CPA and International Tax Attorney for Businesses
At Evolution Tax and Legal, our business tax lawyers specialize in helping small to midsize companies with international operations to reduce or eliminate U.S. tax bills, comply with IRS tax filing requirements, and avoid tax audits and penalties.
Our tax law services will cover all legal aspects for your business – from advice on tax planning or international estate planning to preparing and calculating your taxes, as well as the practicalities of fighting the IRS to reduce taxes due. No tax problem is too large for our law firm.
While our international business tax lawyers aim to serve all small and midsize businesses, our client base consists primarily of those within the manufacturing and distribution industry, tech industry, and the real estate industry. Each of these industries has individual and unique tax planning and compliance needs that must be met. If you are a business owner looking for sound legal advice from an experienced tax attorney and CPA, contact our law office today to schedule a free consultation.
Our Tax Services for Small and Medium-Sized Businesses
U.S. Federal Tax Return Preparation
Our Orange County tax attorneys have vast amounts of experience in preparing returns for businesses with international operations. Our client base spans the gamut of all U.S. tax entities, and generally includes C corporations, S corporations, and partnerships.
State Tax Return
In addition to preparing and calculating your federal taxes, we can and do advise you if you are required to file a state tax return. This generally depends on if you operate in a specific state and the level of operations in such state. Most small or medium-sized businesses with operations in a U.S. state will have a filing requirement in that state. However, we aid in the preparation of such returns and can even consult with you on how to potentially eliminate your filing requirements in some states.
Tax Planning Analysis and Implementation
Along with our tax preparation services, our Orange County business tax lawyers specialize in helping small- to medium-sized businesses mitigate their U.S. tax liability through our tax planning services. There are many techniques that can be used to do this, and it highly depends on each business’s individual fact pattern. We can take a deep dive into the workings of your organization to make recommendations as to how you can reduce or even eliminate taxes owed in the U.S. Additionally, we help our clients implement these strategies.
Federal and State Tax Audit Representation
In addition to providing normal tax planning and compliance solutions, we also represent businesses in tax audits spurred by the U.S. federal and state tax authorities. Most of our audits are in connection with the IRS, however, we also represent many businesses on audits brought upon by varying U.S. states, such as California.
Non-Filer or Delinquent Filers
For those businesses who did not know they were subject to U.S. tax reporting requirements and payments, or who have failed to timely prepare and file their businesses tax returns, there are many options to bring your business back into compliance with the U.S.
Generally the program we bring you through depends upon the level of “willfulness” behind the non-compliance. For a full discussion on these various programs offered by our business tax attorneys, please see our service page on U.S. and Foreign Disclosure Programs.
Prior Tax Return Reviews
Very often when we get a new client and review their prior business tax filings, we find numerous errors – almost always made against the client’s interests. This happens when a client self-prepared or the return was performed by a tax professional unfamiliar with the complexities of U.S. international taxation as it applies to businesses. This happens so frequently that we have established a service specifically dedicated to this. With our tax review done by an Orange County tax attorney experienced in business tax law, we’ll list the errors we find along with potential solutions for correcting complex tax issues. Additionally, if our attorneys find any errors, the fee paid for this service will be applied towards the cost of preparing an amended return.
Frequently Asked Questions on Business Taxes
Does my business have to report income earned overseas?
Yes. Every U.S. taxpayer reports their income to the IRS on a “worldwide basis.” This means that income earned, no matter the place earned, must be reported to the U.S. government. This is also true of both individuals and businesses alike.
What happens if my business owes tax to a foreign government?
If your business owes tax to a foreign government, you may be entitled to a credit against your U.S. tax liability for the year. This credit is better known as the “foreign tax credit”. A U.S. taxpayer is entitled to offset their U.S. tax liability by the amount of income tax they pay to a foreign country. The credit is available to both individuals and businesses, but is complex to calculate and subject to numerous limitations.
Do I have to pay tax on my foreign income in the U.S.?
Yes. All U.S. taxpayers report and pay tax on their “worldwide income.” This means, a U.S. taxpayer is obligated to report all income earned in the year, wherever so earned. This is the same for both individuals and businesses alike. You may, however, be entitled to special credits and exemptions for income earned overseas and which foreign income tax is paid on.
Are there special IRS forms I have to file to report my business’ foreign income?
Yes. If your business operates and holds assets overseas, you may be required to report one of the forms listed below. These are just the basic forms, so please contact a professional tax advisor for a detailed discussion on all your reporting obligations.
Report of Foreign Bank and Financial Accounts (FBAR). This form is required for U.S. taxpayers who hold foreign financial accounts with an aggregate max value of $10,000 or more in a given tax year. If required to file this form, the U.S. taxpayer must report specific details about all such foreign financial accounts such as the account number, bank name and address, max value of the account in the given year, etc.
Form 8938, Statement of Specified Foreign Financial Assets. Form 8938 is required to be reported by U.S. taxpayers who have an aggregate max value of certain foreign financial assets in a given year over a specified threshold. The nature of the reporting required by Form 8938 is similar in nature to that of the FBAR discussed above, but requires additional detail and reporting. The thresholds to report this form vary depending on whether the U.S. taxpayer resided in the U.S. or in a foreign country. You can find the reporting threshold on the IRS website here.
