International Taxation

By:- Clem Barry, EA.

Tel(718) 677-4006

*M.S. Taxation (U.S. & International).

*IRS Enrolled Agent (1989 to Present).

*48-hrs of Mandatory Annual Continuing Education.

*Clients in 13 states in the USA and 5 Foreign Countries.

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The IRS has collected US$4.7Trillion from 2023 tax filings; and paid US$659 Billion in 2023 refunds. The balance was used to fund social programs and the national debt, in accordance to the report from the Treasury Inspector General for Tax Adminstration (TIGTA).

File your Quarterly and Extension Forms

US Citizens and Permanent Residence living Abroad/Overseas can log on to the IRS website:-IRS.Gov and file their:- Quarterly Estimated Tax Form-1040ES(NR). They can also file Tax Extension Form 4868 or Form 2350 if they plan to file their year-end tax return, Form 1040 late. IRS penalty for late filing if you dont file an extension is $200 per month. The IRS calls it, "Enforced Compliance". From Overseas, Call the IRS (313) 234-6146 and (267) 941-1000 from 8:00 am Eastern Standard Time(EST). Calling from inside the USA (800) 829-1040 and (800) 829-4933 from 7:00am Eastern Standard Time (EST).

International Taxation

International Taxation is basically the application of Taxes and Tax Exemptions on cross-border transactions, in accordance with agreement between countries. The agreement is called a Tax Treaty; or a bi-lateral tax agreement/policy. The Treaty is usually based on either the UN Model or the OBCD Model. It is based on 4 principles:-

#1)Citizenship Based Taxation.

#2)Residence Based Taxation.

#3)Territorial/Jurisdiction/Source Based Taxation

#4)Destination Based Taxation.

In 2010, the U.S. Congress passed the Foreign Account Tax Compliance Act (FATCA). It is a tax enforcement program under section 482. It is designed to identify/detect US taxpayers who are evading tax by hiding their money in overseas bank accounts and investments using Tax Havens and Money Laundering. It requires Foreign Financial Institutions to report the value of Foreign Bank Account and Foreign Security Account over $10,000 that are held by U.S Citizens and Permanent residents. 

The IRS cross-checks financial data from foreign tax authorities and banks against U.S. tax returns filed by U.S. taxpayers to ensure they are paying the correct amount of tax. In return, the IRS gives reciprocal data to foreign tax authorities about the financial affairs of their nationals who have bank accounts and investments in the USA. Banks in foreign countries that didn\\\\\\\\\'t comply had difficulties clearing their transactions through U.S. Banks. However, as of 2018, over 100 countries entered into an Inter-Governmental agreement with the U.S.A to implement FACTA (share financial transaction information).

Who must file U.S. tax return(s).

#1) U.S. Citizens, Permanent Residents, and Business Entity that was created/organized/formed under US laws and have foreign bank Account and foreign investments/assets (Interest, dividends, securities, commodity futures, insurance policy with a cash value, and proceeds from the sale of property in a foreign country, etc.) with a combine/total value of over $10,000. The deadline for filing is March 15.

#2) U.S. Citizens and Permanent residence living and/or working outside the U.S.A and receiving compensation from the U.S.A. (Wages, Social Security, Pension, Interest, Dividends, Rental Income, Proceeds/Money from the sale of property, etc.).

#3) Foreign Nationals earning Wages, Salary or Professional fees while working in the USA is considered U.S. income; and it is tax by the USA.(Payroll Forms W-8, 8233, 1042, 1042-T, 1042-S.), even if the employer is a Foreign Corporation and compensation was paid through a Foreign Bank Account. However, compensation paid by a Foreign Employer to a Foreign National in the USA as a Visiting Student, Teacher, Trainee or Specialist is EXEMPT from U.S. tax IRC 871(c) and 872(b)(3). Any portion of a U.S. Scholarship or Fellowship grant that is not excluded from the individuals Gross Income is subject to a tax withholding of 14%(IRC1441(b). (Foreign individuals in the USA should Consult with an Immigration Attorney, or their Countrys Consulate/Embassy office in the USA.

