The German federal tax court ruled that use of business premises or a plant does not constitute a permanent establishment under §12 of the general tax code, subject to taxation in Germany, when the foreign company does not have certain authority over the business premises or plant in which it operates.
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International Tax
Tips for Preparing the Form 5471 for Controlled Foreign Corporations
This article gives an overview of the issues faced by practitioners when preparing Form 5471 and can serve as a roadmap to the potential problems and traps for the unwary.
IRS Focuses on Form 1042 Examinations
In July 2008, the IRS issued a new Internal Revenue Manual (IRM) section that provides for an increased level of focus by IRS examiners to examine and enforce the statutory requirements for withholding and the related compliance reporting of FDAP-type payments to foreign persons.
Automatic Penalty Assertions Begin for Delinquent Forms 5471
In August 2008, the IRS began mailing “soft letters” to corporations that had, during the past two years, filed a late Form 1120 that included at least one Form 5471, to inform them of the new automatic penalty assertion procedures.
IRS Changes Policy for Asserting Penalties for Late-Filed Form 5471
The IRS recently sent letters to certain corporate taxpayers advising them that effective January 1, 2009, penalties for late-filed Forms 5471 will automatically be asserted when such forms are attached to a late-filed Form 1120.
IRS Provides Liquidity Assistance, Relief
In response to the liquidity crisis, the IRS temporarily expanded the short-term financing exception to Sec. 956, which will permit corporations to access cash from their controlled foreign corporations (CFCs) without having an income inclusion for U.S. tax purposes.
Selected Provisions of the Fifth Protocol to the U.S.-Canada Income Tax Treaty
In 2007, the United States and Canada signed the Fifth Protocol to the 1980 U.S.-Canada Income Tax Treaty. The changes to the treaty resulting from this new protocol are numerous and are quite significant for cross-border business
New Temp. Regs. Under Sec. 905(c)
The IRS issued new temporary and proposed regulations under Secs. 905(c) and 6689, which update the 1988 temporary regulations governing a taxpayer’s obligations with respect to a foreign tax redetermination.
Treatment of Loans to U.S. Partners Under the U.S.-Germany Tax Treaty
Germany’s federal tax court ruled that interest payments received by a U.S.-resident partner on a loan to his German partnership can be taxed only in the United States in accordance with Article 11(1) of the U.S.-Germany income tax treaty and are exempt from German taxation.
Why U.S. Businesses Should Be VAT Aware
This item highlights awareness of the aspects of the VAT system that apply directly to overseas businesses so that they can seek professional advice at the correct time, thereby avoiding noncompliance and unexpected costs.
Adapting to the United Kingdom’s New Remittance Basis Rules
There have recently been some radical changes in the taxation of certain taxpayers in the United Kingdom.
New Expatriation Tax Rules Enacted
Legislation imposes a mark-to-market regime for taxing gains of U.S. citizens and long-term U.S. permanent residents who expatriate (Sec. 877A(a)).
Who Is a Manufacturer Under the Proposed Contract Manufacturing Regs.?
In February 2008, the IRS issued proposed regulations intended to clarify the manufacturing exception in the context of foreign base company sales income (FBCSI) under Sec. 954(d)(1).
When Do Foreign Currency Forward Contracts Constitute Sec. 1256 Contracts?
For certain foreign currency derivatives, such as a foreign currency forward contract, Sec. 1256 provides special timing rules. Whether those rules under Sec. 1256 apply to a foreign currency derivative depends on the definition of “foreign currency contract.”
When Is a Foreign Entity Relevant for U.S. Entity Classification Purposes?
A company organized under the laws of a foreign country that does not conduct business in the United States still may be “relevant” for purposes of U.S. taxation. Therefore, it may be necessary to select a federal tax classification to minimize U.S. tax.
Tools for Tax Planning for Foreign Nationals
The AICPA’s Foreign National Task Force has developed tools to help practitioners deal with issues that arise when preparing Form 1040NR for a foreign national.
Foreign Bank and Financial Account Information Reporting Deadline Near
Tax practitioners with clients with foreign bank accounts may want to consider sending a mailing soon to notify clients of their responsibility to file the Report of Foreign Bank and Financial Accounts.
Foreign Tax Credits: Reducing Eight Categories to Two
The American Jobs Creation Act reduced the foreign tax credit limitation categories from eight to two: passive category income and general category income.
Form 1042 Information Reporting Requirements
Taxpayers have an obligation to file information reporting forms to report certain payments to nonresident individuals, foreign corporations, foreign partnerships, and certain foreign fiduciaries, estates, and trusts.
CPM: The World’s Transfer Pricing Method
The comparable profits method has emerged as the dominant transfer pricing method among multinational companies today due to its widespread acceptance by taxing authorities around the world, its administrative ease of use, and, often, opportunities for tax rate reduction.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
