Tax-related Identity Theft

The Internal Revenue Service (IRS) recently issued a warning about a new twist on the Tax-related Identity Theft.  Identity (ID) theft is “a fraud that is committed or attempted, using a person’s identifying information without authority.” ID theft may involve stealing someone’s Social Security number (SSN), name, bank account, or credit card numbers, and using that information without permission.

Online ID theft is called phishing. A phishing scam involves fraudsters sending email messages to trick unsuspecting victims into revealing personal and financial information such as credit card numbers, account usernames and passwords, SSNs, etc.. Some ID theft starts with something as simple as someone stealing a wallet or taking or reading your mail.

Tax-related ID theft can affect you in two main ways:  

1. Someone uses your (stolen) identification information to file a fraudulent tax return and get a refund.
2. Someone uses your (stolen) information to obtain employment, which can make it seem like you had more income than you actually earned.

How will you know if you are a victim of tax-related ID theft?

You may find out you're a victim of tax-related ID theft when you try to file your tax return or start getting IRS notices about your tax account.

The most common indicators are:

• You try to file your tax return electronically, but the IRS rejects your return because it has already received another return using your SSN;
• You receive an IRS notice showing you received wages from somewhere you never worked;
• You receive an IRS letter indicating one or more tax returns have been filed using your SSN; or
• You receive a balance due notice, refund offset notice, or have collection actions taken against you for a tax year when you didn’t file a return or receive a refund.

If you encounter these issues, please contact your CPA.  For additional information, please click on the links below:

https://www.irs.gov/newsroom/tax-scams-consumer-alerts

https://www.irs.gov/newsroom/phishing-identity-theft-and-scams

https://www.irs.gov/newsroom/taxpayer-guide-to-identity-theft

제조업 vs 서비스업

이익과 부담(“benefits and burdens” 혹은 “B&B”)은 판례로 정립된 연방세법의 원리로써, 미국세법에 전반적으로 적용된다. 국내 생산 활동 공제(Domestic Production Activity Deduction), 주택 모기지에 대한 이자비용 공제, 주택 양도소득 공제, 통일 자본화 규정 (263A UNICAP), 리스와 판매, Subpart F규정, 유/무형자산의 감가상각, 및 기타 세금공제 등, 미 국세청이 소유권에 대한 이익과 부담이라는 원리를 사용하여 세무상 소유권을 판단한 사례들은 무수히 많다. 이와 같이 세무상 소유권이 쟁점이 되는 경우, IRS는 겉으로 보이는 형식 및 계약서가 아닌, 실질적인 내용과 사실관계에 중점을 두어 소유권에 대한 이익과 부담이 누구에게 있는지를 판단하게 된다.

제조업에 있어, 제 3자와의 계약을 통해 계약생산을 하는 일은 일반적인 일이다. 계약생산 약정에 따라 다르겠지만, 일반적으로 발주인은 일정한 디자인 혹은 세부사항을 요청하고, 수주인은 발주인의 요구에 따라 생산을 완성하고 이 생산품을 인도하며 보수를 지급받는다. 이에 따라, 수주인은 발주인이 요청한 상품/제품에 대한 보관, 제조, 또한 운송까지의 일련의 공정을 발주인을 대리하여 수행하게 된다. 이 때, 수주인은 계약에 따라서 제조업을 한다고 볼 수 있겠지만, 실질적 사실관계에 대한 해석에 따라, 세무상으로는 서비스업으로 분류될 수 있다.

앞서 말했던 IRS규정들에서는, 일반적으로 한명의 납세자만 세무상 공제를 받을 수 있다. 어떠한 업체가 세무상 공제를 받을수 있는지가 쟁점이 될 경우, 어떠한 업체가 세무상 소유권에 대한 이익과 부담을 갖고 있는지에 대한 분석이 필요한 것이다. 마찬가지로, 세무상 소유권을 수주인이 갖고 있다고 판단되면 수주인의 영업활동은 제조업으로 분류되겠지만, 세무상 소유권을 발주인이 갖고 있다고 판단되면 수주인의 영업활동은 서비스업으로 분류되게 된다. 이와 같은 계약생산에 있어서도, 계약서 상의 내용뿐만 아니라 실질적인 거래의 성격 및 사실관계를 분석하여 세무상 소유권을 갖고 있는지에 따라 수주인과 발주인의 영업활동 성격이 결정된다.

