February 2021 / United States

17 Febbraio 2021

Congressional Research Service Explains US Law for Trade Sanctions

The Congressional Research Service (CRS) of the US Library of Congress has released a report that explains the statutory basis for US trade sanctions on foreign countries that violate US trade agreements or unjustifiably burden US commerce.

The CRS report, updated 16 February 2021, is entitled "Section 301 of the Trade Act of 1974". The CRS report is designated IF11346 (Version 10).

Section 301 of the Trade Act of 1974 (19 USC section 2411) grants the Office of the US Trade Representative (USTR) a range of responsibilities and authorities to investigate and take action to enforce US rights under trade agreements and respond to certain foreign trade practices.

According to the CRS report, there have been 130 cases under section 301 since the law's enactment in 1974. The cases have primarily targeted the European Union (EU), concerning mostly agricultural trade. The EU is followed by Canada, Japan and South Korea. During the Trump Administration, the USTR initiated six new investigations, two of which have resulted in the imposition of tariffs on US imports from China and the EU.

The CRS report states that Congress could consider:

  • amending section 301 to require greater consultation or approval before a president takes new trade actions; and
  • requesting an economic impact study of how such actions may affect the US economy, global supply chains and the multilateral trade system.

Note: The CRS is an agency within the US Library of Congress and serves the US Congress throughout the legislative process by providing legislative research and analysis for an informed national legislature.

1 Febbraio 2021

CBP Issues Region-Wide Withhold Release Order on Products Made by Slave Labor in Xinjiang

WASHINGTON — Effective January 13 at all U.S. ports of entry, U.S. Customs and Border Protection (CBP) will detain cotton products and tomato products produced in China’s Xinjiang Uyghur Autonomous Region.

CBP issued a Withhold Release Order (WRO) against cotton products and tomato products produced in Xinjiang based on information that reasonably indicates the use of detainee or prison labor and situations of forced labor. The agency identified the following forced labor indicators through the course of its investigation: debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.

“DHS will not tolerate forced labor of any kind in U.S. supply chains. We will continue to protect the American people and investigate credible allegations of forced labor, we will prevent goods made by forced labor from entering our country, and we demand the Chinese close their camps and stop their human rights violations,” said Acting DHS Deputy Secretary Ken Cuccinelli.

“CBP will not tolerate the Chinese government’s exploitation of modern slavery to import goods into the United States below fair market value,” said CBP Acting Commissioner Mark A. Morgan. “Imports made on the cheap by using forced labor hurt American businesses that respect human rights and also expose unsuspecting consumers to unethical purchases.”

The WRO was issued against cotton and tomatoes and their downstream products produced in whole or in part in the Xinjiang region, and includes downstream products produced outside the Xinjiang region that incorporate these inputs. These products include apparel, textiles, tomato seeds, canned tomatoes, tomato sauce, and other goods made with cotton and tomatoes. Importers are responsible for ensuring the products they are attempting to import do not exploit forced labor at any point in their supply chain, including the production or harvesting of the raw material.

In July 2020, the U.S. Government issued an advisory to caution businesses about the reputational, financial, and legal risks of forced labor in Xinjiang, where the Chinese government continues to execute a campaign of repression targeting the Uyghur people and other ethnic and religious minority groups. On December 2, 2020, CBP announced the issuance of a WRO on cotton and cotton products originating from the Xinjiang Production and Construction Corps, an economic and paramilitary organization subordinate to the Chinese Communist Party.

This is the fourth WRO that CBP has issued since the beginning of Fiscal Year 2021, and the second on products originating in Xinjiang. Eight of the 13 WRO that CBP issued in Fiscal Year 2020 were on goods made by forced labor in China. All WROs are publicly available and listed by country on CBP’s Forced Labor WROs and Findings webpage.

Federal statute 19 U.S.C. 1307 prohibits the importation of merchandise produced, wholly or in part, by convict labor, forced labor, and/or indentured labor, including forced or indentured child labor. CBP detains shipments of goods suspected of being imported in violation of this statute. Importers of detained shipments have the opportunity to export their shipments or demonstrate that the merchandise was not produced with forced labor.

CBP enforces the prohibition on importing goods made by forced labor. Any person or organization that has reason to believe merchandise produced with the use of forced labor is being, or likely to be, imported into the United States can report detailed allegations by contacting CBP through the e-Allegations Online Trade Violation Reporting System or by calling 1-800-BE-ALERT.

12 Febbraio 2021

US Grand Jury Indicts US Individual for Tax Evasion and Failure to Report Foreign Bank Accounts

The US Department of Justice (DOJ) has announced that a US federal grand jury indicted (i.e. charged) a US individual with tax evasion and failure to file Reports of Foreign Bank and Financial Accounts (FBARs), among other offenses. The announcement was made in a DOJ News Release dated 10 February 2021.

According to the News Release, the US individual allegedly:

  • failed to disclose her interest in a Swiss bank account on annual FBARs for calendar years 2012 through 2014;
  • evaded assessment of income taxes on the interest and dividend income that she earned in her Swiss bank account for tax years 2011 through 2014; and
  • failed to file income tax returns for tax years 2011 through 2014.

If convicted, the US individual faces a maximum sentence of five years in prison for each count relating to her failure to file an FBAR and tax evasion. She also faces a maximum sentence of one year in prison for each count concerning the failure to file tax returns.

19 Febbraio 2021

IRS Reminds Taxpayers to Report Gig Economy Income on Tax Returns

The US Internal Revenue Service (IRS) has issued a reminder that taxpayers must report gig economy income on their tax returns (COVID Tax Tip 2021-21, 18 February 2021).

The gig economy is also referred to as the on-demand, sharing or access economy. This includes renting out a home or spare bedroom and providing delivery services.

People working in the gig economy are generally required to pay:

  • income taxes;
  • social security taxes (Federal Insurance Contribution Act or Self-employment Contribution Act taxes); and
  • additional Medicare taxes.

Gig economy income is taxable regardless of whether the activity is only part-time, side work, or a primary source of income, or even if the taxpayer is paid in cash.

Independent contractors may be able to deduct business expenses related to the use of things like their car or house provided they keep records of their business expenses.