The IRS is the World’s great government agency.
Learn how they are using innovation to help America, here

Try our easy, yet powerful,  custom Google U.S. international tax research program, here on this link.  This site has index all of IRS International (and only the international pages), my book and this blog. 

Hey, is it the women versus the men at the Supreme Court?  -here’is how it happened.

Tax Court allows sloppy taxpayers to avoid gift taxes.  It is like the story of the three little pigs,  on this link.

IRS makes Canada its BFF (best friend forever) on this link.

2012 IRS International Audit Guide for related party transactions.  Here you will learn how to protect yourself and save taxes.

The Best Offshore Structure for a U.S. Business with an IRS guarantee on this link.

IRS  takes  a Big Loss with estate taxes on family partnerships…here is the story. 

Keeping the IRS away with a “No Trespassing” sign.. yes it is really that easy on this link.

Great IRS legal memo on Estate’s foreign trust reporting.. .all you will ever need to know on this link.

New Tax Savings on Form 8938… Reporting Foreign Assets .. here is why and how.

Why  President Obama’s new corporate tax  &  our Value Added Tax Haven laws will attract UK and EU businesses on this link and has angered France.

President Obama releases 200 pages of new tax… including a 45% wealth  tax for trusts  but with  loopholes for income tax planners.  Here are the details.

2012 Edition of Withholding of Tax on Nonresident Aliens and Foreign Entities on this link.

IRS Updates it web site for limited liability company on this link with special rules for Foreign LLC’s.

“Honest Mistakes of Law”  avoids tax penalties… why and how here.

IRS employee hand book on new “economic substance” penalties Ok’s use of offshore corporations learn why here.

What is a Great Tax Team and How to Get Yours-  here on this link.

CNN Money reports that the civilian volunteer Taxpayer Advocate Service, an independent watchdog arm of the IRS, has asked the IRS to start virtual tax assistance and audits.

http://finance.yahoo.com/news/virtual-tax-audits-via-video-091500223.html

The point is that America has a civilian watch dog agency.  Bringing in the public allows more innovation and more debate.

Few people know that the IRS is an agency of the Department of the Treasury.  The President appoints the Secretary of the Treasury.  This Department is responsible in keeping American business successful.

The IRS has a strange role.  In part to enforce the tax laws and in part make its boss happy by making American business successful.  Let’s face it,  America must  make income before an income tax is collected.   Likewise with payroll taxes – no jobs = no payroll taxes.

With 140 million people to help, the IRS Commissioner, Douglas Shulman, (who is the best we have had in my lifetime) deeply concerns about the emotional connection between his staff and Americans.  Remember, he volunteered for this five year job.  While he is paid, his salary is less than we can make in private practice.

Face to face conversations via a Skype or some other free method allows the humans to be more human.

Only the IRS provides you a tax guarantee on your tax plans.  Known as a private letter ruling (more here), they allow your Great Tax Team to help you make more money.  Certainty in your tax plan, allows you to maximize the legal tax benefits.

Back to innovation, the IRS also has an international email ruling program.  Here it is on this link.

•  We have had  many questions  on “why the VAT destroys growth?”    So,  we compiled from the EU information and links to the business killing tax.   This week the Financial Times of London reports how the VAT had destroyed what remains of Greek Small Business on this link.  Meanwhile in Mexico, the EU announce $2 trillion bail out to save the  EU from Greece.  

  How much of a loss is enough before the VAT is abandoned. 
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In today’s case, Estate Of Lois L. Lockett, A.K.A Lois L. Lockett, Deceased, Robert W. Lockett, Jr., Executor, Petitioner V. Commissioner Of Internal Revenue, Respondent, he allowd moneys loaned the estate to avoid gift taxes.

Mom had transferred money to her children.  One child signed a note, one child had the CPA draft a note (never have your CPA prepare a legal document)  but did not sign it  and the last child did nothing.

It is kind of like the three little pigs. One house was bricks, the other wood and the last house straw. Now, the house of bricks.. an easy  Tax Court victory.  The house of straw an easy defeat.  Now the house of wood, well that little pig won my the skin of its chinny chin chin.

