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U.S. Cross-Border Tax Services for Business

Our firm focuses on providing cross-border and U.S. tax planning, structure, consulting and compliance services for small and medium size businesses. We are engaged in all aspects of business operations, both during the start-up phase and mature business.

We help our clients with pre-planning advice and basic guidance, as well as more sophisticated tax strategies and solutions when our clients are faced with tax challenges during any stage in their business cycle. Our team has over 40 years of experience advising business clients in various areas of cross-border, U.S. international taxation, and transfer pricing.

u.s. cross-border tax services for business

Business Planning

Entry Into the United States and Canadian Markets

While beginning a new business or expanding an existing business model to another North American market can appear easy for competent business owners, careful consideration must be given towards tax considerations on both sides of the border. Which type of legal entity should you use to structure your business? How will the business be funded? How will income be distributed? Are you going to have U.S. citizens working or owning the business? How can you bring profits across the border in a tax efficient manner?  There are many things to consider when looking to expand or create a new business with cross-border desires. US Tax IQ has assisted in a variety of consulting, implementation and tax compliance aspect of business expansion and creation.

Funding, Financing and Capital Transactions

One key issue that surrounds the beginning stages of small to medium size businesses is access to cash to meet short term obligations. Being sufficiently liquid involves understanding cash flow and knowing the tax implications related to this. U.S. Tax IQ will work alongside your team to review and advise on optimal funding options from a currency control, regulatory, and tax standpoints, to allow you to focus on your long-term business goals and objectives. We can provide guidance on the blending of equity and debt financing to fund your business and ensure that certain intended interest expense deduction are in line with the applicable debt to equity or earning stripping rules.

Start-Up Business Planning and Structuring, including feasibility assessments

When beginning a business in Canada or the United States, you may be under the impression that having the right ‘idea’ is all you need to get started. Getting started will only get you so far. How will you structure your business? Is your business plan feasible? How will you fund the business? What are your costs and expected revenue streams? Will there be a cross border component to your business and how will you structure it?

As you can see there are many aspects of beginning a business that must be carefully thought out. Our team of professionals can assist in the beginning stages of your business, helping you think through the proper structuring of your business and provide a feasibility assessment. These pre-planning stages of a new business venture are vital to ensuring that you and your business get started on the right foot.

Check the box tax planning for international tax planning

International business planning may require complex entity structures, often including a variety of hybrid entities. The IRS permits entities to make certain check the box elections, so that the service is aware of the expected tax treatment of a particular entity. Careful planning and knowledge is required when preparing these structures and proper notice must be made with the IRS. Our professionals can assist you in the beginning stages of your business formation in understanding the options available to you and helping to guide you through the complexities of the cross border entities.

Subpart F and Controlled Foreign Corporations planning

When a U.S. citizen or Green Card holder owns a foreign corporation, there are likely implications under the U.S. tax concept of a controlled foreign corporation (CFC.) CFCs arise through direct ownership or even indirect ownership of a foreign corporation. Income, such as certain types of passive income and other income derived in transactions among related parties, may be considered subpart F income, which would lead to tax on that income to a U.S. shareholder of the corporation. Investments in U.S. property may also lead to tax on the U.S. shareholder.

Proper planning may be able to mitigate exposure of this type of tax. Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, may be required to be filed. Form 8938, Statement of Foreign Financial Assets (FATCA Form) may also be required to be filed.

Our tax professionals can assist in pre-planning of investments in foreign enterprises, beginning your own business, becoming a part of a partnership or accepting a position as an officer or director of a foreign company.

Passive Foreign Investment Company planning

Many Canadian tax and investment planners have a variety of tax efficient structures that are incredibly advantageous for Canadians to take advantage of to help expand their business. Often times these planners are unaware of the tax consequences this imparts on U.S. citizens or Green Card holders or are unaware that you, their client, has a U.S. presence. This can lead to a whole host of issues and compliance problems for you and your investment.

Passive Foreign Investment Companies (PFICs) require special handling when a U.S. citizen is involved. U.S. shareholders can elect different methods of being taxed by the United States or subject themselves to default tax treatment of PFICs. Understanding your situation and creating a plan to be taxed will help ensure that the taxpayer is aware of all avenues available to them and that you are able to maintain compliance with U.S. tax laws and not subject yourself to harsh penalties by the IRS for incorrect reporting.

