By Anthony Diosdi
The major purpose of an income tax treaty is to mitigate international double taxation through tax reduction or exemptions on certain types of income derived by residents of one treaty country from sources within the other treaty country. Because tax treaties often substantially modify United States and foreign tax consequences, the relevant treaty must be considered in order to fully analyze the income tax consequences of any outbound or inbound transaction. The United States currently has income tax treaties with approximately 58 countries. This article discusses the United States- Netherlands Income Tax Treaty.
There are several basic treaty provisions, such as permanent establishment provisions and reduced withholding tax rates, that are common to most of the income tax treaties to which the U.S. is a party. In many cases, these provisions are patterned after or similar to the United States Model Income Tax Convention, which reflects the traditional baseline negotiating position. However, each tax treaty is separately negotiated and therefore unique. As a consequence, to determine the impact of treaty provisions in any specific situation, the applicable treaty at issue must be analyzed. The United States- Netherlands Income Tax Treaty is no different. The treaty has its own unique definitions. We will now review the key provisions of the United States- Netherlands Income Tax Treaty and the implications to individuals attempting to make use of the treaty.
Definition of Resident
The tax exemptions and reductions that treaties provide are available only to a resident of one of the treaty countries. Income derived by a partnership or other pass-through entity is treated as derived by a resident of a treaty country to the extent that, under the domestic laws of that country, the income is treated as taxable to a person that qualifies as a resident of that treaty country. Under Article 4 of the United States- Netherlands Income Tax Treaty, a resident is any person who, under a country’s internal laws, is subject to taxation by reason of domicile, residence, citizenship, place of management, place of incorporation, or other criterion of a similar nature. Because each country has its own unique definition of residency, a person may qualify as a resident in more than one country. Whether a person is a resident of the United States or Netherlands for treaty purposes is determined by reference to the internal laws of each country.
The term “resident of the United States” means: 1) a business entity formed in the United States, or 2) any other person (except a corporation or any entity treated under United States law as a corporation) resident in the United States for purposes of United States tax, but in the case of an estate or trust only to the extent that the income derived by such person is subject to United States tax as the income of a resident. Section 7701(b) of the Internal Revenue Code treats an alien individual as a U.S. resident where such an individual is 1) lawfully admitted for permanent residence, (26 C.F.R. Section 301.7701(b)-1(b)(1)) “Green card test:” An alien is a resident alien with respect to a calendar year if the individual is a lawful permanent resident at any time during the calendar year. A lawful permanent resident is an individual who has been lawfully granted the privilege of residing permanently in the United States as an immigrant in accordance with the immigration laws. Resident status is deemed to continue unless it is rescinded or administratively or judicially determined to have been abandoned.”) (2) meets the substantial presence test, (An individual meets the substantial presence test with respect to any calendar year if i) such individual was present in the United States at least thirty-one days during the calendar year, and ii) the sum of the number of days on which such individual was present in the United States during the current year and the two preceding calendar year (when multiplied by the applicable multiplier: current year – 1, first preceding year – ⅓, second preceding year – ⅙) equals or exceeds 183 days) or iii) makes a first year election.
Like U.S. tax law, all residents of the Netherlands are taxed on their worldwide income.
Nonresidents are subject to tax only on income derived from specific sources in the Netherlands (mainly income from employment, director’s fees, business income, and income from Dutch property). Article 4 of the General Taxation Act provides that residence is determined by the circumstances. Dutch tax courts will examine the durable ties of a personal nature with the Netherlands.
An individual who is a resident of both Contracting States shall be deemed to be resident of that Contracting State in which he maintains his permanent home. If he has a permanent home in both Contracting States or in neither Contracting State, he or she shall be deemed to a resident of that Contracting State with which his or her personal and economic relations are closest (center of vital interests). While Article 4 of the treaty looks to each country’s laws to define the term “resident,” Because each country has its own unique definition of residency, a person may qualify as a resident in more than one country. Whether a person is a resident of the United States or the Netherlands for treaty purposes is determined by reference to the internal laws of each country.
