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Dividend Equivalent Payments Subject to U.S. Withholding
(January 24, 2012)
The U.S. Treasury and IRS have taken the next step in their crackdown on transactions that avoid the U.S. withholding tax on U.S. source dividends. Recently issued temporary....
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Faxed and Scanned Forms W-8 – Does New IRS Guidance Offer Hope?
(September 21, 2011)
It is no secret to withholding agents that the IRS typically treats a customer or counterparty providing a faxed or scanned Form W-8 as "undocumented"...
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FATCA Transition Relief: Notice 2011-53
(July 15, 2011)
The IRS has responded to industry and foreign government concerns regarding the January 1, 2013, effective date of the chapter 4 provisions of FATCA ...
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Average Basis Creates "Revocation" and "Change" Issues
(June 28, 2011)
The IRS is considering a change to the cost basis regulations that may require brokers to alter the way they handle customer requests to stop calculating basis by averaging ...
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IRS Ruling On Consent Fees: Withholding and Information Reporting Consequences
(May 9, 2011)
Until recently, there has been no guidance addressing the treatment of a consent fee paid to a debt holder to obtain the holder’s agreement to change the terms ...
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Immediate Action Required for Participating FFIs with Respect to Responsible Officer Certifications
(May 6, 2011)
Although FATCA is not effective until January 1, 2013, foreign financial institutions (FFIs) that intend to enter into FFI Agreements with the IRS (“participating FFIs”) ...
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IRS Releases Notice 2011-34 – Second FATCA Notice
(April 11, 2011)
On April 8, 2011, Treasury and the IRS issued a second FATCA notice, Notice 2011-34 (the "Notice") supplementing Notice 2010-60 and providing new guidance in several ...
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Electronic Form W-8 Validation Takes Off
(March 14, 2011)
Electronic validation has grown exponentially in the past two years and is becoming the popular tool for US withholding agents and qualified intermediaries (“WAs”) to obtain ...
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Final FBAR Regulations
(March 2, 2011)
The U.S. Treasury has finalized regulations under the Bank Secrecy Act concerning the disclosure of foreign financial accounts by U.S. persons, commonly known as the foreign bank ...
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New Form W-9
(February 9, 2011)
The IRS released a new Form W-9 at the end of January. Financial institutions, accounts payable operations, and other payers of amounts that may be reported on Forms 1099 ...
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IRS Requires Withholding and Reporting on Expense Reimbursements to Banks’ Customers
(January 21, 2011)
The IRS Office of Chief Counsel published a General Legal Advice Memorandum (“GLAM”) on December 17, 2010, concluding that expense reimbursements paid by U.S. depositary ...
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The Reporting of U.S. Bank Deposit Interest: The Saga Continues
(January 12, 2011)
The U.S. Treasury and the IRS published a proposed regulation on January 7, 2011, that would vastly expand the reporting of U.S. bank deposit interest (“BDI”) paid to non-U.S. individuals on Form 1042-S. ...
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2010 Changes to RIC Distribution Rules
(January 6, 2011)
Year-end legislative changes to the Regulated Investment Company (“RIC”) distribution rules provide significant benefits for both payors and RIC investors...
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Ian Unger
(December 30, 2010)
Burt, Staples & Maner, LLP, is pleased to announce that Ian Unger will join the Firm as an associate effective January 3, 2011.
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Final Cost Basis Regulations
(October 20, 2010)
The final cost basis regulations have finally been published, a mere 11 weeks before the statutory effective date of January 1, 2011. Fortunately, the final rules follow the general outline ...
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Increase in Information Return Penalties Starting Next Year
(September 29, 2010)
Mistakes on information returns and payee statements just became a lot more expensive. Effective with returns required to be filed on or after January 1, 2011, the per-occurrence penalties for incorrect ...
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IRS Comments on FATCA Notice 2010-60
(September 23, 2010)
Several senior IRS executives addressed the Tax Executives Institute in New York City on September 22, 2010, as part of a panel chaired by John Staples, and commented on FATCA Notice 2010-60 (the “Notice”). ...
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First Round of FATCA Guidance Published by IRS
(August 30, 2010)
On Friday, August 27, the IRS published Notice 2010-60 (“Notice”), the first round of guidance under the Foreign Account Tax Compliance Act (“FATCA”) provisions ...
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Notice 2010-46: New Securities Lending/Repo Rules: Notice 2010-46 Replaces Notice 97-66
(May 24, 2010)
What is the purpose of Notice 2010-46? The Notice implements section 871(l)(6) of the Foreign Account Tax Compliance (“FATCA”) provisions of the HIRE ...