Form 1116, Foreign Tax Credit. Form 1116 is required to report the details of the foreign tax credit a U.S. taxpayer takes in a given year. Form 1116 requires the reporting of pertinent details about the calculation of the foreign tax credit taken. It requires the reporting of certain items such as total income, foreign source income, the amount of foreign income tax paid in a given year, etc.
Form 2555, Foreign Earned Income. Form 2555 is required for those U.S. taxpayers electing to take the “foreign earned income exclusion” (FEIE) in a given year. The FEIE allows U.S. taxpayers, residing and earning income abroad of the U.S., to “exclude” some of their foreign earned income from U.S. taxation.
Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations. Form 5471 is required to be reported by U.S. taxpayers who are officers, directors, or shareholders in certain foreign corporations. There are five categories of filers, each category of which has its own certain reporting requirements.
Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. Form 8865 is required to report the activity of controlled foreign partnerships, transfers to foreign partnerships, or acquisitions, dispositions, and changes in foreign partnership interests. Similar to Form 5471, Form 8865 has various categories of filers, each of which has its own specific set of reporting requirements.
How can my business take advantage of tax treaties?
The United States has a network of tax treaties they entered with foreign countries to help avoid the incidence of double taxation on income of persons transacting amongst the two countries. Treaties dictate how income earned and reported by the two countries will be reported and which country has jurisdiction over taxing certain types of income earned. The tax treaty calls out protections for certain types of persons and income earned, which can be claimed on the return of a person filing a U.S. tax return.
For U.S. purposes, the claiming of these tax treaty benefits is completed on Form 8833, Treaty-Based Return Position Disclosure. This form is required to report the treaty benefits claimed and how they are reported on your U.S. tax filing for the year.
Is there a way to lower my tax on foreign income?
Yes. There are various credits and exemptions granted to U.S. taxpayers on foreign income earned in a given year. These are granted in various forms. First, the U.S. provides a credit for foreign income tax paid to a foreign country.
Second, the U.S. provides an exemption for certain foreign earned income in a given year for those U.S. taxpayers living and earning income abroad.
Finally, the U.S. has entered a large network of tax treaties between various foreign countries that are aimed at lowering the incidence of dual taxation on income earned between the two countries.
This, of course, is a non-exhaustive list of the potential options out there for a U.S. taxpayer to utilize when filing their taxes for a given year. An Orange County business tax attorney should be consulted to properly inform you of all of your options. Contact our law firm to learn more.
What happens if my business owns a foreign company?
If your business owns a foreign company, you may have special reporting obligations and will be taxable on certain types of income earned by the foreign company. Generally, this depends on the level of your business’s overall ownership of the foreign company and the specific type of income earned by the foreign company.
You may owe tax on the income earned by the foreign company your business owns. You should consult a business tax lawyer in Orange County to discuss your options.
Are there any special tax credits or exemptions for my business’ foreign income?
U.S. businesses are entitled to various credits and exemption with respect to foreign income. Two of the most popular are the Foreign Tax Credit (FTC) and the Foreign Earned Income Exemption (FEIE). The FTC provides U.S. taxpayers a dollar-for-dollar tax credit against their U.S. tax liability for foreign income tax paid to foreign countries. The FEIE allows U.S. taxpayers who reside and earn income abroad to “exclude” foreign earned income from U.S. taxation, subject to certain limitations.
Is my business entitled to deductions for expenses paid overseas?
Yes. Just as a U.S. taxpayer is required to report their worldwide income, a U.S. taxpayer is associated to a deduction on expenses associated with such income reported. This means that you are entitled to deduct expenses incurred in a foreign country, so long as they comply with the normal requirements of the Internal Revenue Code to be otherwise deductible.
What happens if my company has foreign owners?
If your U.S. business has foreign owners, you may have special reporting and withholding requirements. For example, IRS Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, is required to report a foreign owner’s interest in corporations engaged in a U.S. trade or business who owns more than 25% of such corporation. Additionally, Forms 1042, 1042-S, and 1042-T are forms required to be filed to report payments to foreign persons, including non-resident aliens, foreign partnerships, foreign corporations, foreign estates, and foreign trusts. If a U.S. business has a foreign owner, and payments are made to said owner, Forms 1042, 1042-S, and 1042-T may be required to be filed to report required amounts withheld from such payment(s).
Contact Our Orange County Business Tax Attorney
Whether you’re a business owner of a limited liability company inquiring about a potential acquisition of another business entity, or a concerned taxpayer who needs assistance preparing for an IRS audit, a dually-licensed CPA and tax lawyer at Evolution Tax and Legal can provide aggressive legal representation no matter your tax issue or business structure.
Our firm is are conveniently located in Irvine, CA. To schedule a free consultation to discuss your tax law legal issue, give us a call at (949) 229-6015 or contact us online.