Foreign Issues

IRS Updates Tax Rules for Foreigners Disposing of U.S. Property Interests
Bloomberg BNA

T.D. 9751, RIN 1545-BN22, 81 Fed. Reg. 8398 (Feb. 19, 2016):

Wade Wilson, CPA

Wilson LLP, as well as other tax preparers, has recently become dumbfounded by the IRS not releasing 2014 tax refunds that are due their nonresident alien clients. A minor problem in 2013, the IRS has determined that identity theft and fraud, particularly with the filing of nonresident alien tax returns, have been such a potential threat that the IRS is now holding many returns and refunds in limbo.

Sophie Jing Liu, Tax Associate

Sophie Jing Liu, Tax Associate

Congress Gives Americans a Tax Gift for Christmas But a Potential Headache for Nonresident Aliens Applying for ITINs

The PATH Act (Protecting Americans from Tax Hikes Act of 2015) was signed into law on December 18, 2015.  The Act aims to prevent tax increases, create more job opportunities, and make it easier for Americans to prepare their taxes.  This Act provides many tax benefits for American individuals. However, it causes some trouble for nonresident aliens.

Wade Wilson, CPA

Wilson LLP is excited to announce its membership in the Netherlands American Chamber of Commerce | Southeastern United States this past month.  As a firm we hope to make new friends and connect with both U.S. companies doing business with the Netherlands as well as Netherlands based organizations doing business here in the United States.

Here is a link to their website, Netherlands American Chamber of Commerce | Southeastern United States

IR-2-14-76, June 30, 2014

The IRS recently announced that if a taxpayer uses his Individual Taxpayer Identification Number for five consecutive years, then they will not automatically deactivate the ITIN.   Under the old policy, ITINS issued after January 1, 2013 would have automatically expired after five years.

Practitioners are still trying to digest the idea of reactivating ITINS which will occur beginning in 2018.  Hopefully, the IRS will reconsider the entire system before that point.

The Internal Revenue Service recently warned of a fraudulent scheme targeting non-resident aliens who have income from a United States source. The scheme uses fictitious IRS correspondence and an altered IRS form in an attempt to trick the foreign persons into disclosing their personal and financial data. The information fraudulently obtained is then used to steal the taxpayer’s identity and financial assets.

Read the Announcement

In their 2013 annual report to Congress, the Taxpayer Advocate Service (TAS) reported the ITIN application process as one of its Most Serious Problems of 2013.  The TAS has recognized the IRS ITIN program as a problem for several years.  This year the situation gets even worse as the new procedures the IRS has implemented has caused the process to become even more burdensome, and the number of ITIN rejections to increase.  Their conclusion, "the ITIN program will continue to suffer in terms of facilitation compliance by ITIN taxpayers and preventing fraud."

Wade Wilson, CPA

Recently, a new client presented us with their tax information and asked us to prepare their tax return after not having had a requirement to file for several years.  They had an identification number that they had previously received from the IRS, and were wondering if it was still valid.

CCH

This appeals court ruling rejected the IRS's position that nonresident aliens would have to pay tax on their gambling winnings.

Read the Announcement