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BURT, STAPLES & MANER, LLP is pleased to announce that Yvonne Kunihira-Davidson will join the Firm effective June 1, 2010.
(April 20, 2010)
Ms. Kunihira-Davidson, currently a director in the Financial Services Regulatory Practice at PricewaterhouseCoopers LLP (“PwC”), will join the firm as a director ...
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U.S. Withholding and Information Reporting on Dividend Equivalents Begins September 14, 2010
(April 16, 2010)
ALERT: Clients should be aware that new section 871(l) enacted as part of FATCA requires withholding on dividend equivalents beginning on or after September ...
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IRS Audits of U.S. Withholding Agents Intensifying
(April 6, 2010)
We have seen a sharp increase in the number of IRS audits of U.S. withholding agents in the last few weeks. (cf. BSM client letter dated January 4, 2010.) ...
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Vendor Payment Reporting Significantly Expanded
(March 26, 2010)
The Patient Protection and Affordable Care Act amends § 6041 (Form 1099-MISC reporting) in two ways: (1) it requires reporting of payments made to corporations ...
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Container Corporation: New Rules or Old Concepts for Sourcing
(March 19, 2010)
In Container Corporation v. Commissioner, 134 T.C. No. 5 (February 17, 2010), the Tax Court held that guarantee fees should be sourced by analogy to services ...
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FATCA is Now Law
(March 18, 2010)
Today, the President signed into law a major revamp of the U.S. withholding tax system that imposes a new 30% withholding tax on certain U.S. source payments ...
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Do You Have a 2010 Strategy to Deal with Cost Basis Reporting and FATCA?
(February 8, 2010)
Proposed regulations mandating cost basis reporting (“CBR”)and potential passage of the Foreign Account Tax Compliance Act (“FATCA”) constitute the biggest ...
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Likely Consequences to Financial Institutions from the IRS Voluntary Disclosure Program for U.S. Holders of Undisclosed Offshore Accounts
(January 28, 2010)
Over 14,000 U.S. taxpayers trying to escape criminal prosecution have voluntarily disclosed their offshore accounts to the IRS in the last few months. More such...
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Appointment of Michael Danilack as IRS Deputy Commissioner (International) LMSB
(January 20, 2010)
I am pleased to announce that our partner, Mike Danilack, has been appointed Deputy Commissioner (International) for the Large and Midsize Business Unit (“LMSB”) ...
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New Years Update on IRS Withholding Tax Audits
(January 4, 2010)
The IRS has warned taxpayers for several years that it intends to conduct comprehensive checks of the compliance level of U.S. withholding agents...
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U.S. Withholding Tax Legislation Introduced on October 27, 2009
(October 30, 2009)
Key Congressional tax writers introduced the “Foreign Account Tax Compliance Act of 2009” (“Act”) on October 27, 2009, with the U.S. Treasury expressing its support...
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Meeting with IRS on July 30, 2009, to Discuss Changes to the QI System
(July 31, 2009)
The IRS met with a limited number of representatives of the legal and accounting professions on July 30, 2009, to discuss pending legislative and regulatory changes ...
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IRS Signals Preference for Interview-Style E-W8 Applications for Purposes of Securing MOU
(June 18, 2009)
The IRS recently announced its preference for a “Turbo Tax” interview-style electronic Form W-8 (“E-W8”) from Withholding Agents (“WA”) looking to secure ...
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GlaxoSmithKline Case Shows Importance of Withholding Tax Issues
(June 1, 2009)
The IRS has made cross-border withholding taxes a Tier I issue and has said it will focus on these issues as never before. A recently published ...
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Drastic Changes to Qualified Intermediary (“QI”) Program Proposed by Obama
(May 7, 2009)
The Obama Administration has proposed to Congress sweeping changes in the QI program and the way nonqualified intermediaries (“NQIs”) are treated. If these proposals are adopted ...
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IRS Suggests Use of Internal Audit Departments to Control Costs of QI External Audits
(May 1, 2009)
The IRS recently proposed that a U.S. office of an accounting firm must participate in the external audit of a Qualified Intermediary (“QI”). The proposal set off an uproar ...
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IRS Ramps Up Withholding Tax Enforcement
(April 3, 2009)
We reported last December that the IRS elevated withholding tax and reporting issues to a “Tier 1” audit issue. This means these issues generally are on par with tax shelters as issues ...
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UBS Settlement with the IRS: New Perils for Withholding Agents
(February 20, 2009)
UBS agreed to pay $780 million to the United States on February 18 to avoid criminal prosecution associated with its U.S. withholding tax compliance. While BSM’s representation of UBS in ...
