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Glen E. Frost

Attorney at Law *
Certified Public Accountant **
Master of Laws in Taxation

10480 Little Patuxent Pkwy, Ste. 400
Columbia, MD 21044
Every Tax Problem has a Solution
Phone:  (410) 497-5947

Fax:      (888) 235-8405

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11/14/17

Permalink 01:21:32 pm, by admin Email , 298 words   English (US) latin1
Categories: News

IRS Criminal Investigation Division Assembles New International Tax Enforcement Unit

With international tax compliance on the IRS’s radar, it was revealed publicly to reporters on August 2, 2017, that the IRS Criminal Investigation Division (IRS-CI) is assembling a new, dedicated international tax enforcement unit. The new initiative is expected to be fully operational by October 1. U.S. persons’ worldwide income and foreign financial assets are targeted.

According to the new IRS-CI Chief Don Fort, “we’re going to be standing up a group of elite special agents in our Washington, D.C., field office that are going to be dedicated to working and developing significant international tax cases. What we’re essentially doing is consolidating some of our foremost experts in these international tax cases who are really the nationwide experts in this field and put them under the umbrella of one focused operational group.” Before serving as chief, Fort was IRS-CI deputy chief and has spent the past 26 years of his career as an IRS criminal investigation agent.

Besides the base in the Washington, D.C., field office, members of the team will be strategically located throughout the country. The Department of Justice’s Tax Division will also be supporting the IRS in this endeavor.

The unit will involve a very heavy data analytics component in order to identify noncompliant taxpayers. Fort clarified that “the goal of the unit is to really use all of the data that we have available to us to help identify and develop areas of noncompliance.”

Specifically, the unit will utilize the mass of data recently collected by the IRS from sources such as Foreign Bank Account Reports (FBARs), foreign financial institutions’ data gathered as required under the Foreign Account Tax Compliance Act (FATCA), the Panama Papers, and amnesty programs like the Offshore Voluntary Disclosure Program (OVDP).

Contact Frost & Associates today if you have questions regarding international tax issues.

09/28/17

Permalink 10:11:51 am, by admin Email , 633 words   English (US) latin1
Categories: News

Costa Rica Expats May Soon Experience the Benefits of Residency-Based Taxation

For many years, the persistent call for change in the taxation of American corporations and individuals abroad has gone unanswered. However, the current administration’s actions, suggest the very real possibility of new tax rules, sooner rather than later. Indeed, assuming no major legislative disturbance or some catastrophe, such as a Russian-related scandal or open conflict with North Korea, some are predicting new tax rules before the end of this year or early next year. For the U.S. State Department’s estimated 100,000 American citizens living in Costa Rica, this would mean relief from onerous compliance requirements and potential penalties that can lead to financial ruin.

Expected changes include a long-awaited transition from our anomalous “worldwide” tax regime imposed upon American corporations to a “territorial” tax system. Currently, American corporations are subject to tax on their worldwide income, whether that income is earned in the U.S. or abroad. Under a territorial system, only a corporation’s U.S.-source income would be subject to U.S. tax, leaving foreign-source income generally exempt from U.S. tax.

Significantly, the administration’s advancement on the corporate “territorial” front simultaneously indicates the possibility of a corresponding change in the tax treatment of American individuals living abroad. The House Republicans’ “blueprint” for tax reform, adopting a “territorial” approach for corporations, expressly raises the possibility of changes for individuals. On the Senate side, Finance Committee Chairman Hatch’s proposal calls for reconsidering the taxation of nonresident citizens. Additionally, at a Congressional hearing held on July 18, eliminating citizenship-based taxation was said to be on some Members’ wish list.

Currently, the U.S. taxes its citizens and green card holders on their worldwide income, whether earned in the U.S. or abroad (“citizen-based taxation” or “CBT”). Under this burdensome system, Americans living abroad face a daunting array of tax rules and forms. Penalties for incorrect reporting, usually due simply to not understanding the rules, can be disastrous. For American individuals, residency-based taxation (“RBT”) treatment would provide a solution to these problems in the form of “territorial” treatment. This would mean that Americans abroad would only be taxed on U.S.-source income. Led by groups like American Citizens Abroad, which proposed RBT to Congress in 2016, efforts to make this change have steadily progressed. Since the 2016 elections, these efforts have “gone public,” with grassroots lobbying and “crowd-funding” of the costs of revenue estimates.

The U.S. CBT system stands out among the rest of the industrialized countries of the world—and not in a good way. The vast majority of countries treat their citizens fairly under a RBT system. Americans living in Costa Rica are acutely aware of the burdens imposed upon them under the CBT system. And recent legislation like the Foreign Account Tax Compliance Act (FATCA) has only increased these burdens, making it difficult for many Americans to even get bank accounts abroad, because some foreign financial institutions refuse to do business with Americans to avoid the hassle of FATCA’s special due diligence and reporting requirements.

