September 2021 / United States

28 Settembre 2021

United States – IRS Updates Countries on Tax Data Exchange List

The IRS has provided (Rev. Proc. 2021-32) the list of countries to which the interest reporting requirement in reg. section 1.6049-4(b)(5) and 1.6049-8(a) applies. Also listed are countries with which Treasury and the IRS have determined that it is appropriate to have an automatic exchange relationship regarding the information collected under the regulation.

SECTION 1. PURPOSE

This revenue procedure provides a list of the jurisdictions with which the United States has in effect a relevant information exchange agreement such that the reporting requirement of §§ 1.6049-4(b)(5) and 1.6049-8(a) of the Income Tax Regulations may apply with respect to certain deposit interest paid to residents of such jurisdictions. This revenue procedure also provides a list of the jurisdictions with which the Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) have determined that it is appropriate to have an automatic exchange relationship with respect to the information collected under §§ 1.6049-4(b)(5) and 1.6049-8(a). These lists are updated and restated versions of those set forth in Rev. Proc. 2020-15, 2020-23 I.R.B. 905. Chile has been added in Section 3 of this revenue procedure to the list of jurisdictions with which the United States has in effect a relevant information exchange agreement. The Dominican Republic and Singapore have been added in Section 4 of this revenue procedure to the list of jurisdictions with which the Treasury Department and the IRS have determined that it is appropriate to have an automatic exchange relationship.

SECTION 2. BACKGROUND

Sections 1.6049-4(b)(5) and 1.6049-8(a), as revised by TD 9584, 2012-20 I.R.B. 900, require the reporting of certain deposit interest paid to nonresident alien individuals on or after January 1, 2013. Section 1.6049-4(b)(5) provides that in the case of interest aggregating $10 or more paid to a nonresident alien individual (as defined in section 7701(b)(1)(B)) that is reportable under § 1.6049-8(a), the payor is required to make an information return on Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, for the calendar year in which the interest is paid. Interest that is reportable under § 1.6049-8(a) is interest described in section 871(i)(2)(A) that relates to a deposit maintained at an office within the United States. The regulations also provide that such deposit interest is reportable only if paid to a resident of a jurisdiction that is identified as a jurisdiction with which the United States has in effect an income tax or other convention or bilateral agreement relating to the exchange of tax information within the meaning of section 6103(k)(4), under which the competent authority is the Secretary of the Treasury or the Secretary's delegate and the United States agrees to provide, as well as receive, information. Finally, the regulations provide that jurisdictions are so identified in an applicable revenue procedure (see § 601.601(d)(2)) as of December 31 before the calendar year in which the interest is paid. The preamble to the regulations (at 2012-20 I.R.B. 901-02) notes that the IRS will not exchange information with another jurisdiction, even if an information exchange agreement is in effect, if there are concerns about confidentiality, safeguarding of data exchanged, the use of the information, or other factors that would make the exchange of information inappropriate. Rev. Proc. 2012-24, 2012-20 I.R.B. 913, was published contemporaneously with the publication of TD 9584 to provide a list of those jurisdictions with which the United States has in effect an information exchange agreement, such that interest paid to residents of such jurisdictions must be reported by payors to the extent required under §§ 1.6049-4(b)(5) and 1.6049-8(a), and to provide a separate list identifying those jurisdictions with which the automatic exchange of the information collected under the regulations has been determined by the Treasury Department and the IRS to be appropriate. Before issuance of this Rev. Proc. 2021-32, the most current versions of those lists were set forth in Rev. Proc. 2020-15.