Complex International Planning

We can advise you on an array of complicated international issues that can help you optimize your global taxes, including:

  • All aspects of both inbound and outbound US and Canadian investment and business activity.
  • Thoughtful utilization of tax incentives and credits, including net operating losses (“NOLs”) and foreign tax credits (“FTC”), analysis of available tax attributes (such as tax basis, including preparation of basis studies), their preservation and maximization of cash tax benefits.
  • Minimization of Subpart F and effectively connected income (“ECI”).
  • Maximizing depreciation and amortization deductions.
  • Using tax deferral options to minimize cash tax outflows.
  • Tax treaty positions and related planning opportunities, including permanent establishment (“PE”) planning, determination of eligibility for treaty benefits and tax residency considerations.
  • Minimization of withholding taxes on international payments.Categorization and documentation of payments and transactions, including a determination of source of income and the nature of respective payments.

Business and investment matters

Businesses require funding and access to cash to operate. Tax efficient funding and debt to equity ratios are crucial concepts that must be understood when beginning a business venture. Our team of professionals can work with you and your advisors to review the optimal funding options from a currency control, regulatory, and tax standpoints, to allow you to focus on your long-term business goals and objectives.

Business Maintenance and Tax Preparation

Cash Repatriation Matters & Cross Border Dividends

For businesses producing profits, the method and ramifications of moving these earnings cross-border can be burdensome. We provide practical advice on moving your money efficiently and legally between entities and different jurisdictions. We can perform an E&P (earnings and profits) study to determine the appropriate treatment of a cross-border dividend payment and advise on options based on the level of your business’s E&P. We can consider risks of a payment being viewed as a deemed dividend and being re-characterized as such by the Internal Revenue Service (“IRS”). Intercompany service arrangements (discussed below) can be and in many cases are a basis for cross-border payments as well. New intercompany loans and repayment of principal and interest on existing loans are also good mechanism to consider.

Intercompany Service Arrangement, Transfer Pricing Matters

In many instances, companies have foreign subsidiaries with limited business activities, or the sole purpose of which is to provide intercompany services to the parent. The parent companies also routinely provide management and administrative services to their foreign affiliates. Some of these entities are cost centers by design and have to be structured accordingly with the arms’ length principle and transfer pricing documentation in mind. We can advise you on simple cost plus arrangements, as well as more complex methodologies, such as licensing or return on sales arrangements. We can assist you in guiding you through a process of setting up your transfer pricing methodology, which may be reflected in a benchmarking analysis or a planning transfer pricing analysis, or we can prepare a robust transfer pricing study that would provide transfer pricing penalty protection. We will support you in implementing the adopted transfer pricing methodology and assist you in case of a CRA or IRS audit. Where applicable, we will also assist you in requesting the assistance of the US or Canadian Competent Authorities to resolve your most complex transfer pricing adjustments or controversy. For larger businesses, we will advise you on securing an Advance Pricing Agreement (“APA”) with the IRS and applicable foreign jurisdictions.

U.S. Federal, State and Local Tax Compliance and Preparation

Our firm handles U.S. tax compliance needs ensuring that your company meets all tax requirements, across all jurisdictions, in an effective and timely manner. We can complete and advise on the filing and preparation of required forms and schedules for all types of legal entities, from sole proprietors to global corporations, including consolidated return preparation and filing.

U.S. International Information Reporting

U.S. entities and U.S. individuals are required to report to the IRS on your ownership of any non-U.S. entity in which you owned or owned at least 10 percent by filing Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. Failure, inaccurate or late filing of this Form results in an automatic US $10,000 penalty (per form) from the IRS. Even if an entity is inactive or losing money, the penalties will apply assuming they are required to file the Form. IRS Forms 926 and 5472 are other forms that a company may be required to file to report intercompany transactions, such as cross-border dividends, capital infusions and loans. These international information returns are not exclusive to US persons, they may also be required to be filed by foreign entities with US affiliates, shareholders, or subsidiaries. Often companies are not aware of the full scope of Forms that they are required to file. Our firm can assist in bringing your company into compliance with the IRS. Our expertise allows us to navigate the rules in an attempt to prevent the triggering of any automatic penalties, generally by requesting a penalty abatement with the appropriate authorities by asserting a reasonable cause defense. Other countries also have similar reporting regimes around controlled foreign corporations (“CFCs”) or cross-border activities, which we can advise you on.

