Update from “Accounting Today” – June 4/18 – 11:00 p.m. EST:
RT Looks like many (but not all) #Ameriansabroad impacted by the Sec. 965 @USTransitionTax will NOT be required to make the June 15, 2018 first payment deadline. But, it is YOUR responsibility to read, understand and see how this applies to your situation! https://t.co/FuZ7ZRJbca pic.twitter.com/CmD3u84WxY
— U.S. Citizen Abroad (@USCitizenAbroad) June 4, 2018
I haven’t had time to really read and digest this Bulletin from U.S. Treasury.
You will have to read and draw your own conclusions, but it appears that paragraph 16 speaks to this issue:
Q16: If an individual fails to timely pay his or her first installment of tax due under section 965(h), will the IRS assess an addition to tax for failure to pay? Will the taxpayer’s requirement to pay all subsequent installments be accelerated under section 965(h)(3)?
A16: If an individual meets the criteria in this paragraph and pays the total amount of the first installment on or before the due date for the second installment, the IRS will not assess an addition to tax for failure to timely pay the first installment and will not accelerate subsequent installments under section 965(h)(3). An individual with a net tax liability under section 965 is required to report the liability on his or her tax return for the year in which or with which the inclusion year of the deferred foreign income corporation ends and pay the full amount of that liability on the unextended due date of that return, unless the individual elects to pay the liability in eight annual installments pursuant to section 965(h)(1). However, the IRS has determined that, if an individual’s net tax liability under section 965 in the individual’s 2017 taxable year is less than $1 million, the individual makes a timely election under section 965(h), and the individual did not pay the full amount of the first installment by the due date under section 965(h)(2), the failure to make the payment will not result in an acceleration event under section 965(h)(3) so long as the individual pays the full amount of the first installment (and its second installment) by the due date for its 2018 return (determined without regard to extensions). For this purpose, the relevant due date generally is April 15, 2019. In the case of United States citizens or residents whose tax homes and abodes, in a real and substantial sense, are outside the United States and Puerto Rico, and United States citizens and residents in military or naval service on duty, including non-permanent or short term duty, outside the United States and Puerto Rico, the relevant due date is June 17, 2019, which is provided by Treas. Reg. §1.6081-5(a)(5) and (6). Although the IRS will not assess an addition to tax for failure to timely pay the first installment, a taxpayer will be liable for interest on such amount from the due date of the installment. See I.R.C. §6601.
If the IRS sends a taxpayer a notice of an addition to tax for failure to timely pay the first installment, and the taxpayer meets all the conditions for relief described above (including making the required payment by the due date for the second installment due under section 965(h)), the taxpayer should contact the IRS office that issued the notice and request abatement of the addition to tax for failure to timely pay the first installment in accordance with the provisions in these FAQs.
Note that this does NOT apply to all people (appearing to give relief only to small businesses).
Some Dems trying to make GILTI even worse
Usual suspects in the cosponsors list: Lloyd Doggett, Eleanor Norton Holmes, and Janice Schakowsky, whose names have come up on Brock before
No chance of passing at present, of course, but who knows what happens after the midterms
@Eric – thanks for pointing that one out.
If they pass this, they ought to rename GILTI – it no longer has anything to do with intangible income. It’s essentially a minimum tax, applied on a country by country basis, for CFC income. And they did not fix the problems that arise when you apply this to local corporations owned by US citizens residing (and paying taxes) outside of the US.
Another CBC article mentioning BB http://www.cbc.ca/news/politics/trump-repatriation-gilti-tax-canadian-1.4703386 comments are open
Article in the National Law Review highly critical of IRS retaining overpayments and applying them against next instalment of transition tax.
“IRS Doubles Down on Retention of 2017 Overpayments to Satisfy Future Section 965 Installment Payments”
“If they pass this, they ought to rename GILTI”
The name should be left unchanged. It perfectly describes all three branches of the US government.