Wednesday, April 26, 2017

Trump Proposes 15% Corp. Tax Rate & Repeal of 3.8% Obama Tax

A 15 percent tax rate for corporations, cutting the top individual tax rate from 39.6% to 35%, reducing the number of rates from seven to three and the repeal of a 3.8 percent tax on net investment income are the top priorities in the Trump administration’s tax reform agenda, according to a plan released by the White House today April 26, 2017.

Treasury Secretary Steven Mnuchin and National Economic Director Gary Cohn confirmed rumors that President Donald Trump is sticking to priorities outlined during this election campaign to slash the current 35 percent corporate tax rate by 20 percentage points.

“We will have a massive tax cut for business and massive tax reform and simplification,” Mnuchin said. “The president is determined to unleash economic growth for businesses."

Another significant change that the White House is proposing is a shift to a territorial tax system under which income earned abroad would not be taxed within the U.S. Under the current worldwide system, U.S. corporations are required to pay taxes on all income, regardless of where it is earned.

Mnuchin and Cohn also reiterated Trump’s campaign wish list to allow for a Repatriation of Corporate Income Stored Overseas.

The standard deduction will be doubled to benefit the middle class. However, this benefit would be greatly diminished if it is accompanied by the elimination of certain personal tax exemptions as well, as it was in Trump’s tax package released on the campaign trail.
Trump’s plan is silent on the controversial border adjusted tax proposal floated by the House Republicans that is expected to raise approximately $1.2 trillion in revenue by disallowing deductions for import expenses. The BAT has been staunchly opposed by import-heavy retailers and Trump has waffled on the idea in the past few months, labeling it as too complicated.

Democrats are opposed to such significant tax cuts that they say will benefit the wealthiest at the expense of lower-income people, and so, any tax reform bill introduced in Congress will have to be revenue-neutral without raising deficits beyond a 10-year window so that it can satisfy a Senate rule allowing certain measures to pass with a bare majority.

Senate Democratic Leader Chuck Schumer, D-N.Y., said in a statement that Democrats will oppose any proposal from the president that gives massive tax breaks to “the very wealthy” while exploding the deficit.

The White House administration has said that the tax cuts would be paid for through economic growth, but the Tax Foundation, a nonpartisan, right-leaning think tank, has said that cutting the corporate income tax rate to 15 percent alone would reduce federal revenues by about $2 trillion over a decade and the economy would have to grow by an unrealistic 5 percent.

But also see our April /25/17 post Tax Reform Announcement Coming on April 24 but Tax Reform Is 'Impossible' This Year - So Where Does That Leave Tax Advisers?  where we discuss that there may not be enough time to get the tax bill passed in 2017. Warren Payne, a former House Ways and Means Committee policy director now with Mayer Brown LLP, believes that passing tax reform by August will be ‘‘impossible’’ this year. Rather, he suggested during a conference call March 16 that it is more likely to be addressed in early 2018. 

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The New York Times



Tuesday, April 25, 2017

IRS Adds Belgium, Columbia & Portugal to Automatic Information Exchange List

Rev. Proc. 207-31 updates Rev. Proc. 2016-56 (published in December 2016) to adds 3 countries:
  • Belgium,
  • Colombia, and
  • Portugal
to the Section 4 list of countries with which the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) have determined that it is appropriate to have an Automatic Exchange of information collected under §§ 1.6049-4(b)(5) and 1.6049-8(a).

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 for a FREE Tax Consultation Contact US at 
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Tax Reform Announcement Coming on April 24 but Tax Reform Is 'Impossible' This Year - So Where Does That Leave Tax Advisers?

According to Reuters US President Donald Trump has revealed that he will make a major tax reform announcement this Wednesday, 26 April 2017.