Fortunately, the RBT system fits comfortably alongside all of the international tax reform proposals being developed. Furthermore, it attracts bipartisan support. While differing on details, Democrats Abroad, Republicans Overseas, Americans for Tax Reform, the Heritage Foundation, American Citizens Abroad, a number of American Chambers of Commerce overseas, and other business groups, all support the approach.

The RBT system is finally within reach, and now is the best time to aggressively advocate for it. Work on the legislation is in progress. Revenue estimates, which hopefully will show little or no revenue loss, are in the making. This is a change that can be made easily, possibly achieved without a loss of tax revenue, and with careful drafting, loopholes can be prevented. For more information, go to the American Citizens Abroad website. Then get involved. Go to: www.americansabroad.org

By: Glen E. Frost, Esq., CPA, CFP®; Associate Tax Counsel, American Citizens Abroad

09/15/17

Permalink 10:37:12 am, by admin Email , 620 words   English (US) latin1
Categories: News

Potential Tax Changes for Americans in Panama

By Glen E. Frost Frost & Associates

For many years, the persistent call for change in the taxation of American corporations and individuals abroad has gone unanswered. However, the current administration's actions, suggest the very real possibility of new tax rules, sooner rather than later.

Indeed, assuming no major legislative disturbance or some catastrophe, such as a Russian-related scandal or open conflict with North Korea, some are predicting new tax rules before the end of this year or early next year.

For American citizens living in Panama, this would mean relief from onerous compliance requirements and potential penalties that can lead to financial ruin.

Expected changes include a long-awaited transition from our anomalous "worldwide" tax regime imposed upon American corporations to a "territorial" tax system. Currently, American corporations are subject to tax on their worldwide income, whether that income is earned in the U.S. or abroad. Under a territorial system, only a corporation's U.S.-source income would be subject to U.S. tax, leaving foreign-source income generally exempt from U.S. tax.

Significantly, the administration's advancement on the corporate "territorial" front simultaneously indicates the possibility of a corresponding change in the tax treatment of American individuals living abroad. The House Republicans' "blueprint" for tax reform, adopting a "territorial" approach for corporations, expressly raises the possibility of changes for individuals. On the Senate side, Finance Committee Chairman Hatch's proposal calls for reconsidering the taxation of nonresident citizens. Additionally, at a Congressional hearing held on July 18, eliminating citizenship-based taxation was said to be on some Members' wish list.

Currently, the U.S. taxes its citizens and green card holders on their worldwide income, whether earned in the U.S. or abroad ("citizen-based taxation" or "CBT"). Under this burdensome system, Americans living abroad face a daunting array of tax rules and forms. Penalties for incorrect reporting, usually due simply to not understanding the rules, can be disastrous. For American individuals, residency-based taxation ("RBT") treatment would provide a solution to these problems in the form of "territorial" treatment. This would mean that Americans abroad would only be taxed on U.S.-source income. Led by groups like American Citizens Abroad, which proposed RBT to Congress in 2016, efforts to make this change have steadily progressed. Since the 2016 elections, these efforts have "gone public," with grassroots lobbying and "crowd-funding" of the costs of revenue estimates.

The U.S. CBT system stands out among the rest of the industrialized countries of the world-and not in a good way. The vast majority of countries treat their citizens fairly under a RBT system. Americans living in Panama are acutely aware of the burdens imposed upon them by the CBT system. And recent legislation like the Foreign Account Tax Compliance Act (FATCA) has only increased these burdens, making it difficult for many Americans to even get bank accounts abroad, because some foreign financial institutions refuse to do business with Americans to avoid the hassle of FATCA's special due diligence and reporting requirements.

Fortunately, the RBT system fits comfortably alongside all of the international tax reform proposals being developed. Furthermore, it attracts bipartisan support. While differing on details, Democrats Abroad, Republicans Overseas, Americans for Tax Reform, the Heritage Foundation, American Citizens Abroad, a number of American Chambers of Commerce overseas, and other business groups, all support the approach.

The RBT system is finally within reach, and now is the best time to aggressively advocate for it. Work on the legislation is in progress. Revenue estimates, which hopefully will show little or no revenue loss, are in the making. This is a change that can be made easily, possibly achieved without a loss of tax revenue, and with careful drafting, loopholes can be prevented. For more information, go to the American Citizens Abroad website..www.americansabroad.org

Original publication can be found: http://www.newsroompanama.com/news/panama/potential-tax-changes-americans-panama
Tags: panama

08/24/17

Permalink 01:19:35 am, by admin Email , 92 words   English (US) latin1
Categories: News

A Guide to Trump’s Proposed Tax Plan

Trump’s administration released their proposed tax plan with few details in a one page memo outlined with broad goals and few details. If passed, it could dramatically change the way Americans pay taxes and would be the biggest overhaul in the federal taxation system since 1986. The White House said one of the main goals for tax reform is to “simplify the burdensome tax code.”

