International Tax Issues in the Service Industries

Author: Robert J. Misey, Sara L Rapkin

CPE Credit:  2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC

Thriving as they cross international borders, services are a driving force of the U.S. economy. However, when services cross international borders, they must deal with a host of complex tax rules that Congress has created, including withholding on foreign service providers, sourcing rules, Subpart F rules and myriad other issues that create pitfalls for international services businesses. But there are also opportunities within the complexities for service business that exercise savvy tax planning — such as the creation of an IC-DISC for architecture and engineering firms.

Presented by former IRS attorney and highly regarded international tax practitioner, Robert Misey, J.D., LL.M., M.B.A., this practical course provides insight and commentary on international tax issues confronting service providers.

Publication Date: May 2017

Designed For
CPAs; Enrolled Agents; tax preparers and staff; accountants, attorneys and financial advisors who work with and advise service providers that have cross-border operations, activities and issues. Business tax and finance executives, directors, managers and staff.

Topics Covered

  • Withholding on foreign service providers in the United States
  • Exemptions and Special Rules
  • Form 8233 Procedures
  • Introduction to Foreign Tax Credits
  • Foreign Tax Credits for Services
  • Taxation of Services in the U.S.
  • Services Performed Abroad
  • De Minimis Taxation under the Code
  • IC-DISCs savings for Engineers and Architects
  • The IC-DISC Planning
  • Income Tax Savings
  • Service Cost Method for No Markup
  • SSAs to Allocate Service Costs
  • The challenges of the sourcing rules for service providers and how they impact the foreign tax credit
  • Dealing with the Subpart F rules to avoid foreign personal holding company income on services performed abroad
  • How treaties impact the taxation of service income
  • Avoiding the creation of a permanent establishment
  • Transfer pricing rules for service providers

Learning Objectives

  • Recognize how to structure your service operations in a tax-efficient manner
  • Identify international tax compliance and reporting unique to service providers
  • Differentiate how to reduce your taxes while staying bullet-proof on audit
  • Identify scenarios where a US corporation would not be required to pay U.S. tax on service income earned in a foreign country
  • Recognize when a foreign individual has service income from a U.S. source not subject to U.S. tax withholding
  • Describe examples of permanent establishments
  • Differentiate circumstances when a a U.S. individual can defer reporting subpart F income
  • Recognize attributes of IC_DISC planning
  • Identify services which would typically be eligible for the service cost method
  • Describe service income attributes
  • Recognize what must be included on Form 8233
  • Identify who the Foreign tax credit applies to
  • Differentiate between U.S. source and foreign source income
  • Identify considered withholding agents
  • Recognize the substantial presence test and how it applies to foreign individuals

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic knowledge of U.S. international income taxation.

Advance Preparation
None

Registration Options
Quantity
Fees
Regular Fee $189

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