Service Provider or Manufacturer?

 Benefits and burdens (“B&B”), a judicially developed federal income tax principle, plays a significant role in various Internal Revenue Code (“IRC”) provisions, including the domestic production activity deduction, interest deductions on home mortgage loans, home sale exclusion, section 263A UNICAP, lease vs. sales, Subpart F provisions, allowance for depreciation and amortization, and various tax credits and grants to determine tax owner of the underlying property or asset.  Under this principle, the tax authorities generally characterize the transaction by analyzing the economic effect of the arrangement based on all facts and circumstances, rather than the labels or forms used by the contracting parties.

Taxpayers often enter into contract manufacturing arrangements with independent third parties to manufacture components or products on behalf of the taxpayers.  Under these contract manufacturing arrangements, the taxpayer generally approaches the contract manufacturer with a formula or design.  The contract manufacturer will quote the parts based on material and labor costs, processes, and tooling.  For an agreed-upon price, the contract manufacturer essentially acts as the taxpayer’s factory, producing and shipping components or products on behalf of the taxpayer.

For various afore-mentioned IRC provisions, only one taxpayer may claim the applicable deductions or credits.  In order to determine whether the taxpayer or the contract manufacturer is entitled to the deductions or credits, an analysis of which party in a contract manufacturing relationship has the B&B under the judicially developed federal income tax principles.   The party in a contract manufacturing arrangement with B&B will be treated as a tax owner of the underlying property or asset, and accordingly is a manufacturer, while the party without the B&B, by default, is treated as a mere service provider for the relevant IRC provisions. In order to determine whether a contracting party is a service provider or a manufacturer, the contract as a whole needs to be carefully analyzed.

Proposed Changes to The Income Tax Disclosure

The Financial Accounting Standards Board (FASB) proposed to change the income tax disclosure requirements.  The amendments in this proposed update (see the link below) would modify the current disclosure requirements for income taxes for all entities required to account for income taxes under Topic 740.

The following additional proposed disclosures would be required for all entities:

1. Income (or loss) from continuing operations before income tax expense (or benefit) and before intra-entity eliminations disaggregated between domestic and foreign;
2. Income tax expense (or benefit) from continuing operations disaggregated between federal, state, and foreign; and
3. Income taxes paid disaggregated between federal, state, and foreign.

The following proposed disclosures would be required for public business entities:

1. The line items in the statement of financial position in which the unrecognized tax benefits are presented and the related amounts of such unrecognized tax benefits;
2. The amount and explanation of the valuation allowance recognized and/or released during the reporting period; and
3. The total amount of unrecognized tax benefits that offsets the deferred tax assets and carryforwards.

The amendments in this proposed update would be applied prospectively.  Comments must be submitted to FASB by May 31, 2019.

https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176172382198&acceptedDisclaimer=true

The Proposed Regulations under the Foreign-Derived Intangible Income Regime

The IRS and Treasury released proposed regulations under IRC Section 250 on March 4^th, 2019 (the “Proposed Regulations”).  The Proposed Regulations provide guidance with respect to special federal tax deduction under the new foreign-derived intangible income regime enacted as part of the 2017 tax reform effective for tax year 2018.  Under this regime, domestic corporations with qualifying income is allowed a deduction equal to 37.5% of their foreign-derived intangible income and 50% of their global intangible low-taxed income.

The Proposed Regulations provide guidance related to the mechanics of determining a domestic corporations foreign-derived intangible income, the application of the deduction in the consolidated group and partnership structure, and the its interplay with IRC sections 163(j), 172(a) and 78.  Most importantly, the Proposed Regulations requires contemporaneous documentation requirement for companies claiming deductions under the regime.

Please click on the link below to view the Proposed Regulations.

https://s3.amazonaws.com/public-inspection.federalregister.gov/2019-03848.pdf

Proposed Accounting Standards Update – Share-Based Consideration Payable to a Customer

Financial Accounting Standards Board (“FASB”) proposed amendments to ASC 718 which requires entities to apply the guidance in ASC 718 to measure and classify equity instruments granted in connection with the sale of goods or services to customer.  Under the proposed amendment, entities are required to measure share-based payments to customers using the grant-date fair value of the share-based payment award and the amount would be recorded as a reduction in revenue.  The grant date is the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award.