The Wealthy have a Great Tax Team.  Here is more of just what that means from my Author page on Facebook.

Les Etats-Unis sont le seul pays à traiter la fraude fiscale comme un crime. Si le défendeur a un avocat, la peine est généralement le sursis, le paiement de l’impôt non payé et une amende en fonction l’impôt dû.

Le gouvernement exige 25 pour cent de la valeur de tous les avoirs détenus en dehors du pays par un citoyen américain si le revenu non imposé a été utilisé pour acheter une partie de sa propriété.

Si par exemple votre client réside à Genève où il y possède une maison et qu’une partie de ses revenus non imposés ont été utilisés pour payer sa maison, il devra, dans le cadre du programme d’amnistie, payer une pénalité égale à 25 pour cent de la valeur de sa maison.

La solution :

La pénalité pour ne pas remplir le formulaire IRS FBAR (rapport sur les comptes en banque étrangers) est une simple pénalité. Si vous envoyez votre déclaration d’impôt avec du retard, il n’y a pas de pénalité. Pour plus d’information sur la loi (en anglais) veuillez me contacter.       Clique pour les avocats suisses, en français ou en Belgique

But there is a problem. The IRS denies the foreign tax credit and a deduction of a business loss to the privately owned businesses.  Without the foreign tax credit, you will pay tax twice on the same profit.  First in the foreign country and again in the USA.

England, Scotland, most of Europe, China and Mexico are restrictive in letting a foreign business into their country.  America is not this way because  states’ rights.  These countries require you to incorporate in their country.

Back in 1996, the IRS issued the “check the box’ regulations which allow some foreign entities to elect to be treated like a domestic LLC.  If the election is made, then the entities are disregarded if there is only one owner.   With more than one owner they are partnerships.    If elected before business begins, this is a good tax structure, but not the best legal structure for asset protection (in the United States).

However, most foreign corporation used in Europe, Asia and Latin America are often not eligible of the check the box election.  These are known as “Per Se” corporations.   Here is the cause of the double taxation, loss of tax losses and loss of the foreign tax credit.

The American business must file the complex Form 5471 reporting the controlled foreign corporation subpart F income.   Few CPA’s are experts in this field.  So, you may need a consultant, like me.  The solution is to find a method to allow the foreign corporation to elect Sub Chapter S and file a simple Form 1120S and not the Form 5471.

These foreign corporations cannot elect Sub Chapter S. Thus, the foreign tax credit is trapped inside the corporate shell.   The Department of the Treasury now allows a dual resident corporation.  Your foreign corporation can also be a domestic sub chapter S corporation.     The complex Form 5471 is replaced by the simplifier Form 1120-S (the return for a subchapter S corporation).

IRS Guarantee- I always get an IRS guarantee by obtaining a private letter ruling.

I wan my clients to be guaranteed that their dual resident corporation will get the best of the offshore laws and domestic tax laws.     The ruling covers both the domestication of the corporation and the treatment of retained foreign profits.

Learn about the tax savings in the United Kingdom’s with the explanation from the UK tax authorities (on this link).

This Greek woman visualize the EU believe.  We want your money, and we want it now.

Never before has re-locating a business been as easy as it is now.

Immigration laws allow for an investor visa.

As tax advisers,  we often forget about the harsh U.S. death tax.

The exemption is only $60,000.  A marital deduction does not exist.

Before arriving in the USA, the foreign business owner needs a trust to avoid our death tax.

The IRS allows the family to own the trust company acting as trustee.  This is called a “private trust company” (here is more info).

Green card holders and investor visa holders are rarely  domiciled in the US.  This means that for death taxes, they are a non-resident alien even though they can be a U.S. income tax resident.

America has one great tax haven advantage.. no VAT (value added tax).  This tax is charged on a business as they buy inventory or any other expansion asset.  With an after tax rate of  28 percent, it sucks the life out of a privately owned business.  For example, if you want to purchase inventory for a $1,000 you must pay the VAT at the time of purchase.

