Tax Blog/Blawg

Following the release of Ann and Mitt Romney’s tax returns, the news media and political commentators of all stripes have – to paraphrase Arlo Guthrie – detected, neglected, selected, rejected, and inspected those returns for a variety of commercial and political purposes.  As expected, the return shows substantial income, largely from passive investments.

One of the most interesting aspects of the Romneys’ returns – from a tax practitioner’s perspective – is the geographic location of a significant portion of their investments.  As MSNBC reported:

His 2010 return ...

In this morning’s Tax Notes (subscription required), Jeremiah Coder addresses a topic that we at the Tax Blawg have discussed a couple of times over the past two years: the tax consequences of a potential breakup of the euro.  For our prior coverage, see here and here.  As the currency lurches towards and away from a potential dissolution (in part or in whole), the tax fallout of such an event lurks in the background.

The Tax Notes article generally covers the major tax issue (e.g., currency gain/loss recognition) associated with a potential breakup of the euro.  As the article seemed to ...

Fox Business invited me to appear yesterday on “After The Bell” with Liz Claman and David Asman to discuss (i) the IRS reopening the disclosure initiative for offshore bank accounts and (ii) the ongoing debate about whether Congress should implement a corporate repatriation holiday.  A link to the video is below the fold.

See the video at Fox Business.

The reopening of the 2011 OVDI is good news for taxpayers.  While the initiative presently has no deadline by which taxpayers must come forward, the IRS can change the terms of the initiative at any time.  If the government experiences ...

The IRS announced yesterday a reopening of its 2011 offshore voluntary disclosure initiative (“OVDI”).  This program will have essentially the same terms as the 2011 OVDI, but with a penalty rate of 27.5 percent (rather than 25 percent) of the highest account balance during the period covered by the initiative.  The program requires filing eight years of amended tax returns and unfiled FBARs and the payment of tax, interest and a possible accuracy-related penalty on unreported income as well as the above-mentioned lump-sum penalty.  In certain cases, a reduced penalty for failure ...

On December 9th, the IRS issued final regulations under Code section 881 that treat a disregarded entity as a person to determine whether a “financing arrangement” exists for purposes of applying the conduit financing regulations.  The finalized regulations may deny tax benefits otherwise available from U.S. tax treaties when a multi-party financing transaction is executed with a disregarded entity serving as an intermediary.

Code section 7701(l) permits the IRS to issue regulations that recharacterize a multi-party financing transaction (often referred to as a conduit ...

Over the weekend, a variety of Canadian news sources (see, e.g., the Financial Post and the Edmonton Journal) reported on anticipated guidance from the IRS, which would result in the waiver of penalties on certain U.S. citizens living in Canada for past failures to file Form TD F 90-22.1, commonly known as the "FBAR."  According to the news reports, the IRS will waive failure-to-file penalties for such individuals who file delinquent tax returns and FBARS so long as the individual owes no taxes.  In addition, taxpayers who were unaware of the FBAR filing requirement will be able to file ...

For taxpayers who entered the IRS’s second Offshore Voluntary Disclosure Initiative (“OVDI”) prior to August 31, 2011, November 29th marked the end of the extended deadline that some taxpayers requested for submitting all of the materials included in the disclosure (e.g., amended returns, FBARs).  Coincidentally with the timing of this deadline, many individuals who only recently learned of their reporting obligations (or, in some cases, of the existence of their accounts in the first place) are asking themselves what they can do now, having missed the opportunity to ...

Our in-house and private-practice corporate readers will likely enjoy one of the Tax Foundation's newest reports: Rethinking U.S. Taxation of Overseas Operations. As the abstract describes:

The United States produces a third of the world's wealth but contains less than 5 percent of the world's population. This disparity pushes many U.S. businesses and entrepreneurs to embrace globalization to improve productiv­ity and expand market reach. Large and small businesses alike are increasingly using the tools of faster information, cheaper transporta­tion, and overseas ...

According to the Financial Times, companies around the world are preparing for the possibility of a breakup of the euro.  Given the currency devaluation that would likely occur in countries coming out of the euro, these companies are preparing for the impact that such an event would have on balance sheets (e.g., asset prices) and income statements (e.g., import costs).   (For additional FT coverage of the issue, see here.)

As we noted in the TaxBlawg a while back when the euro crisis was still focused primarily on Greece, a partial or complete breakup of the eurozone would give rise to a host ...

Apparently, there are a large number of U.S. citizens living outside the United States as well as a large number of individuals who are dual citizens of the United States and their country of residence (estimated to be in the millions).  Judging from the phone calls that I have been receiving from my contacts at foreign law and accounting firms, a large number of them have recently become aware of the IRS Offshore Voluntary Disclosure Initiative (“OVDI”) providing reduced penalties for U.S. citizens who come forward to report previously undisclosed foreign financial accounts ...