U.S./Germany Arbitration of Tax Disputes
The competent authorities of the U.S. and Germany recently signed an arrangement to provide guidance for operating the arbitration procedure that went into force on December 28, 2007. Additionally, the competent authorities prepared guidelines for operating the three-person arbitration boards. Refer to Mandatory Tax Treaty Arbitration.
IRS Focus on Foreign Athletes and Entertainers
IRS has launched a cross-functional Issue Management Team using a three-pronged approach directed towards foreign athletes and entertainers.
IRS Issues Regulations on Transactions Designed to Artificially Generate Foreign Tax Credits
The IRS and Treasury Department announced the release of proposed regulations that would disallow foreign tax credits for foreign taxes purportedly paid in connection with certain artificially engineered, highly structured transactions.
Termination of Estate and Gift Tax Treaty With Sweden
June 15, 2007 The Treasury Department announced that on June 7, 2007 the United States delivered to the Government of Sweden a notice of termination of the tax treaty between the two countries with respect to estates, inheritances, and gifts. In accordance with the provisions of the treaty, the notice of termination provides that the treaty will cease to have effect as of January 1, 2008. At the time the treaty was signed, Sweden maintained a tax on inheritances and gifts. Sweden has since abolished this tax such that the treaty is no longer needed to prevent double taxation with respect to taxes on estates, inheritances and gifts.
New Protocols With France Enter Into Force
December 21, 2006. The Treasury Department welcomed the entry into force of protocols to the income tax and estate tax treaties between the United States and France. The protocols were signed in December 2004, and amend the existing income tax treaty concluded in 1994 and the existing estate tax treaty concluded in 1978.
New Income Tax Treaty With Bangladesh
The Treasury Department announced that Deputy Treasury Secretary Robert M. Kimmitt and Finance Minister of the People's Republic of Bangladesh Md. Saifur Rahman exchanged instruments of ratification for the U.S.-Bangladesh Income Tax Convention on August 7, 2006. This exchange of instruments brings the tax treaty into force. With the entry into force of the protocol on August 7, 2006, the protocol generally will be effective for taxable periods beginning on or after January 1, 2007. The provisions of the protocol relating to withholding taxes will be effective for amounts paid or credited on or after October 1, 2006.
IRS Announces New Online Payment Option for U.S. Residency Certification Fees
Beginning April 2, taxpayers who pay U.S. Residency Certification Fees will be able to pay them online.
Treasury Issues New Versions of the U.S. Model Income Tax Convention and Model Technical Explanation
The Treasury Department has issued new versions of the U.S. Model Income Tax Convention and Model Technical Explanation.
Changes in the Foreign Earned Income Exclusion
For tax year 2008 the maximum amount of the Foreign Earned Income Exclusion under section 911 of the Internal Revenue Code has been increased to $87,600. In addition, Section 515 of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) amends the computation of the Maximum Housing Amount Exclusion under Section 911 of the Code (Refer to Notice 2007-25). In addition, the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222) adds a new section 911(f) to the Internal Revenue Code which changes the computation of the income tax liability of an individual who has claimed the Foreign Earned Income Exclusion. Refer to the 2006 edition of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad for details.
Notice 2006-87 - Determination of housing cost amount eligible for exclusion or deduction (PDF)
This notice provides adjustments to the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations, on the basis of geographic differences in housing costs relative to housing costs in the United States. Note: The IRS has revised the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations, on the basis of geographic differences in housing costs relative to housing costs in the United States. Refer to Notice 2007-25 (PDF) for certain modifications and additions to the adjusted limitations on housing expenses published in Notice 2006-87.
Notice 2007-25 – Revised foreign housing cost amounts eligible for exclusion or deduction (PDF)
The IRS has revised the limitation on housing expenses for purposes of section 911 of the Internal Revenue Code (Code) for specific locations, on the basis of geographic differences in housing costs relative to housing costs in the United States. This notice provides certain modifications and additions to the adjusted limitations on housing expenses published in Notice 2006-87 (PDF).
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