15Mar 2022 by Anthony Diosdi
Given the Way the U.S.- Cyprus Income Tax Treaty’s LOB is Drafted, Does it Really Matter if the U.S.- Russia Income Tax Treaty is Canceled?

Given the Way the U.S.- Cyprus Income Tax Treaty’s LOB is Drafted, Does it Really Matter if the U.S.- Russia Income Tax Treaty is Canceled?

Tax Law
By Anthony Diosdi Recently the U.S. Senate Foreign Relations Committee has proposed to review the U.S.- Russia Income Tax Treaty. This has sparked speculation that the United States may unilaterally revoke the treaty. This would not be the first time that tax policy has been weaponized for foreign policy objectives. However, it is very rare that the U.S. would withdraw from a tax treaty. The few cases are significant. For example, Democrats and Republicans came together in Congress to end the U.S.- South Africa Income Tax Treaty in 1987 as part of raising international pressure on the South African government over aparteid. The U.S. and South Africa did not enter into another bilateral tax treaty until 1997. See ITR, This week in tax: Russian tax treaties in doubt? (March 11,…
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15Mar 2022 by Anthony Diosdi
The Risks U.S. Companies Should Consider before Hiring a Foreign Independent Contractor

The Risks U.S. Companies Should Consider before Hiring a Foreign Independent Contractor

Tax Law
By Anthony Diosdi In today’s global economy, it has become increasingly common for U.S. companies to hire workers located in foreign countries and classify them as independent contractors. U.S. companies can save money hiring foreign independent contractors because they do not have to provide benefits, office space, or equipment to contractors or pay taxes on compensation to contractors. U.S. companies can also save money engaging contractors from other countries due to lower labor costs. However, there are significant risks to hiring foreign independent contractors that should be carefully considered by any U.S. company before considering entering into such an arrangement. What Defines an Independent Contractor  for U.S. Federal Tax PurposesUnder U.S. tax law, an independent contractor is defined as follows: “an individual is an independent contractor if the payer has…
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09Mar 2022 by Anthony Diosdi
Crossborder Taxation of Retirement and Pension Plans Under the U.S.- Canada Income Tax Treaty

Crossborder Taxation of Retirement and Pension Plans Under the U.S.- Canada Income Tax Treaty

Tax Law
By Anthony Diosdi In an increasingly global economy, workers are experiencing unprecedented mobility. As such, foreigners living in America, even for a limited time, often participate in a pension or retirement plan in the United States; participation might even be mandatory. In most cases, pretax money is contributed into retirement accounts where it accumulates tax-free until retirement. U.S. retirement such as 403(b) plans, 401(k) plans, and Individual Retirement Accounts (“IRAs”) are commonly encountered by foreigners who are employed in the United States. In the alternative, Americans who are employed abroad often contribute to foreign retirement plans. Whether contributions, earnings, and distributions are includible in a foreign worker’s U.S. taxable income depends on how the worker is classified for U.S. tax purposes and whether a tax treaty exempts an event that…
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09Mar 2022 by Anthony Diosdi
Can U.S. Remote Workers Trigger Foreign Income Tax or Foreign Employment Tax Liability for U.S. Companies? An OECD Perspective

Can U.S. Remote Workers Trigger Foreign Income Tax or Foreign Employment Tax Liability for U.S. Companies? An OECD Perspective

Tax Law
By Anthony Diosdi Unprecedented measures imposed or recommended by governments, including travel restrictions and curtailment of business operations have been in effect in most countries in various forms and stages during the last two years. During the pandemic period, many U.S. enterprises have faced curtailment of their operations, and have been forced to close offices and other business premises forcing those businesses to change how their business is conducted (e.g. working from home). In many countries, international travel was either suspended or severely restricted for a number of weeks leaving people estranged in countries where they might not otherwise be. This temporary dislocation of people or workers can have global tax consequences for those individuals and U.S. businesses for which they work. Foreign Permanent Establishments Rules Many U.S. businesses have…
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03Mar 2022 by Anthony Diosdi
Taxation of the Digital Economy- A Brief Overview of the OECD Two-Pillar Proposal

Taxation of the Digital Economy- A Brief Overview of the OECD Two-Pillar Proposal

Tax Law
By Anthony Diosdi In the modern digital economy, U.S. multinationals routinely sell products through their online platforms into countries in which they may have no physical presence. A major issue of the global tax system is the taxation of big technology companies or “Big Tech,” i.e., how countries should allocate taxing authority over such cross-border online sales. The Organization for Economic Cooperation and Development (“OECD”), consisting of 37 member countries, has taken a lead role in developing a multilateral agreement to establish a regime of global tax rules of the digital economy. The goal is a multilateral agreement to deter companies from taxing digital profits through unilateral action, which could impact global trade and economic growth. As such, the OECD has developed a two-pillar proposal: Pillar one deals with the…
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03Mar 2022 by Anthony Diosdi
How Cryptocurrency “Hard Forks” and “Airdrops” Are Taxed

