Tag Archives: Tax

Foreign Agricultural H-2A Visa Workers on American Farms During Covid-19 National Emergency

By:  Coleman Jackson, Attorney & Certified Public Accountant
May 14, 2020

Foreign Agricultural H-2A Visa Workers

The H-2A nonimmigrant visa classification has been around for a very long time.  See Immigration and Nationality Act (INA) 101(a)(15)(ii)(a), 8 U.S.C. 1101.  The H-2A foreign agricultural workers visa; known as H-2A is more in the public eye right now due to the media’s focus on the rise of Covid-19 cases in meat packing plants, on farms and in rural America potentially resulting in food supply chain disruptions.  The concern of the coronavirus’ disruption of the food supply is very real and it is of grave concern to the well being of farmers’ bringing their goods to market and to their fellow citizens ability to feed their families.  In a nutshell, the foreign agricultural workers program known as the H-2A Visa permits agricultural employers to fill shortages in the available work force by following certain procedures to lawfully bring foreigners to the United States temporarily to perform temporary or seasonal agricultural work.  The Department of Homeland Security defers to the U.S. Department of Labor with respect to defining what work falls into the categories of temporary and seasonal agricultural work.  Historically, the Department of Labor has defined “agricultural labor” as such duties as hauling and delivery on the farm, harvesting, cultivating and planting seed.  Foreign workers on H-2A Visas has historically also worked as sheep herders, goat tenders, cattle raisers, poultry farmers and in other occupations typically in rural areas of America where various kinds of animals are raised for market.  The point is that agricultural workers are not limited to farms performing task around a farm; foreign workers on H-2A Visas work on plantations, ranches, nurseries, meat packing plants, greenhouses, orchards, and as truck drivers and delivery drivers on these or other similar locations.  The Immigration and Nationality Act (INA) has defined the term temporary agricultural work as no more than 12 months or employment of a seasonal nature tied to a certain time of the year, event or pattern.

 

Foreign Agricultural H-2A Visa Workers

There was-and-still-is a very regimented step-by-step process that  agricultural employers must follow to bring foreign farm laborers to work on their farms, ranches, meat packing plants or similar locations; which begins with a petition filed with their state workforce commission; then they go to the DOL for labor certification that there is a lack of available domestic workers to perform the intended project; once the employer receives the DOL Labor Certification they file a request with the Department of Homeland Security; and upon approval, the foreign worker petitions the Consulate’s Office in their country to obtain the H2-A Visa to come to America and work on a specific  temporary or seasonally project for less than 12 months.  The H-2A visa is valid for 3 years.

 

Foreign Agricultural H-2A Visa Workers

This process has been relaxed and modified somewhat. Covid-19 has created the necessity to impose travel restrictions, stay at home orders and caused lots-and-lots of tremendous pain, loss and suffering throughout the country.  In response to anticipated disruptions and uncertainties in the U.S. food supply and the ongoing impact of the Covid-19 epidemic in rural America; the Department of Homeland Security and U.S. Citizenship and Immigration Services (USCIS) published temporary amended regulations regarding temporary and seasonal agricultural workers and their U.S. employers in the H-2A nonimmigrant agricultural workers classification.  These final regulations are published in 85 FR 21739 and is effective from April 20, 2020 through August 18, 2020.The following are the major amendments to the normal process that historically were used by domestic farmers to bring foreign nonimmigrant workers to work temporarily on their farms, ranches, meat packing plants and other similar locations under the H-2A Agricultural Workers program:

  • The H-2A regulations were temporarily amended to permit all H-2A employers to allow nonimmigrants who currently hold a valid H-2A visa status to start working upon the receipt of the employer’s new H-2A petition, but not earlier than the start date of employment listed on their H-2A petition.
  • The H-2A regulations were temporarily amended to permit all H-2A workers to immediately work for any new H-2A employer, but not earlier than the start date of employment listed on the H-2A petition filed during the Covid-19 National Emergency.
  • The H-2A regulations were temporarily amended to create a temporary exception to 8 CFR 24.2 to allow nonimmigrants to extend their H-2A period of stay beyond the three-year limitations without first requiring that the immigrant leave the United States and remain outside of the United States for an uninterrupted period of three months. It is important that an H-2A petition for an extension of stay with a new employer must have been filed with USCIS on or after March 1, 2020 and remain pending as of April 20, 2020.
  • H-4 nonimmigrants who are the spouses and children of an H-2A agricultural worker visa holders are beneficiaries of these same amendments noted in one through three above. H-4 visa holders’ admission and limitations of stay are dependent on the validity of the H-2A visa holders’ status and they must be otherwise admissible.

Moreover, as a practical matter, certain in-person interview requirements at the Consulate Offices have been eased during this Covid-19 National Emergency to facilitate foreign workers traveling into the United States.  H-2A workers fall under the ‘essential worker’ category of critical worker and probably are exempt from the stay-at-home, travel restrictions and other measures imposed by local, state and federal governmental agencies during this Covid-19 National Emergency.

