CalCPA Peer Review
On February 24, 2016, KYJ, LLP has successfully passed AICPA Peer Review Program.
Category Archives: News / Updates
The Protecting Americans from Tax Hikes (PATH) Act
The Protecting Americans from Tax Hikes (PATH) Act
President Obama signed into law The Protecting Americans from Tax Hikes (PATH) Act on December 18, 2015. The PATH Act includes renewal of number of expired tax deductions, credits, and incentives as summarized below:
- Research & Experimental Credit – Permanently extended retroactively January 1, 2015. Certain eligible small business can now use the credit against alternative minimum tax liability and employer portion of their payroll tax liability.
- Section 179 expense – The Act makes permanent the increased expensing limit to $500,000.
- Subpart F exception for active financing income – The bill makes permanent the subpart F exception for certain foreign income derived in the active conduct of banking, financing, securities, or insurance business.
- S-Corporation built-in gains tax recognition Period – The Law permanently reduced the S-corporation built-in gains recognition period from 10 years to 5 years.
- 100% qualified small business stock gain exclusion – The Act makes qualified small business stock gain provision permanent.
- Bonus depreciation – The bill extends bonus deprecation from 2015 through 2019: 50% bonus depreciation for assets placed in service in 2015 through 2017, 40% in 2018, and 30% in 2019.
- Work opportunity tax credit (WOTC) – this hiring related tax credit is extended through 2019.
- Solar energy investment tax credit – the extender renews investment tax credit for qualified expenditures on solar energy through 2019.
- State & local sales tax deduction – individuals are allowed to deduct state and local sales taxes in lieu of income taxes permanently.
- Earned income tax credit & child tax credit – the Act extends for individuals the earned income tax credit and child tax credit through 2017.
Please contact us for further detail of provisions included in the PATH Act.
Streamlined Offshore Domestic Procedure
Streamlined Offshore Domestic Procedure
한미 양 국간의 역외 탈세 방지를 위한 노력의 일환으로 시작된 FATCA (Foreign Account Tax Compliance Act)의 시행 연기는, 그 동안 각 과세 당국에 보고되지 않았던 해외자산과 수입에 대한 정보가 올해부터 대거 노출될 우려에 놓여있던 많은 한국 교민들에게는 (시민권자, 영주권자, 장기체류자, 주재원등) 이번 연기가 반가운 소식(?)이 아닐 수 없다.
하지만, 제도 자체의 실행을 전제로 시행 시기만 뒤로 미루는 이번 조치로 인하여 언제까지 마음을 놓고 안도할 수 만은 없는 노릇이다. 제도가 시행되면 그동안 보고되지 않았던 금융자산 및 소득에 대한 추적이 용이해져, 그 동안에 신고되지 않았던 탈루 소득과 해외자산에 대한 추가 징수는 물론 및 고의성 여부에 따른 형사 처벌의여부도 함께 문제될 수 있기 때문이다.
따라서, 한국에 금융 자산을 보유한 한국 교민들의 경우, 이번 연기를 기회로 음성화된 해외 금융 자산을 미리 양성화해 보고함으러써 추가적인 불이익을 막도록 할 필요가 절실하다.
이와 관련, 최근 미 국세청은 Streamlined Domestic Procedure 제도를 도입하여, 해외 미신고 금융자산에 대하여 비교적 저렴한 5% 의 Miscellaneous Offshore Penalty 만을 부과함을 전제로 양성화의 길을 열어놓고 있다. 적격자격에 따라 penalty가 전면면제될수도 있다. 물론 이러한 Penalty 가 전체 해외 금융 자산의 규모를 볼때 적은 금액이 아닐 경우가 많겠지만, 기존의 Offshore Voluntary Disclosure Program의 27.5%에 비해 과징세가 적고, 궁극적으로 한미 금융계좌 정보 교환법 아래에서는 미신고 금융자산이 과세 당국의 수면에 떠오를 수 밖에 없다는 점 및 자발적 신고가 아닌 과세 당국의 조사 결과 누락된 금융 자산이 포착될 경우, 기존의 미신고 소득에 대한 추가적인 세금 추징 및 기존 세금 신고에 대한 과징세 뿐만 아니라 고의성 여부에 따라 형사처벌의 발생 소지도 상존 한다는 점에서 Streamlined Offshore Procedure 을 적극 고려해 볼 만 하다.
무엇보다 Streamlined Offshore Procedure의 장점은 추후 한미 금융정보 자동 교환 협정에 따른 미 국세청의 해외 미신고 금융 자산의 추적과 소급적인 세금 추징, 예측할 수 없는 잠재적인 벌금과 형사 처벌의 근심과 걱정에서 한국 교민들을 단숨에 벗어날 수 있게 한다는 점에서 있다고 할 것이다.
피할 수 없다면 요행을 바라며 한없이 기다리기 보다는, 위기를 타개하게 위하여 능동적, 선재적으로 대처하는 자세가 무엇보다 필요한 때라고 판단된다. Streamlined Offshore Procedure 절차에 대해 관심 또는 문의사항이 있으신 분들은 전문가나 저희 회계법인에 문의 하시길 바랍니다.
Surprise tax bills for Foreign Companies
Surprise tax bills for Foreign Companies
Many foreign companies make sales into the United States without being subject to US federal taxation under the respective international tax treaties. That is, tax treaties usually contain a provision providing a higher threshold for taxation than the US tax law. This higher threshold is commonly referred to as a permanent establishment (“PE”). Foreign companies are protected from US federal taxation as long as their activities do not create PE in USA.
However, the fifty US states are not bound by the federal rules and tax liabilities may exist even if the company has no federal taxable income. Traditionally, states apply physical presence test to subject foreign and out-of-state businesses to state income/franchise tax. A variety of factors can create physical presence, including but not limited to having inventory, employee, fixed asset, warehouse or office in the state. However, many states have recently adopted Economic Nexus thresholds that would subject a company to state taxation even if the company has no physical connection in the state. Currently, there are 40+ states that have Economic Nexus standards that vary in their criteria for determining if a business has an economic presence.
For example, under the California’s Economic Nexus standards, a company with in-state sales exceeding $500,000 (subject to annual adjustment) is subject to California income tax even if it has little or no physical connection with the state.
Additionally, this matter can potentially escalate to a bigger issue if the foreign company has affiliate(s) with California water’s-edge election in place. The FTB is taking a position that if a foreign company has an economic nexus in California and it has not been part of the affiliated group’s water’s-edge filing, the affiliated group’s water’s-edge election may not be respected if upon audit the non-electing foreign company is determined to be unitary with an electing water’s-edge taxpayer group.
The reassessment of California franchise tax liability based on worldwide filing versus the water’s-edge filing may result in significant liabilities should the group’s water’s-edge election gets disrespected. California FTB auditors recently received training on this matter and are now actively looking for this issue on audit.
Under Economic Nexus standards, many foreign companies find themselves in the position of having created taxable presence with the states and have potential exposures for significant state tax liabilities, penalties and interest. We recommend that companies with in-bound sales from foreign affiliates should evaluate the tax implication of Economic Nexus and its potential impact to water’s edge election to avoid complex with the state taxing authorities.
Contact us for more information.