Both the Democrats and Republicans are working hard to get EU and UK business to move to America.  Here is what they are proposing and more information on our VAT tax haven status.

In the EU, even countries like France have a lower tax rate than the US.  The average UK- EU rate is 25 percent (which President Obama said he will match…details to come).   So, why would are very educated President want three extra percentages?    Is it enough to stop European companies from moving to the US and hiring Americans.

What the American Press is not reporting is our value added tax (VAT)   haven status.   The VAT sucks about 20 percent of a business’s cash if they try to expand.  For example, when a UK or EU business buys inventory, it pays a 20% VAT versus nothing in the USA.

Virgin Air’s Space Ship program is an example. This program is R & D and thus there is no income (or income tax).

 Date: December 29, 2011

 to:  Kathleen L. Morton

Senior Program Analyst

SB/SE Field Operations, Reviews, and Enforcement (FORE)

 from:  Susan Watson

Attorney, Division Counsel  (Small Business/Self-Employed)

 subject:  Trespass

 You have requested advice regarding how revenue officers should respond to No Trespassing signs. IRM 5.1.3.2.3 lists Safety Do’s and Don’ts. One is “Observe No Trespassing signs.” Several revenue officers have interpreted IRM 5.1.3.2.3 as prohibiting them from any entry to premises with such a sign even though these signs often appear in places frequented by the public such as shopping centers. It appears that these revenue officers are confused about what constitutes trespassing. Furthermore, they may be concerned about possible liability. The definition of trespass, the elements of trespass, and defenses to trespass turn on state law. Since collection is national in scope, the analysis below will draw from state law sources.

Trespass is a modern intentional tort that derives from the common law tort of trespass. Generally, trespass consists of an intentional invasion of the property of another. Hawkins v. City of Greenville, 594 S.E.2d 557 (S.C. 2004). The trespass must be intentional, in the sense of an act voluntarily done or that the person intended the intrusion. Brown v. Arcady Realty Corp., 769 N.Y.S.2d 606 (3d Dep’t 2003). A trespasser is “one who enters the premises of another for one’s own purposes with out permission, invitation, or other right or a privilege to do so created by the possessor’s consent.” Sumner v. Hebenstreit, 522 N.E.2d 343 (me. 1988); Monsivais v. Winzenried, 508 N.W.2d 620 (Wis.1993). The elements of trespass are entering the property of another without any right, lawful authority, or express or implied invitation, permission, or license merely for the trespassers’ own purpose, pleasure, or convenience or even just curiosity. Simcox v. Hunt, 874 So. 2d 1010 (Miss. Ct. App. 2004). The character and extent of the harm visited on the plaintiff in the interference with that person’s interest in the exclusive possession of the premises are among the components of the tort of trespass. However, there may be an injury even though no harm is done, in the sense that an unauthorized intrusion upon land in the possession of another is itself an injury. It has also been said that because a legal right is involved, the law recognizes that actual harm occurs in every trespass, and thus, an action for intentional trespass is directed at vindicating a legal right, irrespective of any appreciable injury, and thus, it is not necessary that damage result. Aguilar v. Morales, 162 S.W.3d 825 (Tex. App. El Paso 2005).

There are two types of premises that revenue officers might reasonably be expected to enter in furtherance of their collection duties. One is a business establishment. The other is a residence. Opening a business establishment to transact business with the public is permission to enter. A person who enters the facility, at a reasonable time and in a reasonable manner, has the implied consent of the owner or possessor to be there. This invitation presupposes that those entering will exhibit conduct in keeping with a business purpose. City of Sunnyside v. Lopez, 751 P.2d 313 (Cal. 1988). The proprietor has the right to determine who to invite, the scope of the invitation, and circumstances under which the proprietor can revoke the invitation. Once a person has been requested to leave, there is no legal right to remain. Corn v. State, 332 So.2d 4 (Fla. 1976).1 That person then becomes a trespasser and the owner may use force, if necessary to remove the trespasser. Commissioner v. Johnston, 263 A.2d 376 (Pa. 1970). An invitation to enter can be limited to certain persons and not all members of the public have license to enter. The absence of a “no trespassing” sign on private property does not mean an owner gives all members of the public the right to enter. Sharpe v. Turley, 191 S.W.3d 362 (Tex. App. Dallas 2006).