How Cryptocurrency “Hard Forks” and “Airdrops” Are Taxed

Tax Law
By Anthony Diosdi In 2019, the IRS issued Revenue Ruling 2019-24. This Revenue Ruling provided guidance on the taxation of “hard forks” and “air drops.” Revenue Ruling 2019-24 supplements the basic guidance regarding the tax treatment of virtual currency provided by the Internal Revenue Service (“IRS”) in Notice 2014-21. According to the IRS, cryptocurrency is a type of virtual currency that uses cryptography to secure transactions that are digitally recorded on a distributed ledger, such as blockchain. A distributed ledger records, shares, and synchronizes transactions as data on digital systems without any centralized storage or administration. Revenue Ruling 2019-24 discusses the taxation of a specific type of virtual currency transaction known as a “hard fork” which may be followed by a so-called “airdrop.”As a general rule, a hard fork acts…
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03Mar 2022 by Anthony Diosdi
Crossborder Taxation of Retirement and Pension Plans Under the U.S.- India Tax Treaty

Crossborder Taxation of Retirement and Pension Plans Under the U.S.- India Tax Treaty

Tax Law
By Anthony Diosdi In an increasingly global economy, workers are experiencing unprecedented mobility. As such, foreigners living in America, even for a limited time, often participate in a pension or retirement plan in the United States; participation might even be mandatory. In most cases, pretax money is contributed into retirement accounts where it accumulates tax-free until retirement. U.S. retirement such as 403(b) plans, 401(k) plans, and Individual Retirement Accounts (“IRAs”) are commonly encountered by foreigners who are employed in the United States. In the alternative, Americans who are employed abroad often contribute to foreign retirement plans. Whether contributions, earnings, and distributions are includible in a foreign worker’s U.S. taxable income depends on how the worker is classified for U.S. tax purposes and whether a tax treaty exempts an event that…
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02Mar 2022 by Anthony Diosdi
Crossborder Taxation of Cloud Transactions and Digital Downloads

Crossborder Taxation of Cloud Transactions and Digital Downloads

Tax Law
By Anthony Diosdi U.S. Taxation of the Digital Economy- a Broad OverviewNew technology and new transactions often raise difficult issues of tax policy and administration in part because existing rules were developed to deal with other situations. The dramatic expansion in electronic commerce facilitated by the use of the Internet and other technology is subjecting existing tax principles to new pressures. One area of concern is the application of source rules to electronic commerce transactions. Suppose, for example, that a corporation delivers software or a digital product to a customer on the Internet. The customer can download the product and use it commercially. Depending upon the nature of the transaction and the property interests involved, the income to the corporation might appropriately be characterized as a royalty for the use…
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02Mar 2022 by Anthony Diosdi
Crossborder Taxation of Retirement and Pension Plans Under the U.S.- U.K Tax Treaty

Crossborder Taxation of Retirement and Pension Plans Under the U.S.- U.K Tax Treaty

Tax Law
By Anthony Diosdi In an increasingly global economy, workers are experiencing unprecedented mobility. As such, foreigners living in America, even for a limited time, often participate in a pension or retirement plan in the United States; participation might even be mandatory. In most cases, pretax money is contributed into retirement accounts where it accumulates tax-free until retirement. U.S. retirement such as 403(b) plans, 401(k) plans, and Individual Retirement Accounts (“IRAs”) are commonly encountered by foreigners who are employed in the United States. In the alternative, Americans who are employed abroad often contribute to foreign retirement plans. Whether contributions, earnings, and distributions are includible in a foreign worker’s U.S. taxable income depends on how the worker is classified for U.S. tax purposes and whether a tax treaty exempts an event that…
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01Mar 2022 by Lynn Ching
A Win for Taxpayer in Non-Willful FBAR Penalty Case In The Ninth Circuit Court of Appeals

A Win for Taxpayer in Non-Willful FBAR Penalty Case In The Ninth Circuit Court of Appeals

Tax Law
By Lynn K. Ching In March 2021, a taxpayer prevailed on a significant issue in a non-willful FBAR case. The issue was whether 31 U.S.C. § 5321(a)(5)(A) authorizes the IRS to impose multiple non-willful penalties - up to $10,000 for each foreign bank account that was required to be listed on the FBAR - when an untimely, but accurate FBAR has been filed. The Ninth Circuit Court of Appeals concluded that § 5321(a)(5)(A) authorizes the IRS to impose up to one non-willful penalty of $10,000 per FBAR filing when an untimely, but accurate, FBAR is filed, no matter the number of foreign accounts (as opposed to $10,000 per FBAR account as argued by the government). Ninth Circuit Court of Appeals In United States of America v. Boyd, 991 F 3d…
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