Introductory issues
Advise on the level of business activity that gives rise to a “US trade or business” and the necessity of filing a US tax return. When a client contemplates expansion into the US, advise on the comparison of the branch and subsidiary alternatives. This includes as assessment of:
- – Structure and business model;
- – Funding – debt vs. equity;
- – US shareholders issues creating a need for US reporting etc. (Downward attribution issues, passive foreign investment company);
- – Compensation issues (Section 409A, Section 83(b) election etc.);
- – Other compliance matters: assist with EIN, W-9, 1099, W-8Ben BE-12, BE-13 if applicable;
- – State and Local Tax (SALT) – Analyze nexus and taxability to determine state registrations and compliance obligations. Must be continually monitored as business expands to avoid penalties. This includes advice on invoice presentation and sales tax T&C’s on US contracts.
Transfer Pricing (TP)
– Analyze the assets, functions and risks of related party transactions, if any (requires annual review of business changes in a growing company);
– Prepare a guidance report, which documents the business model and its implementation;
– Coordinate with non-US accountants for UK and other countries (Note that the UK and many non US countries do not require TP for small companies until they reach a certain size). It is important in the US to start implementing the desired TP pricing policy in the first return, in order to clearly document and establish the ongoing economic ownership of IP squarely in the hands of the UK parent. Therefore, the guidance report, although it includes OECD principles, initially focuses on the US implications of related party transactions;
– Implement the “TP guidance policy” in the intercompany legal agreement;
– Monitor changes in business model annually.
US Federal and State and Local Tax Compliance & Controversy
– Prepare US federal 1120 and required international forms;
– Prepare US federal 1120F protective return for non-US parent if necessary;
– Prepare State corporate income and franchise tax returns;
– Assist with government communications and inquiries;
– Provide state and local sales tax and corporate income tax advice.
Not covered:
– Payroll is usually outsourced to a professional employment organization (PEO);
– Sales tax collection, filing and remittance is usually outsourced to a firm such as TaxJar or Alvalara;
– Bookkeeping or accounting at a very early stage can be done in the parent company either in house or by their local accountant;
– Preparation of individual (expats) tax returns (Referrals can be made).
Business partners:
– Economics Partners LLC, a Ryan Company: Transfer Pricing Economic analysis.
– Riverbank Consulting LLC: Tax legal advice, written opinions, and transfer pricing legal agreements.
Continuous personal support:
– Continuous and consistent personal support to provide a context and corporate memory for early stage startups when new business events or changes in the law arise and turnover in senior financial management occurs;
– Project management services to provide assistance when there is no internal “in house” tax professional to coordinate among different tax service providers on a cross-border basis;
– Readily available on short notice for questions and concerns.