SECTION 3. JURISDICTIONS OF RESIDENCE WITH RESPECT TO WHICH THE DEPOSIT INTEREST REPORTING REQUIREMENT APPLIES

The following are the jurisdictions with which the United States has in effect an income tax or other convention or bilateral agreement relating to the exchange of tax information within the meaning of section 6103(k)(4) pursuant to which the United States agrees to provide, as well as receive, information and under which the competent authority is the Secretary of the Treasury or the Secretary's delegate:
Jurisdiction Rev. Proc. First Identifying Jurisdiction
Antigua & Barbuda 2012-24
Argentina 2018-36
Aruba 2012-24
Australia 2012-24
Austria 2012-24
Azerbaijan 2012-24
Bangladesh 2012-24
Barbados 2012-24
Belgium 2012-24
Bermuda 2012-24
Brazil 2014-64
British Virgin Islands 2012-24
Bulgaria 2012-24
Canada 2012-24
Cayman Islands 2014-64
Chile 2021-32
China 2012-24
Colombia 2014-64
Costa Rica 2012-24
Croatia 2014-64
Curaçao 2014-64
Cyprus 2012-24
Czech Republic 2012-24
Denmark 2012-24
Dominica 2012-24
Dominican Republic 2012-24
Egypt 2012-24
Estonia 2012-24
Faroe Islands 2017-46
Finland 2012-24
France 2012-24
Georgia 2019-23
Germany 2012-24
Gibraltar 2012-24
Greece 2012-24
Greenland 2017-46
Grenada 2012-24
Guernsey 2012-24
Guyana 2012-24
Honduras 2012-24
Hong Kong 2014-64
Hungary 2012-24
Iceland 2012-24
India 2012-24
Indonesia 2012-24
Ireland 2012-24
Isle of Man 2012-24
Israel 2012-24
Italy 2012-24
Jamaica 2012-24
Japan 2012-24
Jersey 2012-24
Kazakhstan 2012-24
Korea, Republic of 2012-24
Latvia 2012-24
Liechtenstein 2012-24
Lithuania 2012-24
Luxembourg 2012-24
Malta 2012-24
Marshall Islands 2012-24
Mauritius 2014-64
Mexico 2012-64
Moldova 2018-36
Monaco 2012-24
Morocco 2012-24
Netherlands 2012-24
Netherlands special municipalities: Bonaire, Sint Eustatius, and Saba 2012-24
New Zealand 2012-24
Norway 2012-24
Pakistan 2012-24
Panama 2012-24
Peru 2012-24
Philippines 2012-24
Poland 2012-24
Portugal 2012-24
Romania 2012-24
Russian Federation 2012-24
Saint Lucia 2016-56
Singapore 2020-15
Sint Maarten 2014-64
Slovak Republic 2012-24
Slovenia 2012-24
South Africa 2012-24
Spain 2012-24
Sri Lanka 2012-24
Sweden 2012-24
Switzerland 2012-24
Thailand 2012-24
Trinidad and Tobago 2012-24
Tunisia 2012-24
Turkey 2012-24
Ukraine 2012-24
United Kingdom 2012-24
Venezuela 2012-24

SECTION 4. JURISDICTIONS WITH WHICH THE TREASURY DEPARTMENT AND THE IRS HAVE DETERMINED THAT AUTOMATIC EXCHANGE OF DEPOSIT INTEREST INFORMATION IS APPROPRIATE

The following list identifies the jurisdictions with which the automatic exchange of the information collected under §§ 1.6049-4(b)(5) and 1.6049-8 has been determined by the Treasury Department and the IRS to be appropriate:
Jurisdiction Rev. Proc. First Memorializing Determination on Automatic Exchange with Jurisdiction
Australia 2014-64
Azerbaijan 2016-18
Belgium 2017-31
Brazil 2015-50
Canada 2012-24
Colombia 2017-31
Croatia 2017-46
Curaçao 2019-23
Cyprus 2019-23
Czech Republic 2015-50
Denmark 2014-64
Dominican Republic 2021-32
Estonia 2015-50
Finland 2014-64
France 2014-64
Germany 2014-64
Gibraltar 2015-50
Greece 2018-36
Guernsey 2014-64
Hungary 2015-50
Iceland 2015-50
India 2015-50
Ireland 2014-64
Isle of Man 2014-64
Israel 2016-56
Italy 2014-64
Jamaica 2016-18
Jersey 2014-64
Korea, Republic of 2016-56
Latvia 2015-50
Liechtenstein 2015-50
Lithuania 2015-50
Luxembourg 2015-50
Malta 2014-64
Mauritius 2014-64
Mexico 2014-64
Netherlands 2014-64
New Zealand 2015-50
Norway 2014-64
Panama 2017-46
Poland 2015-50
Portugal 2017-31
Saint Lucia 2016-56
Singapore 2021-32
Slovak Republic 2016-18
Slovenia 2015-50
South Africa 2015-50
Spain 2014-64
Sweden 2015-50
United Kingdom 2014-64
SECTION 5. EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2020-15 is superseded.

SECTION 6. EFFECTIVE DATES

For purposes of the reporting requirement of § 1.6049-4(b)(5), the list of jurisdictions in Section 3 of this revenue procedure is effective: (i) with respect to Chile, for interest paid on or after January 1, 2022; and (ii) with respect to each other listed jurisdiction, for interest paid on or after January 1 of the calendar year following the issuance of the revenue procedure (as cited in Section 3) first identifying the jurisdiction as having in effect an agreement with the United States as described in § 1.6049-8(a). The list of jurisdictions in Section 4 of this revenue procedure is effective from the date of issuance of this revenue procedure with respect to information reported to the IRS pursuant to §§ 1.6049-4(b)(5) and 1.6049-8(a) for any tax year for which the jurisdiction was included in the list in Section 3. The revenue procedure citations in the Section 4 list are included for historical reference.
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6 Settembre 2021

Has US Government Had Change of Heart on Cryptocurrencies?

The US government may no longer treat cryptocurrency as property in certain situations. What one thought was a well-established principle is not so sacrosanct. The US Internal Revenue Service (IRS) has previously issued announcements stating quite clearly that cryptocurrencies are property. This treatment was based on IRS Notice 2014-21 and Revenue Ruling 2019-24. These announcements were quite clear that cryptocurrencies are deemed property and not foreign currency. For example, under IRS Notice 2014-21, using a questions-and-answers format, the IRS stated the following:
  1. How is virtual currency treated for federal tax purposes?
  2. For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.
  3. Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under US federal tax laws?
  4. No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for US federal tax purposes.
Fast forward to 27 August 2021, the Department of Justice (DOJ) filed a formal answer to a complaint from taxpayers in the US District Court for the Middle District of Tennessee, Nashville Division (Joshua Jarrett; Jessica Jarrett v. United States of America, Case No. 3:21-cv-00419). In their complaint, the Jarretts are seeking a tax refund on their digital tokens they generated. The surprise took place when the DOJ, in responding to the Jarretts' complaint, argued that the United States does not agree that virtual currency in all instances is deemed property for the purpose of US federal tax law. The tax implications would be significant as property is generally treated with capital treatment under section 1221 of the US Internal Revenue Code (IRC) and foreign currencies, ordinary treatment under IRC section 988. As the case heads towards litigation, more details on the DOJ's position will be delineated.
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7 Settembre 2021

Why the United States Needs a 21% Minimum Tax on Corporate Foreign Earnings

The President’s Made in America Tax Plan provides a framework to raise revenues in order to rebuild our infrastructure and to make critical investments in education, research, and clean energy, all of which help the United States remain the best place in the world to do business. The plan would not just generate funding to pay for a sustained increase in investments, but it would do so in a way that makes good policy sense. Importantly, it would fix a broken international tax system that rewards corporations for offshoring jobs and shifting profits overseas.

Under current law, U.S. multinational corporations face only a 10.5% minimum tax on their foreign earnings, half the rate that they pay on their domestic earnings, incentivizing them to operate and shift profits abroad. That rate is also far less than small businesses pay on Main Street - which earn all of their profits at home - or the tax rates faced by workers - who bear an increasing share of the tax burden as the corporate burden dwindles.

The Made in America Tax Plan would increase the minimum tax on corporate foreign earnings to 21%, reducing a corporation’s incentives to shift profits and jobs abroad. This policy would bring fairness to the working and middle classes not only through the programs it funds but by creating a more level playing field so that jobs and investment can flourish in the United States. Under current law, companies have large tax incentives to put activities and earnings offshore; a strong minimum tax can reduce that tax distortion, favoring activity and earnings at home.

Corporations have defended a lower rate on foreign income by arguing that their foreign competitors often pay 0% on their foreign earnings; in other words, they argue that U.S. corporations should pay less than American working people in the name of “competitiveness.” Regardless of what the U.S. corporate rate has been in recent decades, whether 35 percent (pre-2017) or 21 percent since then, U.S. corporations have been the most profitable in the world, advantaged by a large market, strong institutions, and a well-educated work force. Future investments in climate change mitigation, education, infrastructure, and research and development - funded by these tax changes – will maintain that standing and will only make the competitive position of U.S. corporations stronger.

Further, in a generational achievement, 134 countries, representing more than 90% of the world’s GDP, have agreed to rewrite the international tax rules to impose a global minimum tax on corporate foreign earnings, thereby ending the race to the bottom that has starved nations of revenues. In the realm of tax competition, no country wins and working and middle class people around the world lose.

Global Decline in Corporate Tax Rates

Importantly, the global minimum tax will function as a floor, not a ceiling, and will therefore allow nations to calibrate the precise rate to their specific country’s needs. The United States must and can act boldly here, leading the way with a 21% minimum tax on the foreign earnings of U.S. corporations. With a global minimum tax now on the horizon, U.S. corporations will be more competitive than they ever were before, as foreign corporations will face minimum tax rates almost worldwide. Importantly, the agreement includes enforcement provisions that encourage countries to join by imposing unfavorable tax treatment on companies based in recalcitrant countries. And with the establishment of a level playing field, the global minimum tax deal creates reliable revenues going forward, benefitting generations to come.

Current Global and U.S. Minimum Rates on Corporate Foreign Earnings

As Congress begins to finalize its legislation, Secretary Yellen has urged its Members to remember the historic opportunity that we have to end the race to the bottom. We can have a tax code that both works for the middle class and furthers the competitiveness of U.S.-based multinationals. Embracing a strong minimum tax at 21 percent is in the national interest and will also further our international efforts toward reducing the pressures of tax competition.

Source: US Department of the Treasury

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2 Settembre 2021

IRS Issues Fact Sheet on E-Signatures

The US Internal Revenue Service (IRS) has issued a Fact Sheet (FS-2021-12) with an overview about using electronic or digital signatures on certain IRS forms. The Fact Sheet was last reviewed or updated on 1 September 2021.

An electronic signature is a way to get approval on electronic documents. The IRS will accept a wide range of electronic signature methods, including:

  • a typed name typed on a signature block;
  • scanned or digitized image of a handwritten signature that is attached to an electronic record;
  • a handwritten signature input onto an electronic signature pad;
  • a handwritten signature, mark or command input on a display screen with a stylus device; and
  • a signature created by a third-party software.

The IRS does not specify what technology a taxpayer must use to capture an electronic signature. The IRS will accept images of signatures (scanned or photographed) including common file types such as tiff, jpg, jpeg, pdf, Microsoft Office suite or Zip.

The IRS allows taxpayers and their representatives to use electronic signatures on certain paper forms, which they cannot file using IRS e-file. The Fact Sheet includes a list of those forms. The forms are available on the IRS's webpage under the heading of "Forms, Instructions & Publications."

The Fact Sheet notes that the IRS is balancing the electronic signature option with critical security and protection needed against identity theft and fraud.

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