 

Foreign Agricultural H-2A Visa Workers

Foreign agricultural workers on H-2A visas are subject to the United States federal tax laws but they are exempt from withholding of U.S. federal income taxes, social security taxes and Medicare taxes on compensation paid to them for services performed in connection to their H-2A agricultural worker visa status.  If they receive more than $600 in compensation, the foreign nonimmigrant worker must receive a Form W-2 from their employer which exempts social security and Medicare taxes.  Typically, the worker files Form 1040-NR and the employer must report the wages of its agricultural nonimmigrant workers on Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees and file all other appropriate tax returns with local, state and federal taxing authorities.   Most of the modified filing, payment and reporting deadlines announced by the U.S. Treasury and Internal Revenue Service during this Covid-19 National Emergency applies to H-2A agricultural workers and their employers.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Thinking About Taxes

By:  Coleman Jackson, Attorney & Certified Public Accountant
March 07, 2020

Thinking About Taxes

Thinking about spending that money withheld from employees’ wages to take a tour of the world, pay other business expenses or house payments?  Don’t do it before reading Internal Revenue Code Section 7702!   Hear those alarm bells ringing!  Anyone required to collect, account for, and turn over to the United States Treasury and willfully fails to carry out this duty are subject to severe civil penalties and upon being found guilty of the felony of failing to collect, account for, and turn over can be fined up to $10,000 and spend up to five years in federal prison.  Payroll tax fraud is a serious crime that is commonly investigated by the IRS Criminal Investigation (CI) Division.  This unit of the IRS investigates all kinds of violations of the Internal Revenue Code.  CI along with the Financial Crimes Network investigates FBAR violations (these are U.S. persons with foreign bank accounts and other foreign assets who fail to timely and accurately disclose these holding on Form 114), money laundering (these are individuals or entities engaged in some kind of unlawful activity and endeavoring to get dirty money into the normal banking system) and other financial crimes.

 

Thinking about not filing that required income tax, gift tax or other federal tax return or providing fraudulent information the IRS?  Don’t do it before reading Internal Revenue Code Sections 7207 and 7203Hear those whistles blowing!  Anyone who intentionally gives false documents, which includes returns and any other written representation to the Internal Revenue Service and any of its employees knowing that its materially false or fraudulent is subject to civil fines and upon being found guilty of the felony of giving the Service false returns or other documents can be fined up to $10,000 (if individual) and up to $50,000 (if corporation), and spend up to one year in federal prison.  Multiples applies in that cumulative false statements, returns and documents can generate multiplication of the civil fines and additional years to the duration of the prison term.

 

Thinking about paying fewer taxes than is lawfully owed by engaging in creative accounting, leaving that or this item off the return while adding and dreaming about things that never happened? Don’t do it before reading Internal Revenue Code Section 7201Hear those gongs clanging! Anyone who intentionally attempts to evade or defeat any tax imposed under the Internal Revenue Code is subject to civil penalties up to $100,000 (if individual) and up to $500,000 (if corporation), and spend up to five years in federal prison upon conviction.

 

Thinking about taxes?  Stay away from the tumbling … lie.


This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432     

Remote Sellers Must Register in Texas before October 1, 2019

By Coleman Jackson, Attorney, Certified Public Accountant
September 16, 2019

 

Remote Sellers Must Register in Texas before October 1, 2019

Texas imposes a 6.25 percent state sales tax and use tax on all retail sales, leases and rentals of most goods and some services that are either sold in Texas or used in Texas.  Cities, Counties and Transit Authorities can charge up to 2% sales tax on taxable goods and services.  This local sales tax varies from city to city, county to county and transit authority to transit authority throughout the state of Texas.   The maximum sales and use tax in Texas is 8.25 percent.

 

online retail sales

Remote sellers are required to begin sales and use tax collection on October 1, 2019 on their Texas sales.    The remote seller must collect the correct tax by using the Sales Tax Rate Locator.  For example if a remote seller sales a chest of imported cigars to a person residing in Dallas, Texas; they must collect 8.25 percent tax on the gross sale at the time of the sale.  If this same sale is made in another city of Texas the total collected tax could be lower.  It would not be higher because 8.25% is the maximum sales and use tax in Texas.  However, other types of tax obligations could be implicated in this hypothetical, such as, tobacco taxes and fees. Remote sellers doing business in Texas must register with the Texas Comptroller of Public Accounts before October 1, 2019 to fulfill their Texas tax responsibilities.  First, remote sellers must apply for a Sales Tax Permit pursuant to the Texas Tax Code.