We previously posted on March 24, 2017 Breaking News - Possibly No Tax Reform This Year! where we discussed that Donald Trump has proposed tax reforms that would:
  • significantly reduce marginal tax rates for both individuals and businesses,
  • increase standard deduction amounts to nearly four times current levels,
  • limit or repeal some tax expenditures,
  • repeal the individual and corporate alternative minimum taxes and the estate and gift taxes, and
  • tax the profits of foreign subsidiaries of US companies in the year they are earned.  
So Where Does That Leave Tax Advisers?

Fast-forward and now it appears that

Tax Reform Is 'Impossible' This Year."
Now according to Law360 Businesses that entered 2017 with a high degree of optimism for the prospects of tax reform are now feeling increasingly uncertain following President Donald Trump's latest decision to once again put tax reform on hold while going back to reworking health care policies.

All the talk of tax reform without any substantive action from the president, or even so much as an outline from the White House for tax policy proposals, has tempered the sanguine disposition that businesses had at the start of the year, experts say.

"There is a window in which tax reform can be taken up and that window will close once we get into the election season next year for midterm. I would expect that they have to get something done by the early part of next year or everything might start to get derailed," David Blair, an attorney and chair of Crowell & Moring LLP's tax group, said.

Months after Trump promised a phenomenal tax plan, the White House's direction on tax reform is wholly unclear, with mixed messages coming from administration officials. Trump himself has wavered on the centerpiece, and the most controversial part, of the House Republicans' blueprint for tax reform, to not tax exports, while disallowing deductions for import expenses. The proposal is commonly known as the Border Adjusted Tax. Trump has said that he simply does not like the word "adjustment" and equates it to America losing in the trade game.

He has also indicated that he prefers a straightforward tariff on imports at the border to a policy change embedded in the tax code.

Trump's comments have experts scratching their heads trying to figure out if the president merely has a branding issue with the BAT or if he has more substantial policy arguments against the BAT which would meet his goal to incentivize domestic manufacturing.

Trump could very well ultimately come out with a recalibrated version of the BAT proposal. Tax cuts and a plan to encourage businesses to repatriate their offshore earnings are among the other tax policy proposals he has remained firm on. However, the specifics of how he would achieve these goals are still unknown.
Have a Tax Problem?
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 for a FREE Tax Consultation Contact US at 
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Get Ready for The Cayman Islands Beneficial Ownership Register & Reporting Under CRS

We had previously posted on August 10, 2016, Cayman Islands FATCA Reporting of American Depositors is TODAY - Don't Wait Until it is TOO Late to Come Clean! where we discussed that August 10, 2016 was the deadline for Cayman Islands financial institutions to complete their notification and reporting of American Clients' accounts to the Cayman Tax Information Authority, under the US Foreign Account Tax Compliance Act (FATCA).
Users of Cayman Islands vehicles which fall within the scope of FATCA, as Reporting Financial Institutions (FFIs), which will include most Cayman funds, are reminded that they had until the previously extended deadline of August 10, 2016, to complete their notification and reporting to the Cayman Tax Information Authority.  
Now the Cayman Islands Government has adopted new Amended Regulations to ensure the effective implementation of the Common Reporting Standard (CRS) in the Cayman Islands, which requires reporting to the UK, which can then be shared with the US, by June 30, 2017

Notification Requirement

The Amended Regulations now provide that all Cayman Financial Institutions (CFIs), including Non-Reporting Financial Institutions, must file an information notice with the Cayman Islands Tax Information Authority (TIA), the deadline for which has been extended to June 30, 2017 or, if an entity becomes a CFI after that date, then on or before 30 April of the following year.

The information notice must provide certain required information, including the name and CRS classification of the entity, together with comprehensive details of the person authorized to be that entity's principal point of contact for CRS purposes. Any changes to the required information must be notified to the TIA and all notifications must be completed electronically.   

Criminal Liability for CRS Failures 

The Amended Regulations now include various offences and corresponding defenses. The offences include making false self-certifications, intentionally providing inaccurate information, tampering with (altering, destroying, mutilating, defacing, hiding or removing) information, or hindering the TIA from performing its functions concerning CRS.  