For example, an alien who qualifies as a U.S. resident under the substantial presence test pursuant to U.S. tax law may simultaneously qualify as a resident of Switzerland under its definition of resident. To resolve this issue, the United States has included tie-breaker provisions in the United States- Netherlands Income Tax Treaty. The tie-breaker rules are hierarchical in nature, such that a subordinate rule is considered only if the superordinate rule fails to resolve the issue. Article 4 of the United States- Netherlands Income Tax Treaty provides the following tie-breaker for individuals:
a) An individual shall be deemed to be a resident of that Contracting State in which he maintains his permanent home. If he has a permanent home in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of that Contracting State with which his personal and economic relations are closest (center of vital interests);
b) If the Contracting State in which he has his center of vital interests cannot be determined, he shall be deemed to be a resident of that Contracting State in which he has a habitual abode;
c) If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;
d) If he is a national of Both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
Below, please see Illustration 1 which provides an example how a treaty-tie breaker can be analyzed and resolved.
Paul is a citizen and resident of the Netherlands. Paul owns NethCo, a company incorporated in the Netherlands that is in the trade or business of taking over corporations. NethCo is in the process of expanding to the much more lucrative U.S. market by opening a branch office in the United States. Paul is divorced and maintains an apartment in Amsterdam, Holland where he spends every other weekend visiting his children. Paul’s first wife, who kept their house in their divorce, has never left Holland. Paul becomes a U.S. resident alien under the substantial presence test as he operates NethCo’s U.S. branch. In the United States. Paul owns a luxury condominium in Miami, Florida where he lives with his second wife.
Because Paul is considered a resident of both the United States and the Netherlands, the treaty tie-breaker procedures must be analyzed to determine which country has primary taxing jurisdiction. With an apartment in Holland and a condominium in the United States, Paul has a permanent home available in both countries. With Paul’s children and his home office in the Netherlands as opposed to the lucrative portion of his business and his new wife in the United States, Paul does not have a center of vital interests in either country. Furthermore, Paul regularly spends time in both countries, he arguably has a habitual abode in both. As a result, under the treaty tie-breaker, Paul may be considered a resident of the Netherlands because he is a citizen of the Netherlands.
Article 2(1) of the United States- Netherlands Income Tax Treaty clarifies the application of the definition of residency with respect to certain dual resident companies. If a company is a resident of one of the Contracting States under the domestic law of that State, but is treated as a resident of a third state under a treaty between that State and the third state, then it will not be treated as a resident of the Contracting State for purposes of the United States- Netherlands Income Tax Treaty. For example, if a company that is organized in the Netherlands is managed and controlled in the United Kingdom, both countries would treat the company as being a resident under its domestic laws. However, the treaty between the Netherlands and the United Kingdom assigns residence in such a case to the country in which the company’s place of effective management is located. Assuming that, in this case, the place of effective management is the United Kingdom, the company would not qualify for benefits under the United States- Netherlands treaty because it is not subject to tax in the Netherlands as a resident of the Netherlands. See Rev. Rul. 2004-76, 2004-31 I.R.B. 111.
Business Profits and Permanent Establishment
A central issue for any company exporting its goods or services is whether it is subject to taxation by the importing country. Most countries assert jurisdiction over all the income from sources within their borders, regardless of the citizenship or residence of the person receiving that income. Under a permanent establishment provision, the business profits of a resident of one treaty country are exempt from taxation by the other treaty country unless those profits are attributable to a permanent establishment located within the host country. A permanent establishment includes a fixed place of business, such as a place of management, a branch, an office, a factory or workshop. A permanent establishment also exists if employees or other dependent agents habitually exercise in the host country an authority to conclude sales contracts in the taxpayer’s name.
Article 5 of the United States- Netherlands Income Tax Treaty defines a permanent establishment as a fixed place of business through which a resident of one of the Contracting States engages in industrial or commercial activity. This includes the following: 1) a set place of management; 2) a branch; 3) an office; 4) a store or other sales outlet; 5) a factory; 6) a workshop; 7) a mine, quarry, or other place of extraction of natural resources and 9) a building site or construction or assembly project or supervisory activities in connection therewith, provided such site, project or activity continues for a period of more than 12 months.