Comments are due by April 18, 2019.

Please click on the link below to view the proposed amendment.

https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176172244836&acceptedDisclaimer=true

임대 부동산 소유주들을 위한199A 공제

미국세법 199A에 의거하여, 주식회사가 아닌 납세자 (즉, 파트너쉽, S Corporation 및 개인사업자 형태로 사업을 하는 경우)는 적격사업 소득의 20%를 공제할 수 있다. 몇가지 예외 조항이 있지만, IRS의 제안규정에 따르면, 납세자의 임대사업이 세법조항 162(a)에서 규정하는 “사업활동”에 부합하는 경우, 임대 부동산 소유주들도 이와 같은 임대사업으로 부터 얻는 소득에 199A 공제를 받을 수 있게 된다. 다만, 162(a)는 “사업활동”의 명확한 정의가 나와 있지 않아 논란 및 불확실성의 여지가 있는 바, IRS에서는 2019-07 노티스를 통하여 어떠한 경우에 임대사업이 20% 공제를 받을수 있는 사업활동으로 간주되는지에 대한 안전피난처 (“Safe Harbor”)를 포함한 제안규정을 공시하였다. (안전피난처란 특정 상황에서 또는 특정 조건이 충족되는 경우 책임 또는 형벌로부터 보호받을 수있는 법률 또는 규정의 조항을 말한다).

안전피난처 조항에 따르면, 임대사업이 199A 공제를 받을수 있는 사업활동으로 간주되기 위해서는 아래의 요건들을 충족하여야 한다.

• 각각의 임대사업체별로 임대수입 및 비용등을 정리한 장부관리가 개별로 이루어 져야 한다;
• 매년 250시간 이상의 렌탈 서비스가 이루어져야 한다; 그리고
• 렌탈 서비스가 몇 시간 제공되었는지, 어떠한 종류의 서비스가 제공되었는지, 어느 날짜에 누가 이러한 서비스를 제공하였는지에 대해서 실시간으로 기록을 보관하여야 한다.

IRS의 노티스에 따르면, 렌탈 서비스는 (i) 임대에 대한 광고, (ii) 임대차 계약에 대한 협상 및 계약 타결, (iii) 입주자 신청서에 대한 확인, (iv) 임차료 수금, (v) 임대 부동산에 대한 일과 운영, 수리 및 보수, (vi) 부동산 관리, (vii) 필요한 자재 구매, 및 (viii) 직원 및 계약자들 관리 등 을 포함한다. 이와 같은 렌탈 서비스는 부동산 소유주, 직원, 대리인 및 개인계약자 들이 제공할 수 있다.

트리플 넷 리스와 임대 부동산에 소유주가 거주하는 경우는 노티스에서 명확하게 안전피난처에서 제외되었다.

더 자세한 내용은 다음의 링크에서 확인할 수 있다: <<https://www.irs.gov/pub/irs-drop/n-19-07.pdf>>

Section 199A Deduction for Rental Real Estate Owners

Internal Revenue Code (“IRC”) section 199A provides a deduction to non-corporate taxpayers of up to 20 percent of the income from “qualified business”, including those operated through a partnership, S corporation, or sole proprietorship, subject to limitations.  According to the proposed regulations, rental real estate owners may potentially be qualified for the 199A deduction if the rental activity rise to the level of a “trade or business” as defined under the section 162(a), which lacks clear definition and leaves room for debate and uncertainty. To help mitigate this uncertainty, the IRS issued Notice 2019-07 (the “Notice”) providing a “safe harbor” under which a rental real estate enterprise would be treated as a trade or business for purpose of the section 199A and thereby qualify for the 20 percent deduction.

According to the safe harbor rule, for purpose of 199A deduction, a rental real estate enterprise will be treated as a trade or business if the following requirements are satisfied:

• Separate books and records are maintained to reflect income and expense of each rental real estate enterprise;
• 250 or more hours of rental services (as defined below) are performed per each year with respect to the rental real estate enterprise; and
• The taxpayer maintains contemporaneous records of hours of all rental services performed; description of all services performed; dates on which such services were performed; and who performed the services.

