International Tax Considerations for Nonprofits

In the current climate, global expansion is a common route for nonprofit organizations if they wish to continue expanding and achieving their exempt purpose with a broader impact. And while COVID-19 has made this process easier in some respects (more remote technology and online processes), the U.S. tax law that relates to nonprofits with international operations and investments hasn’t changed or evolved during the pandemic.

As such, it’s essential to be aware of the legal matters, reporting requirements, and risks associated with operating internationally. Understanding the U.S. filing obligations associated with international activities is necessary to know because the penalties can be quite large for missed filings.

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2017 FBAR Update: Deadline Changes and Refresher for Individuals, Entities, and Nonprofits

By Jennifer Mace, CPA

In today’s increasingly global economy, there are many U.S. tax-reporting requirements that relate to foreign investments, foreign organizational operations, and other international transactions. One of these requirements is the Report on Foreign Bank and Financial Accounts (FBAR).

While the reporting requirement has been around for decades, IRS scrutiny and compliance efforts have been a focus since 2004, when Congress passed stronger laws to strengthen the penalties for non-filers in the wake of the 9/11 attacks. As part the FBAR evolution, the IRS announced changes to the filings, effective for 2016 filings due in 2017.

The purpose of the FBAR (now filed electronically via Form FinCEN 114) is to disclose accounts for any US person who has a financial interest in,

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Avoid IRS Scrutiny of Your Cross-Border Transactions

Is your global company up to date on the latest IRS transfer pricing requirements? If it participates in the international exchange of goods, services, or intangible assets with related entities, it should be. The IRS has identified transfer pricing as one of its most prominent audit issues – and other revenue-strapped tax authorities are following suit. The good news is that you can mitigate the risk of potentially steep penalties of 20% – 40% on transfer pricing adjustments through proper documentation and implementation. A well-documented transfer pricing study will allow you to make that happen, proactively.

Background

Transfer pricing restrictions aren’t limited to international transactions.—they also apply to domestic companies that do business across state lines with related parties.

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International tax developments – what charities need to know about PFICs, FATCA, and OVDP

By Jennifer Becker Harris, CPA

New international tax developments over the last six months will affect U.S. charities and provide welcomed relief in some areas and added compliance in others. The following is a summary.

Passive Foreign Investment Companies (PFICs)

What is a PFIC?
A foreign corporation is a PFIC if:

  • 75% or more of its gross income is from passive sources, or
  • the average FMV of assets which produce or are held to produce passive income is 50% or more.

Once a foreign corporation is classified as a PFIC,

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