Below is a copy of the memo they released:

Trump’s Administration Goals for Tax Reform

Grow the economy and create millions of jobs
Simplify our burdensome tax code Lower the business tax rate from one of the highest in the world to one of the lowest

Individual Reform

Tax relief for American families, especially middle-income families
Reducing the 7 tax brackets to 3 tax brackets for 10%, 25% and 35%
Doubling the standard deduction
Providing tax relief for families with child and dependent care expenses

Simplification

Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers
Protect the home ownership and charitable gift tax deductions
Repeal the Alternative Minimum Tax
Repeal the death tax
Repeal the 3.8% Obamacare tax that hits small businesses and investment income

Business Reform

15% business tax rate
Territorial tax system to level the playing field for American companies
One-time tax on trillions of dollars held overseas
Eliminate tax breaks for special interests

Since they are proposing a larger standard deduction it would eliminate the need for itemized deductions, streamlining the tax filing process. At first glance the proposed plan appears to be very regressive, returning back to the basics and helping to simplify the tax filing process. Although the reform would reserve the majority of the benefits for wealthier individuals, it would streamline the tax filing process for most Americans. Read below for more details on the main changes proposed in his memo.

Reduce The Number of Tax brackets

Trump's proposed plan will reduce the number of tax brackets for individuals from seven to three: 10%, 25%and 35%. The current top rate will drop from 39.6% to 35%. This proposal will lower the top rate by nearly 5%, easing the tax burdens on most Americans, including the rich. They did not clarify which income ranges would apply to the proposed brackets.

Double The Standard Deduction and Reduce Itemized Deductions

Americans can expect a sizable increase to the standard deduction allowed when filing taxes, permitting taxpayers to keep more of their income. Under the proposal, tax breaks for individuals and married couples filing separately will increase from $6,350 to $12,700. The standard deduction for a married couple filing jointly will jump from $12,700 to approximately $24,000. This is intended to put more money in the pockets of the average taxpayers who do not itemize their deductions. It has the added benefit of simplifying the preparation of tax returns for more people. Under the new plan, tax breaks for charitable giving and mortgage interest would remain in place.

Repeal of Estate Tax and the Alternative Minimum Tax

Trump is proposing that the estate tax, also known as the death tax, will end. The Tax Foundation states that America’s estate tax is the fourth highest in the world. The Alternative Minimum Tax (AMT) is a complicated additional system of taxation that follows different guidelines than standard tax. The AMT currently requires certain taxpayers to calculate their liability twice and pay the higher amount, which more often than not applies to wealthier taxpayers earning several thousand dollars or more annually.

Businesses Catch a Break

The U.S. corporate tax rate is currently 35%, which is one of the highest marginal corporate tax rates among the world’s industrialized nations. The administration proposes to cut the tax by a staggering 20%, one of the most aggressive moves in the plan. Under the plan, small businesses would be included in this tax reduction.
Tags: tax law

08/04/17

Permalink 02:37:15 pm, by admin Email , 261 words   English (US) latin1
Categories: News

Panama Papers: Germany Pays Millions for a Copy of the Leaked Data

The Federal Crime Office (BKA) in Germany has confirmed that it is in possession of a copy of the alleged Panama Papers and will use the information to investigate possible offshore tax evasion by German citizens. In addition to the obvious tax fraud, they intend to look for evidence of arms trafficking and organized crime.

On July 4, the BKA released a statement in conjunction with the state of Hesse and public prosecutors informing the public that they are in the process of putting the obtained information into an electronic database for a detailed evaluation. The tax authorities in the state of Hesse and the Frankfurt Attorney General's Office are cooperating in the matter and they have stated that they intend to "cooperate closely" with foreign authorities.

The Panama Papers leak was the biggest in history, consisting of millions of documents that detailed different strategies that allowed affluent individuals to take advantage of offshore tax havens to hide their wealth. Among the affluent individuals implicated in the leaked data are twelve current or former heads of state and government. The data consists of emails, financial spreadsheets, passports, corporate records and more, and contains information from a 40 year period. The papers originated from Panamanian law firm Mossack Fonseca and were initially leaked to the German newspaper, Süddeutsche Zeitung, and then to other news outlets.

"The data is being looked into and evaluated with Hesse state's tax authorities to pursue criminal and fiscal offenses," the BKA said in a joint statement (in German) with Hesse's finance ministry and the public prosecutor's office in Frankfurt.

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* Licensed to practice in Maryland, Florida, and the District of Columbia. May represent taxpayers nationwide in IRS disputes.
** Licensed in Maryland

10480 Little Patuxent Pkwy, Ste. 400
Columbia, MD 21044
(410) 497-5947
© 2011 Glen E. Frost