#4) A Foreign Parent Corporation or a Foreign Subsidiary Corporation doing business in the USA; and a U.S. Corporation that have one or more Foreign subsidiary (The Corporate Transparency Act). The tax return is due 2.5 months (75 days) after the close of the corporation tax year. Failure to timely comply could result in a penalty of $25,000. Consult you tax advisor.

International Tax Compliance 

International Tax Compliance is rigorous and the IRS is cracking down on Foreign Bank Accounts used for Tax Evasion. According to the IRS, this is a high fraud area. They have put resources behind it; and they are aggressively in persuit of the culprits. There are heavy/severe/stiff penalties for failure to comply with tax filing requirements.

#1)There is a $10,000 penalty for Late Filing and Non-Willful violation. Hence, claiming IGNORANCE about your tax filing responsibilities is NOT a valid argument in an IRS audit.

#2)A Penalty of $100,000 or 50% of the amount in the largest account; or the amount of reportable transaction in each year is charged for willful failure to file.

#3)Criminal Prosecution for failure to file comes with a fine of up to $250,000 and/or 5-years imprisonment.  The statute of limitation will NEVER expire if you never filed your tax retuns. Hence, the IRS has FOREVER to come after you. Consult your Tax Advisor.

***UPDATE:-If a U.S. Citizen or Permanent Resident failed to file U.S. tax returns and pay taxes, the IRS will issue a Tax Warrant and send it to U.S. immigration offices in U.S. Airports, Seaports, Border Crossings, and countries that have an extradition treaty with the USA. The taxpayer can be arrested, U.S. passport seized (Revocation of Passport under IRC 7345); or Permanent Residency revoked if the taxpayer has Permanent Residency Status.  Consult an Immigration Attorney or the IRS. 

Services we provide for clients

We identify when a taxpayer has a Foreign Reporting Obligation. We compiled the information necessary to properly report  those Foreign Accounts and Assets; and we help the taxpayer avoid penalties and potential criminal prosecution.

#1) We provide pre-move planning (to and from the U.S.A).

#2) Formulate U.S. business structure.

#3) Advise on International Transaction.

#4) Structure U.S. Real-Estate Investments.

#5) Oversee Business and Real-Estate operations for absentee owners.

#6) Prepare and file Personal and Business tax returns, including Foreign Bank & Financial Accounts Reports, and Foreign Assets Information (FBARS) over $10,000, with the IRS and the Financial Crimes Enforcement Network(FinCEN), in compliance with the Foreign Account Tax Compliance Act(FACTA), for U.S. Citizens and Permanent Residents living in the USA and outside the USA; and have a Financial interest or Signature authority in one or more foreign bank/financial account. Tax Filing deadline is March 15.

Taxation of Expatriates (Expats)

Absentee Owners

Clients Testimonials From Clients Survey

(Testimonials that we have received from our Clients survey)

#1)"Thanks for helping me claim the Foreign Earned Income Exclusion and the Foreign Tax Credit on my US Tax return for income tax I paid in the UK. You are sharp!! You gave me a quick and accurate assessment; and you prepared my tax returns quickly". - Capt., J. Dundee (London, UK).

#2)"Clem! thanks for helping me comply with the US foreign account reporting; and thanks for filing my personal and business tax returns. As usual, my nephew will bring you the information to prepare and file those tax returns". - D. Walcott (St. Michael, Barbados). 

#3)"Mr. Barry, thanks for overseeing the operations and maintenance of my rental buildings in Brooklyn and filing all my tax returns on time. Great job!!" -K. Szablewski (Gdansk, Poland).

#4)"I\\\\\\\\\'m a U.S. Expat living in Canada. During the past 10-years, my Accountant prepared my Canada tax return and Barry prepared my U.S. Non-Resident tax return. I trust my Accountant; but Barry is super transparent and ingeneous with our shared goals. He adds value and he gives me peace-of-mine".-M. Edghill (Montreal, Canada).

#5)"I am a citizen of France. I came to the USA as a foreign student. I got married to my fiance, Suizette and we had a baby over there. We thank Barry for preparing our tax returns and sharing with us, his knowledge and experience about employment opportunities and U.S. immigration since he also came to the USA as a foreign student."-K. Bedeau (Marseille, France).

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