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New Withholding Tax Audit Developments
(December 16, 2008)
On a number of fronts it appears the IRS intends to raise again the stakes on withholding tax compliance. We would like to bring two specific matters to your attention...
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U.S. Senate Focuses on Dividend Withholding Tax Abuse: Are Changes on the Way?
(September 23, 2008)
The U.S. Senate Permanent Subcommittee on Investigations (the “Subcommittee”) held a hearing on September 11, 2008, entitled “Dividend Tax Abuse: How Offshore Entities Dodge Taxes on U.S. Stock Dividends.” ...
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New Withholding Tax Audit Guidelines
(August 15, 2008)
The IRS published guidelines on August 7, 2008, for their examiners to follow when conducting withholding tax audits of U.S. withholding agents other than Qualified Intermediaries (“Guidelines”) ...
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GAO report on Qualified Intermediary ("QI") Program and U.S. Withholding Agent ("USWA") Compliance
(March 18, 2008)
Eight years ago, the IRS allowed foreign institutions to hold securities on behalf of their clients and obtain a reduced withholding rate without disclosing their client’s identity, provided the institution agreed to become a QI...
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US Income Tax Treaties with Belgium, Denmark, Finland & Germany
(February 1, 2008)
On January 2, 2008, the Treasury Department announced the entry into force of Protocols amending existing income tax treaties with Germany, Denmark and Finland and a new income tax treaty and protocol with Belgium...
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Due Diligence Needed for All M&A
(January 11, 2008)
Recent experience shows that financial institutions (“FIs) and multi-national corporations (“MNCs) who acquire companies do not adequately review the tax withholding and information reporting activities of the acquiree as part of their due diligence...
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Proposed NRA Withholding Regulations on Redemptions of Actively Traded Stock
(October 24, 2007)
The Treasury and the IRS issued proposed regulations (“Prop. Regs.”) on October 24, 2007, regarding a U.S. financial institution’s NRA withholding and reporting obligations on distributions in redemption of actively traded stock.
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The Electronic Form W-8: A Potential Cure For Your Compliance Headaches?
(July 30, 2007)
Each year, Withholding Agents (“WAs”) spend countless hours collecting and validating paper Forms W-8. Worse yet, getting a valid Form can take a number of tries, frustrating both the customer and the WA. Now, there is an easier, more accurate, and less expensive way to comply...
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IRS Issues Draft Form W-8BEN and Instructions
(July 9, 2007)
The IRS recently issued a draft version of Form W-8BEN tentatively dated January 2008. The instructions to the draft form provide many clarifications of the positions that the IRS has taken in that past, as well as new positions and requirements.
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Proposed Tax Shelter Disclosure Regulations
(January 12, 2007)
The Treasury and IRS issued proposed regulations ("Regs") on November 2, 2006 that when finalized, will significantly modify the tax shelter disclosure regulations.
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Tax Arbitrage: A Mixed Message
(October 31, 2006)
Although developed country tax authorities are focusing on tax arbitrage -- transactions that exploit the different treatment of the same cross-border transaction in two or more countries -- the US has not defined acceptable arbitrage versus abusive tax avoidance.
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Dramatic New Expansion of US Tax Withholding and Reporting Rules?
(September 19, 2006)
Congress recently held hearings to look into the effectiveness of the US backup withholding and reporting rules to police offshore tax shelter abuses by US taxpayers: Congress did not like what it heard.
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Proposed Foreign Tax Credit (“FTC”) Regulations Affect Popular Tax Structures
(August 14, 2006)
Recently proposed regulations define which US person may claim FTCs by “clarifying” which person or entity is legally liable for the foreign tax subject to credit.
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U.S. Zero Withholding on Dividends
(October 7, 2005)
The U.S. Treasury Department just released its most recent Treaty Protocol that eliminates U.S. taxation on dividends paid by U.S. subsidiaries of foreign companies.
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What Should You Make of the Tax Court’s Transfer Pricing Decision in Xilinx?
(September 8, 2005)
How much discretion does the IRS have to determine what tax return positions “clearly reflect income”? One would think quite a lot because § 482 provides sweeping authority to the IRS to make this determination and the IRS regularly uses it to attack tax abuses.
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Practical Insights into IRS Goals for International Audits
(June 27, 2005)
Senior IRS officials recently described 3 main goals of their international tax audits: 1) to audit more taxpayers; 2) to assign more staff to issues most likely to lead to sustainable adjustments; and 3) to make their audits more current.
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Qualified Intermediary (QI) External Audits: Meeting with IRS (17/5/05)
(May 27, 2005)
The IRS met with representatives of the Big 4 accounting firms and Burt, Staples & Maner (BSM) on May 17, 2005, to discuss external audits of QIs. Two items bear particular mention.