The Notice provides that rental service includes (i) advertising to rent or lease; (ii) negotiating and executing leases; (iii) verifying prospective tenant applications; (iv) collection of rent; (v) daily operation, maintenance, and repair of the property; (vi) management of the real estate; (vii) purchase of materials; and (viii) supervision of employees and independent contractors.  Rental services may be performed by owners or by employees, agents, and/or independent contractors of the owners.

The Notice explicitly excludes triple net lease and owner-occupied rental properties from the safe harbor.

Please refer to the Notice 2019-07 https://www.irs.gov/pub/irs-drop/n-19-07.pdf for additional detail.

앞선 2018년 12월 11일자 KYJ 뉴스레터 (http://www.kyjcpa.com/news-updates/mexico-free-trade-zone-korean-version/)에 나와 있듯이, 멕시코 정부는 국경 자유무역 지역(“Border TFZ”) 규정을 포함한 2019년도 세법 개정안을 제안했다. 이 법안은 2019년 1월 1일부로 발효된다. 멕시코 북부 국경 지역의 제조 시설 또는 비즈니스에 영향을 줄 수 있는 제정 조항은 다음과 같다.

• 국경 지역은 Ensenada, Playas de Rosarito, Tijuana, Tecate, Mexicali, Reynosa, 그리고Baja California, Sonora, Chihuahua, Nuevo Leon, Coahuila de Zaragoza, and Tamaulipas에 있는 다른 도시들을 포함하여 멕시코로 25km 뻗어 있는 북부 멕시코 국경 지역을 의미한다.
• Universal Compensation의 폐지 – 기존에는 초과납부된 부가가치세로 소득세를 정산하는 식의 보편적 보상이 허락되었으나, 개정 이후 납세자는 동일한 성격의 세금 잔액만 보상하도록 허용된다. 자세한 내용은 KYJ 뉴스레터 (http://www.kyjcpa.com/news-updates/mexico-proposal-to-eliminate-universal-compensation-korean-version/)에 명시되어 있다.
• 부가가치세율 인하– Border TFZ는 부가가치세를 16%에서 8%로 즉시 인하하도록 규정하고 있다. 납세자들은 2019년 1월 30일까지 인하된 세율 혜택을 신청해야 한다.
• 소득세율 인하 – Border TFZ는 자격있는 납세자에게 20%의 인하된 소득세율을 제공한다. 납세자는 매년 3월 31일까지 등록 사무국 (the Office of Registry)에 인하된 세율 혜택을 신청해야 한다.
• 기타 규정 – Border TFZ 지역의 납세자는 새롭게 증가된 최저 임금 요건과 감소된 유틸리티 요금의 대상이 된다.

As discussed in our newsletter dated December 11, 2018 (http://www.kyjcpa.com/news-updates/mexico-free-trade-zone/), the Mexican government proposed 2019 tax law change which includes the Border Trade Free Zone (the “Border TFZ”) provision.  The bill is enacted with an effective date of January 1, 2019.  Following are the enacted provisions that may impact the companies with manufacturing facilities or businesses in the northern border region of Mexico.

• The border region is along the northern Mexican border, stretching 25 km into Mexico, including Ensenada, Playas de Rosarito, Tijuana, Tecate, Mexicali, Reynosa, and other municipalities in Baja California, Sonora, Chihuahua, Nuevo Leon, Coahuila de Zaragoza, and Tamaulipas.

• Elimination of Universal Compensation – taxpayers are only permitted to compensate balances of the same tax nature.  See additional discussion at http://www.kyjcpa.com/news-updates/mexico-proposal-to-eliminate-universal-compensation/

• Reduction of VAT rate – the Border TFZ provides for an immediate reduction of the VAT rate from 16% to 8%.  Taxpayers must apply for the reduced rate by January 30, 2019.

• Reduction of income tax rate – the Border TFZ provides for a reduced income tax rate of 20% to qualifying taxpayers. Taxpayers must apply for the reduced tax rate with the Office of Registry by March 31 of each year.

• Other provisions – taxpayers in the Border TFZ area are subject to the new increased minimum wage requirement and reduced utility rates.

Korean version will be ready shortly.