U.S. Foreign Bank Account Reporting

If you are a US entity or a US resident individual and have over US $10,000 in a foreign (non-US) bank account at any moment during the year, or even just signature or other authority over such an account (for example, having online access to a foreign bank account that is not yours but where you have the authority to initiate and approve wire transfers counts as such ‘other’ authority), you have triggered another compliance requirement – the filing of Form FinCen 114, Foreign Bank Account Reporting (“FBAR”) with the Financial Crimes Enforcement Network. We will be happy to help you stay in compliance with these highly sensitive regulations.

Tax Provision Support

If you or your company has to file a set of financial statements, or present statements to current or potential investors, your tax provision becomes an vital piece of information. Our team can help with global tax accounting needs, such as building a complete tax provision work-paper, including an effective tax rate reconciliation, a deferred tax inventory, a tax basis balance sheet, a current tax payable / receivable analysis, and all the required disclosures. A quality tax provision is a good tool for a planning discussion and a solid basis for your tax filings.

M&A Activity Support

Merger and Acquisition transactions often happen quickly and when you least expect them. Our team can assist you in preparing for due diligence activity, allowing you to go through the process in a n effortless way. We will analyze the purchase accounting aspects of the transaction and tax accounting matters will be addressed through this process. There are a number of elections and positions available under the Internal Revenue Code when a transaction occurs, for instance: an IRS Section 338(g) election on a foreign target can provide some tax benefits in the long run, an IRC Section 83(b) election is a smart move when investing in early stage startups. We can also assist by analyzing the deal and transaction costs to determine eligibility under relevant country rules.

Corporate reorganizations and approaches for selling U.S. based businesses

Tax Planning and Preparation for Employees

Maintain a tax compliant business for owners, shareholders and employees is crucial. When cross border transactions, cross border workers and executives traveling across borders come into play, the complexities and compliance required are elevated. Our team of professionals can help pre-plan your businesses tax preparation service or take over your current service to help bring you, your business and employees in compliance with U.S. tax law. We will work with all levels of your business to ensure that the proper reporting requirements are met and can help evaluate whether or not filing is required.

Tax for C Corporations, S Corporation and Limited Liability Companies

Tax Disputes

Tax Controversy

Tax audits, examinations and even just informational requests and inquiries can put a lot of stress on your team. We have the knowledge and expertise to jump in and assist when these stressful events are thrust upon you. We will help support and substantiate your tax positions and will work hard to arrive at the best possible result. With tax authorities under pressure to collect more tax revenue around the world, the trend over the last few years has been for more examinations and audits, and often more aggressive ones too. Transfer pricing enforcement is also on the rise, and we can assist you by acting pro-actively to anticipate an upcoming audit, as well as by representing you on audit or Appeals and protecting your interests.

U.S. Federal, State and Local Tax Compliance and Preparation

Our firm handles U.S. tax compliance needs ensuring that your company meets all tax requirements, across all jurisdictions, in an effective and timely manner. We can complete and advise on the filing and preparation of required forms and schedules for all types of legal entities, from sole proprietors to global corporations, including consolidated return preparation and filing.

Managing Your Tax Risk

Tax risks are probably the most sensitive item in the world of business. You may have a successful profitable enterprise with a strong balance sheet, but potential buyers, investors and partners will hesitate if they hear of a tax exposure. Many deals fall through before closing when an undisclosed tax risk popped up. We will help you manage and minimize your tax risks and help provide Tax risk management tools, including drafting proper documentation of uncertain tax positions and potential unrecognized tax benefits.

Mini Due Diligence

When business have been active for a long period of time, they may find themselves in the crosshairs of a “tax audit.” This can come from a qualified team of tax professionals, rather than tax authorities, who can identify any issues and areas that require re-evaluation and some attention, including potential restructuring or structure simplification. We can prepare a pre-emptive due diligence, on a small scale, that would give you a unique look at your tax situation. We can also provide comments and recommendations on how to optimize your situation if the tax circumstances surrounding your business have been stagnate.  

IRS Audit Defense, Appeals Representation and Penalty Abatement Request

If you are a US entity or a US resident individual and have over US $10,000 in a foreign (non-US) bank account at any moment during the year, or even just signature or other authority over such an account (for example, having online access to a foreign bank account that is not yours but where you have the authority to initiate and approve wire transfers counts as such ‘other’ authority), you have triggered another compliance requirement – the filing of Form FinCen 114, Foreign Bank Account Reporting (“FBAR”) with the Financial Crimes Enforcement Network. We will be happy to help you stay in compliance with these highly sensitive regulations.

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