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Are You Ready for Simultaneous Multi-Country Audits of Your Cross Border Structures and Transactions?
(May 13, 2005)
The US, UK, Canada and Australia formally launched their Joint International Tax Shelter Information Center (“JITSIC”) on May 4, 2004, to allow the four countries to coordinate – and accelerate – their attacks on “abusive” cross border transactions.
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Maximize the New US Domestic Production (§ 199) Deduction (“DPD”)
(April 21, 2005)
Congress gave companies a new deduction for “domestic production” in 2004 to compensate them for the tax benefits they had under the FSC export regime.
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IRS Denies Treaty Benefits to Prevent Double Non-Taxation
(March 25, 2005)
The IRS is targeting transactions that use U.S. tax treaties to obtain unintended tax benefits, such as simultaneously avoiding tax in both treaty countries (“double non-taxation”). IRS Commissioner Everson identified the prevention of double non-taxation as a key enforcement concern.
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IRS Voluntary Compliance Program (“VCP”): Underpayment Interest News
(March 4, 2005)
The IRS will not assess underpayment interest on remedied accounts for financial institutions participating in the VCP, calling off Treas. Reg. 1.1441-1(b)(7)(iii). Financial institutions have yet another compelling reason to consider the VCP in addition to the liberalized application of the withholding tax and penalty provisions outlined in our letter of November 2004.
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Draconian Penalties and Second Opinions
(February 17, 2005)
Congressional reaction to the marketing of tax shelters has led to what can only be described as two draconian anti-tax avoidance penalties in the recently passed "Jobs Act" ("Act").
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Transfer Pricing Preparation and Audit Review (“TPPAR”) Program Update
(February 10, 2005)
The press has been filled with stories of the IRS’s increasingly aggressive transfer pricing audit and litigation activity. It is not difficult to understand why.
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“Cargo Cult” Tax Opinions Won’t Stop IRS Push for International Penalties
(October 28, 2004)
A “cargo cult” is a belief that if one goes through the proper rituals – building a runway and control tower on a remote South Sea island, for instance – that the results one wants (e.g., planes full of cargo) are destined to occur.
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BNA International Article on Transfer Pricing
(August 31, 2004)
Enclosed is an article I wrote entitled, "Are You Ready for the New U.S. Approach to Compliance?", which appears in the August edition of BNA International. The article describes the increasingly strict transfer pricing environment in the United States and gives some practical advice on what steps to take now to help avoid problems with the I.R.S. later.
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Increasing IRS Pressure on Transfer Pricing Audits
(July 1, 2004)
The “softer, gentler” IRS is gone. IRS enforcement is becoming much tougher, and one of the main areas of toughening is transfer pricing audits.
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Interpretation of New US-UK Tax Treaty
(May 4, 2004)
We, along with many others in the tax community, wonder why the US provided a number of far more generous terms in the new US-Japan Tax Treaty than in the new US-UK Tax Treaty, even though only a year separates the two.
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Key Points From IRS Meeting in New York
(April 22, 2004)
The IRS met with the Big Four accounting firms and Burt, Maner, Miller & Staples on April 20, 2004, in New York to hear from key QI practioners about how the external audits are going and to give them a progress report. You should be aware of several points.
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New Crackdown on Abusive Cross-Border Tax Transactions: Broader, Faster and Wider
(March 26, 2004)
IRS Commissioner Everson announced on March 15 that the IRS will form a task force with the U.K., Canada and Australia to identify and close down “abusive” cross-border transactions.
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How to Persuade the I.R.S. and Treasury to Change Their Mindsroposed Schedule M-3: Giving the IRS a Roadmap to Questionable Transactions
(March 19, 2004)
How a recent change in the U.S. withholding tax rules came about is worth considering.
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Proposed Schedule M-3: Giving the IRS a Roadmap to Questionable Transactions
(February 4, 2004)
The I.R.S. proposed Schedule M-3 last week, a new, highly detailed schedule for the tax returns of corporations with assets of $10 million or more. The schedule will highlight the book-tax differences of more than 80 specified categories of income and expense – an easy roadmap for the I.R.S. quickly to identify, not just tax shelters, but many questionable tax positions.
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Treaty Abuse – Doctrine Into Practice
(January 13, 2004)
Any cross-border financing (“CBF”) is at risk of attack if it relies on a treaty for a result not intended by the two negotiating governments. We have recommended that our clients keep this basic principle in mind when assessing any current or potential CBF, because a US court may well consider it in deciding if a CBF is legitimate.
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