A permanent establishment shall be deemed not to include any one of the following:
1) The use of facilities solely for the purpose of storage, display, or occasional delivery of goods or merchandise belonging to the resident;
2) The maintenance of a stock of goods or merchandise belonging to the resident solely for the purpose of storage, display, or occasional delivery;
3) The maintenance of a stock of goods or merchandise belonging to the resident solely for the purpose of processing by another person;
4) The maintenance of a fixed place of business sol;ely for the purpose of purchasing goods or merchandise, or for collecting information, for the resident; or
5) The maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character, for the resident; or
Marketing products in either the United States or the Netherlands solely through independent brokers or distributors does not create a permanent establishment, regardless of whether these independent agents conclude sales contracts in the exporter’s name. In addition, the mere presence within the importing country does not create a permanent establishment. Please see Illustration 2 and Illustration 3.
USAco, a domestic corporation, markets its products through the internet to Netherlands customers. Under the United States- Netherlands Income Tax Treaty, the mere solicitation of orders through the internet does not constitute a permanent establishment. Therefore, USAco’s export profits are not subject to income tax in the Netherlands.
USAco decided to expand its Netherlands marketing activities by leasing retail store space in Amsterdam, Holland in order to display its goods and keep an inventory from which to fill foreign orders. Under the United States- Netherlands Income Tax Treaty, USAco’s business profits would still not be subject to Netherlands income taxation as long as USAco does not conclude any sales through its foreign office. However, if USAco’s employees start concluding sales at the Amsterdam office, USAco may have a permanent establishment in the Netherlands.
Personal Services Income
United States- Netherlands Income Tax Treaty provisions covering personal services compensation are similar to the permanent establishment clauses covering business profits in that they create a higher threshold of activity for host country taxation. Generally, when an employee who is a resident of one treaty country derives income from services performed in the other treaty country, that income is usually taxable by the host country. However, the employee’s income is typically exempted from taxation by the host country if the employee is present in the host country for 183 days or less in a 12 month period. See Article 16(2) of the United States- Netherlands Income Tax Treaty.
Income from Real Property
Tax treaties typically do not provide tax exemptions or reductions for income from real property. Consequently, both the home and host country maintain the right to tax real property. Article 6 of the United States- Netherlands Income Tax Treaty provides that income derived by a Netherlands resident from U.S. real property may be taxed in the United States and vice-versa.
Dividends, Interest, and Royalties
Treaty Rates for Dividends
Article 10 of the United States- Netherlands Income Tax Treaty discusses the taxation of dividends. The term “dividends” as used in this Article means income from shares or other rights participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. The Term “dividends” also includes, in the case of the Netherlands, income from profit sharing bonds (“winstdelende obligations”) and, in the case of the United States, income from debt obligations carrying the right to participate in profits.
Dividends paid by a company that is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State. Article 10(2) generally limits the rate of withholding tax in the State of source on dividends paid by a company resident in that State to 15 percent of the gross amount of the dividend. If however, the beneficial owner of the dividend is a company resident in the other State and owns directly shares representing at least 10 percent of the voting power of the company paying the dividend, then the rate of withholding tax in the State of source is limited to 5 percent of the gross amount of the dividend. Shares are considered voting shares if they provide the power to elect, appoint or replace any person vested with the powers ordinarily exercised by the board of directors of a U.S. corporation. The term “beneficial owner” is not defined in the treaty, and is, therefore, defined as under the internal law of the country imposing tax.
Article 10(3) provides exclusive residence-country taxation (i.e. an elimination of withholding tax) with respect to certain dividends distributed by a company that is a resident of one Contracting State to a resident of the other Contracting State. As described further below, this elimination of withholding tax is available with respect to certain intercompany dividends. Article 10(3) provides for the elimination of withholding tax on dividends beneficially owned by a company that has owned directly 80 percent or more of the voting power of the company paying the dividend for the 12 month period ending on the dividend is declared. Eligibility for the elimination of withholding tax is subject to the rules of Article 26 discussed below.
In certain cases, Article 10(4) of the treaty provides that the favorable withholding rates on dividends are not available to dividends paid by a U.S. Regulated Investment Company (“RIC”) or U.S. Estate Investment Trust (“REIT”) or a Dutch beleggingsinstelling.