Where a CFI has committed an offence, the Amended Regulations also provide for the imputed criminal liability of the directors, managers, secretaries, trustees, general partner and other similar officers of that CFI. 

Do You Have Undeclared Income From 
a Grand Cayman Island Account, Entity or 
a Grand Cayman Island Mutual Fund?
Want to Know if the OVDP Program
is Right for You?

Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888) 882-9243



Trump’s 45% Tariff on Chinese Imports and How to Avoid It?

On February 10, 2017 we post we posted Border Tariff or Border Adjustment Tax or US VAT?  where we discussed that there's a lot of talk these days about borders and taxes in Washington. U.S. President Donald Trump wants to hit firms that outsource with a simple tariff on imports, but republicans in Congress have pitched a more complex idea, a border adjustment, built into a corporate-tax overhaul.

The idea is that U.S. companies that import goods in VAT countries (i.e., almost every other country in the world) are being charged with import VAT. This import VAT is creditable/recoverable for domestic importers, but not for U.S. importers. Therefore, U.S. companies that import goods elsewhere are significantly worse off than domestic traders. This is protectionism and must be retaliated against.

Now according to TradeReady  in addition to a potential border adjustment tax (BAT), President Trump has also threatened to impose a 45% tariff on imports from China. Imported goods that would be affected by this tariff include clothes and electronics. According to the Tariff Act of 1930, President Trump could impose “tariffs of up to 50% and then, if escalation was required, block imports completely.”
Those Affected Companies May Avoid The 45% Tariff On Imports By Using A Bonded Warehouse or A Foreign Trade Zone.
For example, importers bring merchandise into the U.S. that is not intended for U.S. consumption, but rather for exportation and consumption overseas; can take advantage of either a Bonded Warehouse or FTZ to bypass the 45% duties.

What is a Bonded Warehouse?

A Bonded Warehouse “is a customs regulated warehouse which must comply with strict Custom and Border Protection requirements.” According to the CPB, any merchandise that is stored in the Bonded Warehouse “is under the joint custody and joint supervision of both CBP and the Bonded Warehouse proprietor.”

What is a Foreign Trade Zone?

A Foreign Trade Zone (FTZ) is a secure area that is under CBP supervision, but is not considered within customs territory. The CPB explains that FTZs are “located in or near CBP ports of entry,” and are the American version of what are known in the rest of the world as free trade zones. Both domestic and foreign goods may be placed in an FTZ.
With an ability to curtail the possible 45% import tax by opting for either a Bonded Warehouse or an FTZ, the time to apply is now.
 Have a Tax Problem? 

Let US Help!
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 for a FREE Tax Consultation Contact US at
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Corp Exec. Must Face Criminal Charges for Failure to Withhold Payroll Taxes

According to Law360, a software and hospitality executive accused of not withholding federal taxes must face criminal charges after the U.S. Supreme Court refused Monday to consider his challenge of a Sixth Circuit decision holding that those charges are not precluded by a civil suit court order forcing him to work without pay.

Rankin had been made to serve as an unpaid corporate president until a state appellate court overturned that order in 2012 as unconstitutionally amounting to involuntary servitude under the 13th Amendment.

Three years later, Rankin found himself facing federal criminal charges for allegedly failing to account for Medicare and withholding taxes.

Rankin's argument was that the order to continue as president of the corporation was ultimately overturned as involuntary servitude, the six months that had been served under that order should bar further criminal prosecution.

However, when the federal criminal charges followed, Rankin unsuccessfully argued that they amounted to a case of constitutionally prohibited double jeopardy.

The Sixth Circuit panel unanimously ruled that the criminal charges should not be thrown out because they are “completely different” from the civil case and now the U.S. Supreme Court refused on April 24, 2017 to consider his challenge of a Sixth Circuit decision.

Have a Payroll Tax Problems?

IRS Proposing to Assess the
Responsible Party Penalty Against You Personally?
Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243).