Issues & Insights
Tax Alerts
Please be reminded that the deadline for participation in the 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI) is August 31, 2011. The special voluntary disclosure initiative is designed to bring hidden offshore financial accounts and assets back into the U.S. tax system and to help those taxpayers with undisclosed foreign accounts become compliant with their U.S. tax obligations. The IRS indicated that this program will be the last, best chance for individuals to substantially reduce their exposure to significant civil penalties and, in many cases, to eliminate the risk of criminal prosecution.
Given the limited timeline, individuals who wish to participate in the program can request an extension of up to 90 days under certain circumstances if they do so by August 31, 2011. While The Wolf Group cannot provide assistance in the process of extension requests at this late date, we can refer you to an appropriate attorney to provide legal counsel to ensure the advisability of OVDI participation, and to prepare the legal forms and documents for the extension requests. Once the extension requests are filed and approved, we can assist you in filing the requisite forms and schedules.
If you think you have (or had) undisclosed foreign financial accounts or assets, you can contact our International Tax Director, Dale Mason, at (703) 502-9500 x120, or dmason@thewolfgroup.com to discuss the matter.
Sincerely,
The Wolf Group
Given the limited timeline, individuals who wish to participate in the program can request an extension of up to 90 days under certain circumstances if they do so by August 31, 2011. While The Wolf Group cannot provide assistance in the process of extension requests at this late date, we can refer you to an appropriate attorney to provide legal counsel to ensure the advisability of OVDI participation, and to prepare the legal forms and documents for the extension requests. Once the extension requests are filed and approved, we can assist you in filing the requisite forms and schedules.
If you think you have (or had) undisclosed foreign financial accounts or assets, you can contact our International Tax Director, Dale Mason, at (703) 502-9500 x120, or dmason@thewolfgroup.com to discuss the matter.
Sincerely,
The Wolf Group
Please click here to download the full article.The IRS recently changed its position regarding the requirements for foreign government employees’ wages to be exempt from U.S. federal income tax. Under Section 893 of the Internal Revenue Code, a foreign government employee’s wages are exempt from U.S. federal income tax if they meet all of the following requirements:
Until recently, the IRS had taken the position that foreign government employees could not qualify for the tax exemption provided by Section 893 until they received the above certification from the State Department. Earlier this year, the IRS lost a case related to this issue: Abdel-Fattah v. Commissioner of Internal Revenue. In that case, the Tax Court ruled that the State Department certification was not a prerequisite for the tax exemption, and that a foreign government employee’s wages are not subject to U.S. federal income tax if they meet the three requirements listed above.
In response to the Tax Court’s decision, the IRS recently released Action on Decision 2010-004, stating that it will no longer take the position that State Department certification is a prerequisite for the tax exemption. The burden of proof remains on the employee to show that he has met the above conditions and therefore qualifies for the tax exemption on his wages.
If you have any questions related to this tax alert, or any general taxation questions, please feel free to contact Kristen Colston at kcolston@thewolfgroup.com or at 703-502-9500.
- The employee is not a citizen of the United States;
- The employee performs similar services to those performed by U.S. government employees abroad; and
- The employee’s government grants an equivalent exemption to U.S. government employees performing similar services in that country.
Until recently, the IRS had taken the position that foreign government employees could not qualify for the tax exemption provided by Section 893 until they received the above certification from the State Department. Earlier this year, the IRS lost a case related to this issue: Abdel-Fattah v. Commissioner of Internal Revenue. In that case, the Tax Court ruled that the State Department certification was not a prerequisite for the tax exemption, and that a foreign government employee’s wages are not subject to U.S. federal income tax if they meet the three requirements listed above.
In response to the Tax Court’s decision, the IRS recently released Action on Decision 2010-004, stating that it will no longer take the position that State Department certification is a prerequisite for the tax exemption. The burden of proof remains on the employee to show that he has met the above conditions and therefore qualifies for the tax exemption on his wages.
If you have any questions related to this tax alert, or any general taxation questions, please feel free to contact Kristen Colston at kcolston@thewolfgroup.com or at 703-502-9500.