Special Branch Profits Treaty Rates
Article 11 of the U.S.- Netherlands Income Tax Treaty permits a Contracting State to impose a branch profits tax on a company resident in the other Contracting State. U.S. tax law imposes a 30 percent branch profits tax on a foreign corporation’s U.S. branch earnings and profits for the year that are effectively connected with a U.S. business, to the extent that they are not reinvested in branch assets. Article 11(3) of the U.S.- Netherlands Income Tax Treaty reduces the branch profits tax to a rate not exceeding 5 percent. Article 11(3) of the treaty excludes intercompany dividends from the branch profits tax.
Treaty Rates for Interest
Article 12 of the United States- Netherlands Income Tax Treaty deals with the taxation interest. Article 12(1) of the United States- Netherlands Income Tax Treaty generally grants to the State of residence the exclusive right to tax interest beneficially owned by its residents and arising in the other Contracting State. Article 12(2) provides a definition of the term “interest.” The term “interest” means income from debt claims of every kind, whether or not secured by mortgage, and, in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as all other income that is treated as income from money lent by the taxation law of the Contracting State in which the income arises. Penalty charges for late payment shall not be regarded as interest for the purposes of the treaty.
Treaty Rates for Royalties
Article 13 of the U.S.- Netherlands Tax Treaty generally grants the State of residence the exclusive right to tax royalties beneficially owned by its residents and arising in the other Contracting State. Article 12(2) defines the term “royalties.” The term “royalties” means payment of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic, or scientific work (but not including cinematographic films, or works on film, tape, or means of reproduction for use in radio or television broadcasting); for the use of, or the right to use, any patent, trademark, design or model, plan, secrete formula or process, or other like right or property; or for information concerning industrial, commercial, or scientific experience. The term “royalties” also includes gains derived from the alienation of any such right or property that are contingent on the productivity, use, or further alienation thereof.
Article 19 of the United States- Netherlands Income Tax Treaty discusses the taxation of pensions. The United States- Netherlands Income Tax Treaty provides favorable language providing tax exemption in the host country for home country pension contributions. Article 19 of the United States- Netherlands Income Tax Treaty deals with cross-border pension contributions. It is intended to remove barriers to the flow of personal services between the Contracting States. Article 19 provides that if a resident of a Contracting State participates in a pension plan established in the other Contracting State, the State of residence will not tax the income of the pension plan with respect to that resident until a distribution is made from the pension plan. Thus, for example, if a U.S. citizen contributes to a U.S. qualified plan while working in the United States and then establishes residence in the Netherlands, the treaty prevents the Netherlands from taxing currently the plan’s earnings and accretions with respect to that individual.
However, the U.S.- Netherlands Income Tax Treaty or its technical explanations do not define the term “pension.” Since the term “pension” is not defined in the treaty or its technical explanations, the Organisation for Economic Cooperation and Development (“OECD”) commentary may be utilized to interpret the term “pension.” The OECD defines the word “pension” under the ordinary meaning of the word that covers periodic and non-periodic payments. The OECD also provides that a lump-sum payment in lieu of periodic pension payments (for example, a 401K plan or Individual Retirement Plan “IRA”) may be classified as a pension for purposes of the treaty. Thus, the U.S.- Netherlands Income Tax Treaty may allow Netherlands nationals working in the U.S. to contribute to a U.S. based retirement account such as a 401K plan or IRA and avoid all U.S. withholding tax and income tax when taking a distribution from the retirement plan. Accordingly, 401K plan and IRA distributions paid to a Netherlands national may be subject to a zero rate of withholding tax. Thus, for example a Netherlands resident receiving a distribution from a U.S. based 401K plan or IRA may be exempt from U.S. tax.
The U.S.- Netherlands Income Tax Treaty also contains comprehensive language for U.S. persons making contributions into Netherlands retirement plans. In order for a U.S. person to make tax-deferred contributions into a retirement plan, the plan must generally constitute a “qualified plan” for U.S. tax purposes. Foreign retirement savings plans do not generally constitute a “qualified plan” for U.S. tax purposes because such plans are usually not structured to conform to the rules for qualification under Internal Revenue Code Section 401. Consequently, contributions to foreign retirement plans are typically taxable in the U.S. under Section 83 of the Internal Revenue Code unless the U.S. has ratified a tax treaty which includes a comprehensive pension article. The U.S.- Netherlands Income Tax Treaty provides an article that addresses cross-border pensions. For instance, the U.S.- Netherlands Income Tax Treaty includes favorable language providing tax exemption for U.S. residents making contributions in Netherlands based pension plans. The treaty may permit U.S. residents to contribute and accumulate funds in a Netherlands based retirement plan on a tax deferred basis for U.S. and Netherlands tax purposes while on assignment.
The Anti-Treaty Shopping Provision (Limitation on Benefits)
For an individual to be eligible for treaty benefits, the individual must be considered a resident of the particular treaty country and must satisfy any limitation on benefits (“LOB”) provisions in the treaty. Under Article 26 of the U.S.- Netherlands Income Tax Treaty, an individual will be considered a resident for treaty purposes if such person is “liable to tax therein by reason of its domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature.” Under the treaty’s LOB provision if that resident is an individual, or a corporation that is at least 50 percent of the number of the shares of each class of the company’s shares are owned, directly or indirectly by persons who are entitled to the benefits of the treaty. A corporation that is not entitled to the benefits of this treaty pursuant to the provisions discussed above may qualify for treaty benefits if the corporation is traded on a “recognized stock exchange” such as NASDAQ or the stock exchanges of Amsterdam, Frankfurt, London, Milan, Paris, Tokyo, or Vienna.
Even if an individual is not publicly traded, it can still qualify for treaty benefits if it passes the “active conduct of trade or business” test. The active conduct of a trade or business need not involve manufacturing or sales activities but may instead involve services. However, income that is derived in connection with, or is incidental to, the business of making, managing or simply holding investments for the resident’s own account generally will not qualify for benefits under the treaty.
Below, please see Illustration 5 as example intended to clarify how these rules are intended to operate:
P, a holding corporation in the Netherlands, is owned by three persons that are residents of third countries. P has a participation of 50 percent in the Netherlands resident P-1, which performs all of the principal economic functions related to the manufacturer and sale of widgets and midgets in the Netherlands. P, which does not conduct any business activities, also owns all of the stock and debt issued by R-1, a United States corporation. R-1 performs all of the principal economic functions in the manufacture and sale of widgets in the United States. R-1 purchases midgets of midgets in the United States and neighboring countries. P-1’s activities are substantial in comparison to the activities of R-1.
In this example, treat benefits may be obtained by P on the payment of dividends or interest from R-1. The income received by P from R-1 is derived in connection with P’s active and substantial business (through P-1) in the Netherlands. For this purpose, 50 percent of P-1’s activities may be attributed to P since P owns a 50 percent participation in P-1. The same result would occur if R, a wholly owned United States subsidiary of P, owned all of the stock and debt of R-1.
Article 26 of the treaty provides an additional method to qualify for treaty benefits. Article 26 sets forth a “derivative benefits” test. In general, a derivative benefits test entitles certain companies that are residents of a Contracting State to treaty benefits if the owner of the company would have been entitled to the same benefit had the income in question flowed directly to the owner. To qualify, the company must meet an ownership and a base erosion test. Under this test, seven or fewer equivalent beneficiaries must own shares representing at least 95 percent of the aggregate voting power and value of the company and at least 50 percent of any disproportionate class of shares. Ownership may be direct or indirect, although in the case of indirect ownership, each intermediate owner must be a resident of a member state of the European Union or any party to the North American Free Trade Agreement.
The term “equivalent beneficiary” may be satisfied in two alternative ways. Under the first alternative, a person may be an equivalent beneficiary because it is entitled to equivalent benefits under a tax treaty between the country of source and the country in which the person is a resident. The alternative has two requirements. The first requirement is that the person must be a resident of a member state of the European Union or of a party to the North American Free Trade Agreement. In addition, the person must be entitled to all the benefits of a comprehensive tax treaty between the Contracting States from which benefits of the treaty are claimed. The requirement that a person be entitled to “all the benefits” of a comprehensive tax treaty eliminates those persons that qualify for benefits with respect to only certain types of income. Accordingly, the fact that a French parent of a Netherlands company is engaged in the active conduct of a trade or business in France and therefore would be entitled to the benefits of the U.S.- France treaty if it received dividends directly from a U.S. subsidiary of the Netherlands company will not qualify such a French company as an equivalent beneficiary. Further, the French company cannot be an equivalent beneficiary if it qualifies for benefits only with respect to certain income as a result of a “derivative benefits” provision in the U.S.-France treaty. However, because such a French company is a resident of a qualified state, it would be possible to look through the French company to its parent company to determine whether the parent company is an equivalent beneficiary.
The second alternative for satisfying the “equivalent beneficiary” test is available only to residents of one of the two Contracting States. Thus, a Netherlands individual will be an equivalent beneficiary without regard to whether the individual would have been entitled to receive the same benefits if it received the income directly. Thus, a resident of a third country can be an equivalent beneficiary only if it would have been entitled to equivalent benefits had it received the income directly. The second alternative was included in order to clarify that ownership by certain residents of a Contracting State would not disqualify a U.S. or Spanish company from treaty benefits. For example, if 90 percent of a Netherlands company is owned by five companies that are residents in member states of the European Union who satisfy the requirements of the treaty, and 10 percent of the Spanish company is owned by a U.S. or Netherlands individual, then the Netherlands company still can satisfy the requirements of the test and qualify for treaty benefits.
Disclosure of Treaty-Based Return Positions
Any taxpayer that claims the benefits of a treaty by taking a tax return position that is in conflict with the Internal Revenue Code must disclose the position. See IRC Section 6114. A tax return position is considered to be in conflict with the Internal Revenue Code, and therefore treaty-based, if the U.S. tax liability under the treaty is different from the tax liability that would have to be reported in the absence of a treaty. A taxpayer reports treaty-based positions either by attaching a statement to its return or by using Form 8833. If a taxpayer fails to report a treaty-based return position, each such failure is subject to a penalty of $1,000, or a penalty of $10,000 in the case of a corporation. See IRC Section 6712.
The Income Tax Regulations describe the items to be disclosed on a Form 8833. The disclosure statement typically requires six items:
1. The name and employer identification number of both the recipient and payor of the income at issue;
2. The type of treaty benefited item and its amount;
3. The facts and an explanation supporting the return position taken;
4. The specific treaty provisions on which the taxpayer bases its claims;
5. The Internal Revenue Code provision exempted or reduced; and
6. An explanation of any applicable limitations on benefits provisions.
If an individual would like to take a treaty position (such as a claim that the U.S.- Netherlands Tax Treaty) exempts a U.S. based retirement plan from U.S. taxation, a detailed statement must be stated on the Form 8833.
The U.S.- Netherlands Income Tax Treaty provides a number of planning opportunities for cross-border tax planning. The U.S.- Netherlands Tax Treaty also permits individuals working in one of the two countries to deduct or exclude their contributions to a pension or other retirement plans for taxation. The benefits of the U.S.- Netherlands Income Tax Treaty is subject to certain conditions such as the treaty’s LOB. Anyone considering utilizing the U.S.- Netherlands Income Tax Treaty for cross border tax planning should consult with a qualified international tax attorney.
Anthony Diosdi is one of several tax attorneys and international tax attorneys at Diosdi Ching & Liu, LLP. Anthony focuses his practice on domestic and international tax planning for multinational companies, closely held businesses, and individuals. Anthony has written numerous articles on international tax planning and frequently provides continuing educational programs to other tax professionals.
He has assisted companies with a number of international tax issues, including Subpart F, GILTI, and FDII planning, foreign tax credit planning, and tax-efficient cash repatriation strategies. Anthony also regularly advises foreign individuals on tax efficient mechanisms for doing business in the United States, investing in U.S. real estate, and pre-immigration planning. Anthony is a member of the California and Florida bars. He can be reached at 415-318-3990 or email@example.com.
This article is not legal or tax advice. If you are in need of legal or tax advice, you should immediately consult a licensed attorney.