Courts have held that entrance onto property that would otherwise be considered a trespass may be justified by reason of authority vested in the persons entering. This includes firefighters investigating reports of a fire; physicians and EMTs investigating possible elder abuse; humane society personnel investigating animal abuse; process servers; and power company employees running transmission lines.

All of these persons were held by various courts not to be trespassers. In re Catalano, 623 P.2d 228 (Cal. 1981); State v. Howard, 167 N.W.2d 80 (Neb. 1969); Easton v. Sutter Coast Hosp., 95 Cal. Rptr. 2d 316 (1st Dist. 2000); Reisdorff v. County of Yellowstone, 989 P.2d 850 (Mont. 1999) (overruled on other grounds by, Miller v. City of Red Lodge, 65 P.3d 562 (Mont. 2003)); Mesgleski v. Oraboni, , 748 A.2d 1130 (N.J. 2000); Hand v. Stray Haven Humane Soc. and S.P.C.A., Inc., 799 N.Y.S.2d 628 (3d Dep’t 2005).; Kucker v. Kaminsky & Rich, 776 N.Y.S.2d 72 (2d Dep’t 2004); Harris v. Carbonneau, 685 A.2d 296 (Vt.1996); Zanoni v. Hudon, 678 A.2d 12 (Conn. 1996) (precluding a trespass claim by the ward’s child who was excluded from using the property); Brassette v. Central Louisiana Elec. Co., Inc., 383 So. 2d 120 (La. Ct. App. 3d Cir. 1980).

Revenue Officers investigating the tax liability of a taxpayer might also be included in this list. * * *

While the state law of trespass also applies to private residences, federal constitutional issues also arise when civil or criminal law enforcement authorities enter onto property. State v. Cook, 2011 WL 1376622 (guiding principle is a police officer on legitimate business may go where any reasonably respectful citizen may go.) State v. Posenjok, 111 P.3d 1206 (Wash. 2001).

With respect to criminal law enforcement, courts have held that the porch of a residence is a public place for purposes of the 4th Amendment. Coffin v. Brandau, 662 F.3d 999, 1012 (11 Cir. 2011) (In carrying out their duties, the police are free to go where the public would be expected to go.); State v. Detlefson, 335 So.2d 371, 372 (Fla. App. 1976) (It cannot be said [that] the defendant had a reasonable expectation of privacy in the front porch of his home where, presumably, delivery men and others were free to observe the [marijuana] plants thereon.). Most of the cases center on the constitutional issue and not whether the law enforcement officers were trespassing. If a revenue officer goes to a taxpayer’s front door to deliver documents or make other contact, the revenue officer is not trespassing. If the taxpayer then tells the revenue officer to leave, the revenue officer should leave. Usually at that point he has completed his task. We suggest revising the IRM to tell the revenue officer he can go up to someone’s front door to deliver a summons or other document requiring personal service even if there is a “no trespassing” sign posted. See Schaal v. Unites Stated, 2008 WL 5638684 (E.D. Wis.), explained in more detail infra. Revenue officers should use caution and only enter areas of a private residence that are commonly understood to be open to the public such as the area of the front door and porch. The UPS man would probably deliver a package to the front door as would the mail carrier. Until told otherwise, the revenue officer has a valid business reason to be there. Revenue officers should approach premises with a no trespassing sign in a rural area more cautiously then one posted on a suburban residence with no fence. If revenue officers see a “no trespassing” sign in a rural, possibly fenced residential premises, they may wish to leave and request the assistance of a special agent or TIGTA agent to accompany them on a second attempt to contact the taxpayer.

Revenue Officers who leave when requested to do so will not incur liability. Taxpayers may not sue employees acting within the scope of their employment. Reisman v. Bullard, 14 Fed. Appx. 377 (6th Cir. 2001). Furthermore, a plaintiff who asserts that a government employee acted outside the scope of employment has the burden of proof on the issue. Nogueras-Cartagena v. United States, 172 F. Supp. 2d 296 (D. Puerto Rico 2001).

