International IRS Offices

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US citizens and resident aliens must report their worldwide income, meaning income from all sources within or outside of the United States.  The IRS receives tax filings and payments all year round and from all over the world.  If you derive income from sources in either Frankfurt, London, Paris, or Beijing and happen to be working there too, you have the fortune (or misfortune if you have an unpaid tax debt) to have an international IRS office nearby.

I would normally not recommend dropping in at a local IRS office.  You can usually get what you need more quickly, and with less hassle, by using the IRS’ website or by calling and speaking with a customer service representative if you don’t have a tax attorney.  However, if I worked in one of these four cities, I might give the international office a try.  They are located inside the United States embassies (or consulate in Frankfurt) and I would bet they do not get a lot of foot traffic.  Be sure to check the hours of operation here because they vary office to office, or visit the individual offices for more information:

image via lib.utexas.edu

Frankfurt

London

Paris

Beijing

Denmark's "Fat Tax" is Losing Support

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image via amazon.com

I was sad to learn that the Danish government is second guessing the “fat tax” that just made it on the books last October.  They are finding that Danes are crossing the border for tax relief.  They are crossing into neighboring countries (Germany, Holland, or Sweden) to make their high-fat food purchases, which is causing serious financial harm to Danish businesses.  I guess this means the Danes won’t be taxing foods with high sugar content either as they had planned to do previously.  They had such high hopes only a year ago.

The issue of whether or not “sin taxes” produce the desired effect is a hot one; experts do not agree.  Denmark certainly would have been an interesting test case.  But repealing the fat tax after only one year isn’t going to tell us anything definitive.  I won’t lie, it was also kind of nice that we were able to observe how this might have played out from a distance (without subjecting ourselves to such an awful tax).  The tax attorneys at our firm are united in our steadfast opposition to any tax that would make junk food more expensive.

$104 Million Award: Big Win for Whistleblower, Bigger Win for IRS

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image via nydailynews.com

The IRS Whistleblower Office, in its June 20th memorandum, promised to make some long-overdue changes to the whistleblower program, one of which would be to follow through on paying out awards to those who come forward with valuable intel.  When I saw this memo back in June, I wondered how long it would take for the Whistleblower Office to make good on its promise.  Well, the time has come.

The tax attorneys for former Swiss banker, Bradley Birkenfeld, announced yesterday that the IRS paid their client an award of $104 million for revealing information that resulted in the highly publicized exposure of UBS.  Why would the IRS pay out such a huge award in these miserable financial times?  Because the benefits far outweigh the cost.  Here’s what the IRS got out of the deal:

  • $780 million fine against UBS
  • strong message sent to tax cheats and financial institutions around the world that the IRS is serious about enforcement and collection of tax debts
  • strong message sent to potential whistleblowers around the world that the IRS is serious about compensating those who take risks and come forward
  • billions of dollars in taxes that otherwise would not have been collected

In the words of the IRS:

[T]he information provided by the whistleblower formed the basis for unprecedented  actions against UBS AG, with collateral impact on other enforcement activities and a continuing impact on future compliance by UBS AG.

This was a huge case for Mr. Birkenfeld and his tax attorney.  But for the IRS, the magnitude and value of this case really cannot even be measured at this point.  Full story here.

Olympic Medal Tax Rates

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image via en.wikipedia.org

US citizens are generally required to pay taxes on their worldwide income, regardless of where they are living.  If you don’t believe me, you can read all about it in IRS Publication 54 “Tax Guide for U.S. Citizens and Resident Aliens Living Abroad.”  So the olympic medals and prize money obtained by American athletes — you guessed it: taxable.

The people at Americans for Tax Reform calculated the tax on each prize level:

  • Bronze – tax bill is $3,502 on prize of $10,000
  • Silver – tax bill is $5,385 on prize of $15,000
  • Gold – tax bill is $8,986 on prize of $25,000

And that’s just the prize money tax rate associated with the medal.  If our Olympians really want to do things correctly, they will have to pay tax on the medal itself too.

Some think that our “amateur” athletes should get tax relief similar to that which we extend to our military personnel.  They do represent the United States, but I’m not sure the public policy reasons are quite the same.

The Multi-Talented Chinese Tax Authority

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photo via blog.pgi.com

We think the IRS has been tasked with more than it can handle now that it will have to enforce the new health care law, but it takes just one look at the Chinese taxing authority to rethink how bad it really is here.

Chinese tax collectors take multitasking to a whole new level.  The case of Chinese artist/political activist Ai Weiwei shows how their duties go far beyond collection of revenue.  In between their bean counting sessions, they somehow found time to detain and interrogate Ai in a secret location for 81 days last year.  All in a day’s work for the Chinese tax authority.

The Chinese Government insists that it is only interested in Ai paying his tax debt, but it is clear that what they really want from Ai is silence.  This story is back in the news now because Ai recently lost his appeal.  A Chinese appellate court rejected his argument that the tax authority had violated its own procedures by temporarily robbing him of his freedom last year.  And still Ai refuses to hold his peace when it comes to important Chinese social & political issues.  See full story here.

Dolce & Gabbana Face Tax Evasion Charges

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image via bombod.com

Italian fashion designers Domenico Dolce and Stefano Gabbana allegedly owe in the neighborhood of 1 billion euros in back taxes (that’s equal to $1.25 billion this side of the pond), and of course they deny it.  I’m sure they’re innocent, since Italians are so good about paying their taxes.  FYI, the only nation with more tax evaders than Italy is Greece.  Here is Gabbana’s well-reasoned tweet from earlier today:

Everyone knows that we haven’t done anything.

With 140 available characters that’s all he could say for himself!?  I wonder if Dolce is any brighter than Gabanna.  The Italian tax authorities have beeen investigating the two since 2007.  A lower court acquitted them, but the government appealed, so their quest for tax relief continues.

Based on the designs pictured in this post, Italy should consider taxing D&G at an even higher rate.  Maybe if they taxed these designs like cigarettes it would discourage anybody from wearing them.

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