By Jeff Quinn
Special to the Sun
INCLINE VILLAGE, Nev. — Seems IRS Commish Shulman is looking toward a “one world” philosophy when it comes to the next era of tax audits. In a recent speech before the Organization for Economic Cooperation and Development, Shulman said plans are being made for joint country audits of multinational corporations. And with all of the recent attention to individuals’ foreign investments, can joint audits of we and thee be far off?
Shulman says IRS is now working out the details on developing a protocol for joint audits with other countries, noting that a joint audit wouldn’t be a “simultaneous exam,” but instead a process of two or more countries joining forces to carry out a single audit of a company with cross-border business dealings — a process that “will be more sensible and efficient for the participating business.”
And with regard to individuals, Shulman is singing the praises of the Foreign Accounts Tax Compliance Act (FATCA), enacted as part of the HIRE Act, as the most important development in international information reporting in a generation, allowing the Revenooers to get after Americans (in particular) prone to hiding assets overseas, by:
1. Increasing information reporting by U.S. taxpayers holding financial assets outside the U.S. and imposing severe penalties for failure to comply;
2. Expanding due diligence standards, so that IRS has better and easier access to U.S. beneficial owners of accounts; and
3. Getting tougher with foreign financial institutions that will “have to agree to disclose U.S. investors to IRS or feel the pain of a substantial new withholding tax on U.S. income and gains.”
Meanwhile, the House of Representatives has been busy passing tax measures — such as the “American Jobs, Closing Tax Loopholes and Preventing Outsourcing Act of 2010” just last month. Among many other things, the House bill would retroactively reinstate and extend for one year (through the end of 2010) the following:
1. The election to claim an itemized deduction for state and local general sales taxes in lieu of the itemized deduction allowed for state and local income taxes;
2. The additional standard deduction for state and local real estate taxes; and
3. The availability to taxpayers 70-1/2 and older to make tax-free distributions to charity from their IRA, in the amount of up to $100,000 annually.
And how to pay for all of these goodies? One nasty idea, for tax years beginning after Dec. 31, 2010, would prevent individuals engaged in a professional service business from “avoiding” employment taxes by channeling their earnings through a limited liability company or limited partnership. This provision would apply to an “S” corporation engaged in a professional service business that is mainly based on the reputation and skill of three or fewer individuals, or an “S” corporation which is a partner in a partnership engaged in a professional service business if substantially all of the activities of the “S” corporation are performed in connection with the partnership.
We can hardly wait for the Senate to weigh in on this one.
For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz