In Washington, Senior House representatives are working together to create a draft proposal that could potentially raise $2.9 trillion to pay for most of President Biden’s expansion of the social safety net. They propose raising the corporate tax rate to 26.5 percent for the richest businesses and imposing an additional surtax on individuals who make more than $5 million. This plan is a critical step for advancing the $3.5 trillion package. While it is unclear if the entire House tax-writing committee supports the proposal, it suggests plans to undo key components of the 2017 Republican tax law. But the revenue provisions outlined fall short of fully financing the entire package the Democrats are putting together. People briefed on the details cautioned that the plan was still in flux. The committee is scheduled to convene to continue work on the legislation.

Infrastructure Bill outline highlights:

  • $1 trillion package passed on August 10th, which capped weeks of intense negations and debates over the largest federal investment in the nation’s public works system over more than a decade.
  • The final tally in the Senate was 69 for and 30 against. This legislation, which still must pass the House, would touch nearly every facet of the American economy, and fortify the nation’s response to the warming of the planet.
  • The bipartisan plan focuses spending on transportation, utilities, and pollution cleanup.
  • About $110 billion would go to roads, bridges, and other transportation projects; $25 billion for airports; and $66 billion for railways.
  • Senators have also included $65 billion meant to connect hard-to-reach rural communities to high-speed internet and help sign up low-income city dwellers who cannot afford it, and $8 billion for Western water infrastructure.
  • Roughly $21 billion would go to cleaning up abandoned wells and mines, and Superfund sites.

The proposal would raise the corporate tax rate to 26.5 percent from 21 percent for businesses that report more than $5 million in income. The corporate tax rate would be lowered to 18 percent for small businesses that make less than $400,000 and remain at 21 percent for all other businesses. While the president originally wanted to raise the corporate tax to 28 percent, both parties have resisted. To help raise the $900 billion from taxes on corporations, congress has suggested additional changes to the tax code to push the minimum taxes for corporate income as well as crack down on multinational companies shifting profits to tax havens.

Representatives are also considering an increase to the top marginal income tax rate to 39.6 percent from 37 percent for households that report taxable income over $450,000 and for unmarried individuals who report more than $400,000. As for those who make more than $5 million, the proposal would impose a 3 percent surtax, which is expected to raise $127 billion. It also increases the top tax rate for capital gains — the proceeds from selling an asset like a boat or stocks — to 25 percent from 20 percent. This would provide about $80 billion over the next decade for the IRS to beef up tax enforcement, which would raise about $200 billion.

While the draft outline adhered to Mr. Biden’s pledge to avoid raising taxes on Americans who make less than $400,000, it suggests increasing the tax rate for tobacco products and imposing a tax on other products that use nicotine. This would bring in an estimated $96 billion. The document also outlines the possible inclusion of drug pricing provisions and changes in tax rules to treat cryptocurrency the same as other financial instruments.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

Officials in some of the world’s largest cities want to tax the empty homes of the rich as policymakers struggle to control an affordable housing crunch. By 2022, Los Angeles is planning to put a vacant house tax on the ballot in the face of a mounting housing crisis. In Hong Kong, officials consider taxing condo developers to deter them from keeping new units. Barcelona has already threatened to seize empty apartments from landlords to convert them into affordable rentals. Back in 2017, Paris officials tripled the taxes on second homes.

Authorities are deciding to take drastic measures to not only discourage people from parking cash into homes instead of living in them but to also stop distortion of supply-and-demand metrics with properties off the market. Lawmakers say that trends are depleting inventory which makes it difficult for low-to middle-income renters and homebuyers. Lawmakers hope that taxes will fund affordable housing efforts or push landlords, as well as the wealthy, to put their properties on the market.

While in theory this change may make a difference, many aren’t convinced that it will work. Brendan Coates, economics policy program director at Think Tank Grattan Institute located in Melbourne, believes that it will be a distraction from the main issue. Many economists say factors such as record-low interest rates, population growth, an imbalance between supply and demand, as well as a lack of affordable housing construction have a much bigger impact. There are three main reasons why many economists believe that adding another tax won’t work.

  1. No Inventory. Vancouver implemented a vacancy tax of 1% of a property’s assessed value due to a rental market with near-zero inventory. While landlords in the city were able to convert more than 5,000 existing condominium units into long-term rentals, the actual number was not so impressive. Vancouver originally expected there to be more than 10,000 homes that were empty or “under-utilized. In practice, the city identified only 2,538 units that fit that description. That number fell by 25% over the next two years. There has been no notable improvement in the availability of condos for rent. This can be seen by the vacancy rate in the Vancouver metropolitan area, which was at 0.8% in 2020; 0.3% higher than in 2019. While the city had hoped the tax would push vacancy rates as high as 5%, any new stock was quickly absorbed.

  2. No enforcement. Looking at Melbourne, middle-class families are finding themselves priced out after a two-decade-long housing boom. Across Australia, the number of low-income households in rental stress has more than doubled in that time as well. Melbourne’s tax was meant to increase for-sale and rental inventory, but few have had to pony up. For 2019, Melbourne estimated a gain of A$80 million over the next four years. Officials soon realized that this was not going to happen after they had taxed 587 properties and only raised A$6.2 million. This was a huge disappointment to advocates. Karl Fitzgerald, director of research at Prosper Australia, had estimated there were 24,042 properties in Melbourne that consumed zero liters of water a day, meaning they couldn’t have been occupied, but only 587 properties were taxed. He now believes that taxing both land and property regardless of use each year might be a simpler way to discourage speculative buying and encourage developers and owners to make more properties available for use.

  3. Moral Optics. Los Angeles-based Strategic Actions for a Just Economy published a report last year arguing that the city should implement its own vacant-homes tax. Arguing that while the tax itself wouldn’t be enough to turn the situation around and taking into account that vacancy rates are higher for more expensive properties, such legislation would send an important message. For some cities, it’s not about money or redistribution, but the political and moral optics of not having more homes than you need while others struggle to even hold onto one. In Vancouver, tripling the tax from 1% to 3% since it launched sends an even stronger message that homes are for people, not speculation.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

As part of an unprecedented effort to recoup lost income-tax revenue, New York tax authorities are targeting individuals earning as little as $100,000 a year who claim to have left the state during the pandemic. Since the end of the filing season, thousands of notices from the New York Tax and Finance Department have landed in taxpayers’ mailboxes. Normally, it would take $1 million a year in income to trigger heightened scrutiny, but many people who are earning far less are receiving letters asking them to verify residency status and personal income allocation to determine whether they owe more to the state than claimed on their 2020 earnings. According to the state agency, their tax authorities have sent out more than 149,000 audit notices. This also includes computerized letters, or desk audits.

While New York is known to be an aggressive tax collector due to its history of relying on field audits of high-net-worth individuals, its latest enforcement efforts are highly unusual. This is due to New York tax authorities sending notices to clients with salaries between $100,000 and $300,000 a year within weeks of filing their state returns. The triggering events for such audits appear to be if a taxpayer indicated that they only lived in the state part of the year or allocated less income to New York than prior years.

Tax Enforcer. New York taxes the income of nonresidents if they work or perform services inside the state. This includes wages paid to a commuter who worked from home out of necessity during the pandemic. Some commuters, like those in neighboring New Jersey, will receive a credit on their New Jersey state income tax to avoid double taxation. Some have challenged that assertion, arguing that New York doesn’t have a right to tax income earned outside its borders.

Desk Audits. Tax experts say the pandemic has only accelerated an existing enforcement priority for the tax department over the last several months. Across the country, Americans fled dense major cities like New York during the height of the pandemic either to second homes or to temporarily live with family, while some left altogether to the suburbs in search of more space. Desk audits are computer-generated queries that are sent automatically to individual filers when the system picks up an anomaly in a tax return from prior years. A field audit consists of an individual auditor being assigned to deeply vet a taxpayer’s whereabouts for an entire tax year. In desk audits, taxpayers are being asked to fill out a non-resident questionnaire collecting preliminary information like when the individual last filed a state tax return, when they became a non-resident, and how many days they worked in New York.

$10,000 tax bill. Many have been surprised by these unexpected tax bills. Taxpayers have been receiving a $10,000 tax bill with their desk audit notice. This is because some believe that they can allocate a smaller percentage of income to New York compared to the previous year. Many taxpayers who are unable to prove their whereabouts are forced to pay state income tax even if they are a non-resident.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

Earlier this month, the IRS issued a safe harbor that allows employers to exclude certain amounts received from pandemic economic relief programs when determining whether they qualify for the Employee Retention Credit (ERC) based on a decline in gross receipts. Amounts that can be excluded from the calculation of gross receipts include:

  • Forgiveness of Paycheck Protection Program (PPP) loans
  • Shuttered Venue Operators Grants under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act
  • Restaurant Revitalization Fund grants under the American Rescue Plan

It is important to calculate gross receipts since an employer may be eligible for the ERC if the gross receipts for a calendar quarter declines by a certain percentage compared to a prior calendar quarter. While the amounts received from other pandemic relief programs above are excluded from an employer’s gross income, they have to be included in its gross receipts, unless safe harbor is used. According to the IRS, the safe harbor is needed because Congress intended that all employers could partake in the other relief programs while claiming the ERC. This is done by assuring that the same wage dollars are paid for or reimbursed with other relief program funds and are not treated as qualified wages for purposes of the ERC.

What is the safe harbor? The safe harbor allows employers to exclude other economic relief funds from their gross receipts to determine eligibility to claim the ERC for a calendar quarter. Employers may consistently apply this safe harbor if they:

  • Exclude the amount from its gross receipts for each calendar quarter in which gross receipts for that calendar quarter are relevant to determining eligibility to claim the ERC; and
  • Apply the safe harbor to all employers treated as a single employer under the ECR aggregation rules.

How do you elect the safe harbor? To do this, an employer must exclude the amounts received through relief programs listed above from its gross receipts when determining eligibility to claim the ERC on its employment tax return or adjusted employment tax return that calendar quarter. Employers may also file employment tax returns on an annual basis for the year including the calendar quarter.

The safe harbor is to be applied for the purposes of determining eligibility to claim the ERC for wages paid after March 12, 2020, and before January 2, 2022. Employers must retain records to support the credit claimed, including the use of the safe harbor. The safe harbor does not permit the exclusion of these amounts from gross receipts for any other federal tax purpose.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

Last week, two Senate members proposed an end to the prized tax break for the private-equity industry. Senate Finance Committee Chairman Ron Wyden and panel member Sheldon Whitehouse proposed a repeal to the carried interest tax break. This would prevent private equity fund managers from paying lower tax rates on their earnings compared to regular income. This bill also prohibits deferring tax payments on those earnings. According to an estimate made by the Joint Committee on taxation, requiring fund managers to pay taxes when they receive profits will raise about $63 billion over the next decade. While the American Families Plan did call for an end to carried interest, it fell short of eliminating an investor’s ability to delay paying taxes on the income. This means that the initial plan would have created about $14 billion over the next decade, according to an estimate from the congressional tax scorekeeper.

In addition to salaries, private equity managers rely on a share of the appreciation of the assets that they oversee, which can be in the millions of dollars. These gains have previously been taxed as capital gains, which is a much lower rate than the top marginal income tax rate applied to wages. Biden has proposed to raise the top income tax rate from the current 37% to 39.6%. Carried interest payments are being taxed at 20% under the current law.

The potential revenue totals are just a small portion of the up-to $3.5 trillion, but the issue represents a symbolic political win for lawmakers who say they want to raise taxes on the wealthiest Americans to make the Tax Code more equitable and lessen income disparities. Carried interest has been under attack from both parties for years. In 2017, the private equity industry successfully fought off major changes in the tax overhaul that year, when some legislators considered cutting the tax break to pay for reductions elsewhere. In the end, the GOP kept the carried-interest tax break intact but required that investors hold their investments for longer to get the benefit.

The Senate will soon begin debating a budget resolution that will serve as the framework to advance the Democrats’ economic agenda. The bill requires unanimous support from Democrats in Congress and will likely consume the legislative agenda in the fall.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

With the Biden administration and G-20 leaders agreeing on the need for more revenue, the U.S. and other countries are moving forward on increasing tax rates on multinational corporations. Earlier in July, G-20 leaders agreed on a plan to impose a minimum tax rate of 15% on corporations and to keep companies from shifting their profits to low-tax countries. Between the U.S. and international moves, companies are turning to tax experts for advice on how to minimize their taxes. New data released by the Organization for Economic Cooperation and Development (OECD) indicated that multinational corporations have continued to shift their profits to other countries despite record low tax rates.

Proposed changes from the Biden administration would reverse some of the provisions of the Tax Cuts and Jobs Act (TCJA) of 2017, increasing the 21% corporate tax rate. This could upend the careful tax planning that companies have been doing with their clients after passage of the TCJA. Doubling the Global Intangible Low-Taxed Income (GILTI) is not going to be viewed as an overly positive development for those who are subject to the rate.

What are the major changes that are in store for the US? While the bipartisan group of senators have struck a deal on the infrastructure plan, there are still others that oppose any tax increases. The administration hopes to move the infrastructure legislation on a parallel track with a $3.5 trillion budget resolution to fund what they call “human infrastructure.” After passage of the TCJA, the Treasury Department and the IRS needed to spend the next few years developing regulations to implement the various provisions of the 2017 tax overhaul. While the infrastructure plan at least seems to be making progress, the shape of the tax provisions in the larger budget bill remain uncertain. One of the offsets to help pay for the increased social spending was supposed to be increasing the IRS’s enforcement budget to pull in more tax revenue and close the tax gap but it was met with backlash.

Global minimum taxes. The latest moves by both the Biden administration and the OECD toward a global minimum corporate tax rate are just one element of a wider reaction against the overall lowering of rates. The OECD’s international tax reform discussions on base erosion and profit-shifting were underway long before the Biden administration added new momentum this year with its proposal for a global minimum tax rate. While the OECD timeline may seem ambitious, experts believe the proposals may be ratified and introduced within three years. Advocates for raising corporate tax rates are hoping the OECD and the G-20 will go even further in their negotiations. While the initial plan calls for a 15% minimum, advocates are hoping to get above a 20% minimum for global corporate taxes. Another important detail is having digital companies taxed if they operate in your territory. Countries that are benefiting from offering the lowest tax rates would need to sign off on the plans before all the proposals for a global minimum tax rate could work.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

After more than a year of the Paycheck Protection Program and legal challenges, the Small Business Administration (SBA) is dropping their request that larger borrowers provide supplemental financial information. Due to this change, it is easier for big borrowers to apply for PPP loan forgiveness. The SBA’s effort marks an about-face for the agency that landed in hot water after allowing publicly traded companies to access the program intended for small businesses. The SBA began informing lenders that it plans to eliminate the loan necessity review for PPP loans of $2 million or more. They said they will no longer request the loan necessity questionnaire for any PPP loan reviews as well. In October, the SBA asked lenders to provide loan necessity questionnaires for both for-profit and nonprofit PPP loan borrowers that had or exceeded $2 million. On the other hand, smaller businesses were only required to self-certify for potential need.

The questionnaire itself took a lot of time and energy for borrowers to fill out. It asks for a litany of supplemental financial information such as gross revenue, capital on hand, and a list of the highly paid executives. Not to mention it had questions regarding business operations and business activity. Many businesses worried that the information they were providing could fall into the public domain.

In April of 2020, the U.S. Treasury encouraged businesses with an alternative way to raise funding to return the money. It also encouraged companies to look deeply into if they need federal funds to guard against the economic uncertainty. The U.S. Treasury also added that a public company with substantial market value and access to capital markets would not meet the standards required for attaining a government-backed loan. The SBA also issued a final interim rule. This rule notes that hedge funds are not eligible for federal assistance through the PPP. The SBA alluded that private equity-backed companies would face a level of scrutiny like public companies when applying for a PPP loan.

Closer inspection of the bigger loans was thought to be useful for preventing companies that did not need emergency funding from tapping the PPP loans. It also served as a mechanism for weeding out publicly traded companies and other firms that have alternative funding.

After a year of the PPP, the SBA has helped in loaning over $780 billion in emergency funds to more than 8 million small businesses throughout the U.S.A. The SBA’s interests are to keep the forgiveness process streamlined and drama-free. Former director of the SBA’s office of capital access, Bill Briggs, said that the SBA is looking to further expedite the forgiveness process for borrowers and ease some administrative tasks that the agency is currently facing. In December of 2020, the Associated General Contractors (AGC) of America filed a lawsuit against the SBA, seeking to amend the loan necessity questionnaire to allow borrowers to provide additional context explaining the totality of their circumstances. The AGC notes in their complaint that the questionnaire does not ask borrowers to describe the status of their operations and the attendant business anxieties back in the spring. Instead, it focuses on what came after, over the ensuing months of 2020. This pushed the SBA’s information request outside their purview. The goal of this lawsuit was to achieve a more rational review of what borrowers in general knew and did not know at the time they applied for loans. They were also trying to persuade the SBA that economic uncertainty was a major factor.

Looking past what may have been the SBA’s reasoning behind the change, businesses should be looking to complete the next step and figuring out an action plan. Although businesses won’t need to file the supplemental form anymore, they may still need to provide financial documents of need. After receiving forgiveness, businesses won’t be “off the hook” either, they may be audited many years later. It is a good idea for businesses to hold onto financial documents relating to PPP loans for at least 6 years.

Talley’s professionals have spent hundreds of hours reviewing the law, regulations, and SBA PPP FAQs issued on an almost daily basis and we are happy to assist you in the process. We are available to simply answer a quick question or assist in the application and/or forgiveness audit process.

At the end of June 2021, the U.S. Supreme Court denied New Hampshire’s request to file a bill of complaint against Massachusetts regarding the taxation of remote workers during the pandemic. New Hampshire filed their motion for leave to file a bill of complaint in October of 2020 after Massachusetts issued a temporary emergency regulation that said workers who normally work in Massachusetts but who, because of the COVID-19 pandemic, were working in other states would still be required to pay Massachusetts income tax.

In its complaint, New Hampshire had said that Massachusetts unilaterally imposed an income tax within New Hampshire that New Hampshire, in its sovereign discretion, has deliberately chosen not to impose. New Hampshire argued that this rule was unconstitutional under the Commerce Clause and the Due Process Clause of the U.S. Constitution. They asked the Court to enjoin Massachusetts from enforcing the regulation and to require Massachusetts to refund the payments, plus interest, that it collected from nonresidents.

While The Supreme Court did not explain its decision not to take up the case, they did reply to New Hampshire’s motion. Massachusetts had argued that New Hampshire lacked standing to sue because it did not, as a state, suffer an injury, and that it did not state a viable Commerce Clause or due process claim. Massachusetts broadly described its regulation as maintaining the status quo.

In May, an amicus brief filed by the U.S Justice Department urged the Court to dismiss the case. This case was described as not an appropriate case for the exercise of this Court’s original jurisdiction because the issue could be litigated by New Hampshire residents who were subject to the Massachusetts income tax.

With so many employers struggling with tax compliance within their remote work policies, this major case could have cleared up issues between states and their tax policies that ultimately impact employers and workforce mobility. The decision to decline the case means that resolving these issues is now in the hands of individuals impacted by remote work taxes.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

While technologies like crypto and non-fungible tokens (NFTs) are designed to be invisible, the IRS is aware that money laundering is being carried out by some crypto users. It is leveraging data analytics technology and artificial intelligence to assist its overburdened staff. Jeff Tribiano, deputy commissioner for operations support at the IRS, believes that technology, data analytics, and artificial intelligence play a large part in the future of the work that the IRS is going to be doing. Although the crypto world has been changing rapidly, the IRS has been leveraging technology to keep up with it. The IRS is continuing to address how cryptocurrency relates to the dark web and is working with firms on the potential issue of tax evasion.

Global cooperation. IRS Criminal Investigation has been working with tax authorities in four other countries, Canada, the United Kingdom, Australia, and the Netherlands, through a group known as the J5 on tax cases involving cryptocurrency. Initially working with the Organization for Economic Cooperation and Development, the IRS was coming up with typologies and methodologies to help countries worldwide to address various emerging threats, and cryptocurrency was on that table. With the J5, they have taken it one step further as far as really addressing the non-compliance issues in cryptocurrency and professional enablers. Not only are they looking at cryptocurrency as an issue of digital currency, but they also have a platform where they’re looking at the technology so that countries can speak to each other.

Biden Administration proposals. In the Treasury Department’s Green Book, the Biden administration’s proposal for the IRS is to increase its tax enforcement budget to pull in more tax revenue, including requiring banks and other financial institutions to report more information about their customers’ accounts. The commissioner of the IRS’s Small Business/ Self-Employed Division, Eric Hylton, anticipates that more tax whistleblower claims will be filed relating to cryptocurrency, and the IRS will be able to trace these more with the help of tipsters. Hylton will be working with former IRS acting commissioner Steven Miller and former Senate Finance Committee senior counsel Dean Zerbe on research and development for tax credits, tax advisory services for digital currency, and whistleblower claims against taxpayers who aren’t reporting their cryptocurrency gains.

IRS Tech Hiring. Cryptocurrencies and NFTs are only one part of the IRS’s digital transformation challenge. The IRS is looking to hire more tech employees to help with that effort, thanks to the streamlined “critical pay authority” it was granted in the Taxpayer First Act of 2019 for technology upgrades. On top of that, the IRS is actively fighting against the increase in fraud and non-compliance brought about by COVID-19. The IRS is hoping to hire experts who can perform complex audits, investigations, and compliance checks on cryptocurrency using data analytics and other advanced technologies. IRS Criminal Investigation is increasing its use of artificial intelligence and data manipulation tools to find connections and patterns that wouldn’t necessarily be readily identified as a human being.

Like the IRS, business owners should be looking into leveraging data analytics and technology to help them make better data-driven decisions. The availability of useful information is constantly increasing, and many companies are changing how they look at their processes. By embracing real-time metrics and real-time forecasts, business owners will gain a greater understanding of how certain actions will affect their decisions.

From technology-based accounting solutions to management information, analysis, and reporting, Talley LLP is the premier business consulting firm for entrepreneurs and their closely-held businesses. For more information on how to leverage your business’s data technology, contact Talley today.

Let’s pretend for a second that the pandemic is a thing of the past and companies are keeping their promise of allowing remote work from anywhere in the world for a few months out of the year. Now, imagine a Londoner, a New Yorker, and a Hong Konger get together somewhere in Brazil. They all make the same $100,000 salary and have been approved to work remotely from Brazil for two months. Once they have finished business in Brazil and head home, who would owe the most in taxes?

That is the one question staff and employers have been trying to determine while discussing post-pandemic work arrangements. Although there is still a lot of uncertainty, the job market is tightening in many countries. Firms, startups in particular, are eager to entice new talent with remote-work options.

A decade ago, Uber, Facebook and Instagram were able to differentiate themselves from Wall Street firms by offering free lunches, kooky office setups, and casual dress codes. Now companies all around the world are formalizing and extending their COVID-era flexible work options; many with liberal limits on where employees can commute from and how long they are able to do it for. Many believe that this is a valuable lifestyle being offered that might be one of the only ways to hire good people.

Many companies are turning to outside firms to help with a remote workforce. These firms help with different human resource functions. Payroll startup Deel has seen a surge in demand within the last year for its services of managing staff abroad with a mixture of software, local accounting experts, and foreign exchange hedging. Work-from-anywhere policies present risks for staff and companies where governments are educating themselves with cross-border commutes and are in dire need of tax revenue. Many employees that work abroad, even for a few weeks, may find themselves liable for taxes overseas even though many countries have double-taxation agreements in place which avoid excess taxation. These policies, however, only apply to federal taxes, not city or state obligations that are common in the U.S or social-security liabilities common across Europe.

All things considered, the New Yorker may face the highest bill, while the Londoner may see no change. Although, this assumes that all three can fill out their Brazilian taxes on time and according to regulations. He also warns remote workers of the possibility of filling out multiple tax forms for different countries and losing benefits from tax treaties between jurisdictions.

It is estimated that the New Yorker would be paying $1,648 more than they would have if they stayed in New York. This is because Brazil’s flat tax rate of 25% for non-residents is higher than the U.S. federal tax rate of 24% and the state of New York, as well as New York City, does not provide tax relief for Brazilian liabilities. The Hong Konger may owe $1,334 for working two months in Brazil due to higher tax rates as well. Luckily for the Londoner, the 40% U.K. tax rate for their salary is higher than Brazil and the U.K. could provide full relief for the Brazilian taxes paid.

Talley’s team of tax professionals provide comprehensive tax compliance and consulting services so you can preserve, enhance, and pass on your assets and wealth to the next generation. We welcome the opportunity to discuss the current options available for you. For more information, contact us today.

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