Case law involving revenue officers and trespass claims is sparse. In Schaal v. United States, 2008 WL 5638684 (E.D. Wis.), a revenue officer was serving a summons and had asked a sheriff to accompany him to a residence. The taxpayer had affixed a “no trespassing” sign to the premises. No one answered so the revenue officer taped the summons to the door. Just then the taxpayer arrived home. The court held that the taxpayer’s attempt to sue in tort for trespass was barred by both the Federal Tort Claims Act and sovereign immunity and dismissed the case for failure to state a cause of action.

In summary, a “no trespassing” sign might suggest to a revenue officer to proceed with caution. That caution is attenuated when the sign appears at a shopping mall, restaurant, or other business establishment that by implication invites the public to enter.

Revenue officers should not assume that they cannot approach the front door of a residence that has a “no trespassing” sign. If the postman or other persons with legitimate business may approach, so may the revenue officer. The revenue officer should use his judgment based on the facts and circumstances whether to proceed when a “no trespassing” sign is in evidence.

Please call me if you have any questions.

FOOTNOTE

1 Criminal trespass is not fundamentally different from the civil tort. Helms v. Zubaty, 495 F.3d 252 (6th Cir. 2007) ([defendant] defied a lawful order not to . . . remain. Ky . Rev. Stat. Ann § 511.090(2). Criminal trespass concerns presence, not behavior.) (Emphasis in original.) See also Borgman v. Kedley, 646 F.3d 518 (8th Cir. 2011) (Under Iowa law, person commits criminal trespass if she enters the property of another after being notified or requested not to enter.) We do not think criminal trespass is material to the discussion here.

The Department of Treasury issued regulation sections 1.6049-4(b)(5) and 1.6049-8 requiring  the IRS to report of bank deposit interest paid to nonresident aliens to their tax authorities.

Now, the IRS acknowledged that the United States has an income tax treaties  where the U.S. promised to the exchange of information with the foreign tax authorities. In these agreements, the United States agreed to provide, as well as receive, information.  Some pf these foreign countries have complained about the IRS tax haven status.  Like the Swiss, U.S. banks help foreigners evade taxes.

If the IRS were to provide this information, U.S. banks would lose foreign depositors.

In the announcement the IRS lists the 79 countries that will just have to bug off. Here is the IRS list:

1. Antigua & Barbuda

2. Aruba

3. Australia

4. Austria

5. Azerbaijan

6. Bangladesh

7. Barbados

8. Belgium

9. Bermuda

10. British Virgin Islands

11. Bulgaria

12. China

13. Costa Rica

14. Cyprus

15. Czech Republic

16. Denmark

17. Dominica

18. Dominican Republic

19. Egypt

20. Estonia

21. Finland

22. France

23. Germany

24. Gibraltar

25. Greece

26. Grenada

27. Guernsey

28. Guyana

29. Honduras

30. Hungary

31. Iceland

32. India

33. Indonesia

34. Ireland

35. Isle of Man

36. Israel

37. Italy

38. Jamaica

39. Japan

40. Jersey

41. Kazakhstan

42. Korea (South)

43. Latvia

44. Liechtenstein

45. Lithuania

46. Luxembourg

47. Malta

48. Marshall Islands

49. Mexico

50. Monaco

51. Morocco

52. Netherlands

53. Netherlands island territories: Bonaire, Curacao, Saba, St.
54. Eustatius and St. Maarten (Dutch part)

55. New Zealand

56. Norway

57. Pakistan

58. Panama

59. Peru

60. Philippines

61. Poland

62. Portugal

63. Romania

64. Russian Federation

65. Slovak Rep.

66. Slovenia

67. South Africa

68. Spain

69. Sri Lanka

70. Sweden

71. Switzerland

72. Thailand

73. Trinidad and Tobago

74. Tunisia

75. Turkey

76. Ukraine

77. United Kingdom

78. Venezuela