International Tax Collection Juggernaut Of US Rolls On - Law Firm Note

Tom Burroughes

16 November 2017

A unit of the US Internal Revenue Service focusing on large firms and foreign affairs has set up 11 new compliance campaigns, many of them affecting US expats, adding to the 13 programs already announced at the start of this year.

As explained in a briefing note to clients by international law firm Baker & Mckenzie, the IRS’s Large Business and International Division’s latest campaigns will directly impact US-resident individuals and corporations with international tax issues, and some will impact non-US corporations, including financial institutions, with US tax and reporting obligations.

Under its system of worldwide tax collection, the US can impose tax reporting and payment obligations on US citizens and Green Card holders across the globe, contrasting with the territorial system used by most other nations. Controversy over whether the US system discourages citizens from working and running businesses abroad has led some American groups to lobby for change, as reported here recently.

The B&M note pointed out that among the campaign issues flagged by the IRS recently are the Swiss Bank Program Campaign ; the Foreign Earned Income Exclusion Campaign; a program around Verification of Form 1042-S Credit Claimed on 1040NR forms , Individual Foreign Tax Credit .

A number of other campaigns are aimed at corporations, including non-US financial organizations and intermediaries, as in the case of enforcing US extra-territorial FATCA rules.