americans working and living abroad, in “Expatriate and Alien Taxation”. If you have wrestled with Form 2555 or Form 1116, this is the session for you.
The advanced track runs concurrently with the introductory sessions. You are welcome to jump back and forth between the two tracks, depending on your interest.
Passive Foreign Investment Companies (PFICs) for Experienced Professionals
Elena Redko will tackle PFICs in a session that assumes you know the basics. Actual spreadsheets, hands-on. This is how it works. Preparing Form 8621 correctly is hard. Elena will show you how it works.
Portfolio Interest: A Congressional Gift to Practitioners
Rufus Rhoades will do a session on portfolio interest. Get a tax deduction for an interest expense and the lender collects interest income tax-free? Seriously? Rufus will show you how it’s done.
Managing Transfer Pricing Issues and Opportunities
Jim Hill of Grant Thornton will talk about transfer pricing from a technical yet practical angle. How do you, as the tax practitioner, help the CFO of a mid-market company deal with the complexities and costs of doing transfer pricing properly? These clients don’t have the budget but face the same problems that giant multinationals face.
U.S. Tax Deferral Planning
For U.S. companies doing business abroad, the tax planning strategy is deferral. Why pay a dollar of tax today when you can pay that dollar of tax next year? Or five or ten years from now? Douglas Wright will talk about the deferral mechanisms built into the Code and how to use these strategies when advising U.S. multinationals.
How to Handle an Expatriation Client
Phil Hodgen will do a session on expatriation. Section 877A. It is getting more and more popular, and despite everyone’s focus on the citizenship side of things–giving up your passport–an expatriation project is 90% a tax return problem and only 10% a “citizenship/green card” problem. This session will tell you about preparing the tax returns and doing pre-expatriation tax planning for people giving up U.S. citizenship or green cards.
Thursday Night Fun
An added bonus for those of you attending in person, please join Phil Hodgen (Chairman of this year’s Conference) and other speakers on Thursday night, December 5, 2013, from 7:00 p.m. to 8:30 p.m. (flexible!) at the OneUP Lounge at the Grand Hyatt at Union Square.
This is an informal no-host get-together to give you the opportunity to meet with other speakers and attendees before the conference on Friday. This is a great opportunity to meet your fellow international tax practitioners in a casual environment.
So far, we have informal speaker profiles for:
As more of the speakers send in their profiles, we will add to the list.