 

remote seller

Once the remote seller is properly registered with the Texas Comptroller of Public Account and receive their sales tax permit, they will be advised by the Texas Comptroller as to whether they must report their taxable sales and use taxes on a monthly basis, quarterly basis or annual basis.  Monthly sales and use tax reports are due on the 20th day of each month following the reporting month.  Quarterly filers must file their sales and use tax reports on April 20th, July 20th October 20th and January 20th.  Annual filers must report taxable Texas sales and use taxes on January 20th for the previous year.

Out of State sellers or remote sellers are required to begin collecting sales and use tax from their Texas customers on October 1, 2019.  If the remote seller fails to register and report Texas Sales and Use Tax they will be subjected to the penalties, administrative actions, and judicial options available under the Texas Tax Code in enforcing the tax laws.  The TTC provides for civil and criminal sanctions against businesses doing business in Texas and not in compliance with their tax responsibilities.

 

Businesses out of Texas

Businesses, who run afoul of the Texas Tax Code and desire to comply with Texas tax laws, whether they are in Texas or someplace else in the world, could possibly qualify to voluntarily disclose under the Texas Voluntary Disclosure Agreement Process (VDA).  A company representative must initiate the process on behalf of an anonymous client who meets the threshold requirements by contacting the Business Activity Research Team (BART) in writing.  If the business has already been contacted by the Texas Comptroller regarding non-compliance with Texas Tax laws, the business cannot voluntarily disclose.  It should be noted that the VDA process is available for all types of taxes administered by the Texas Comptroller of Public Accounts.  Some of the types of taxes that the Texas Comptroller is responsible for administering under the Texas Tax Code are as follows:

  • Sales and Use Tax
  • Hotel Tax
  • Franchise Tax
  • Tobacco Taxes and Fees
  • Battery Sales Fees
  • Cement Production
  • Boat and Boat Motor Taxes
  • Insurance Taxes
  • Manufactured Housing
  • Controlled Substances

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Taxpayers with Significant Tax Debts Can Lose Their U.S. Passports

By Coleman Jackson, Attorney, Certified Public Accountant
August 21, 2019

 

Taxpayers with Significant Tax Debts Can Lose Their U.S. Passports

 

Ever heard of the Fixing America’s Surface Transportation (FAST) Act of 2015?  Well, under FAST the IRS has the authority to notify the State Department of taxpayers certified as owing the federal government.  A significant tax debt is currently defined as a delinquent tax bill of $52,000 or moreThe FAST requires the State Department to revoke the delinquent taxpayer’s U.S. passport and limit the taxpayer’s ability to travel outside the United States.

 

Taxpayer’s who intend to travel outside the United States must negotiate with the IRS to get the delinquent tax certification lifted

 

Taxpayer’s who intend to travel outside the United States must negotiate with the IRS to get the delinquent tax certification lifted.  Until that happens the taxpayer could become stranded outside of the U.S. with a revoked passport, or be blocked receiving a passport for the first time or on renewal leaving them unable to travel out of the country for any reason.

 

taxpayers who have to travel abroad must responsibility deal with their federal tax obligations long before they need to travel; because other than option one, above (paying the tax debt in full), the suggested options take months and some of them even take years to resolve in negotiations with the IRS

 

The IRS has identified several ways taxpayers can avoid having the IRS notify the State Department of their seriously delinquent tax debt as follows:

  1. Paying the tax debt in full;
  2. Paying the tax debt timely under an approved installment agreement;
  3. Paying the tax debt timely under an accepted offer in compromise;
  4. Paying the tax debt timely under the terms of a settlement agreement with the Department of Justice;
  5. Having a pending collection due process appeal with a levy; or
  6. Having collection suspended because a taxpayer has made an innocent spouse election or requested innocent spouse relief.

The practical tiptaxpayers who have to travel abroad must responsibility deal with their federal tax obligations long before they need to travel;  because other than option one, above (paying the tax debt in full),  the suggested options take months and some of them even take years to resolve in negotiations with the IRS.

The following types of taxpayers have been exempted from the delinquent taxpayer certification requirements under FAST:

  • Taxpayers in bankruptcy proceedings;
  • Identity Theft Victims;
  • Taxpayers whom the IRS has deemed non-collectible;
  • Taxpayers located within a federal declared disaster area;
  • Taxpayers with pending Installment Agreement request;
  • Taxpayers with pending Offer in Compromise with the IRS; or
  • Taxpayers with an IRS accepted adjustment that will satisfy the debt in full; and
  • Taxpayer’s serving in a combat zone is not exempt from the certification rules, but the certification is postponed while they do their tour of duty in the combat zone.

 

Taxpayers with plans to travel abroad simply need to be aware of the fact that their plans can be totally upended if they owe the federal government more$52,000 or more in back taxes.

 

Taxpayers with plans to travel abroad simply need to be aware of the fact that their plans can be totally upended if they owe the federal government $52,000 or more in back taxes.  The $52,000 could be owed on personal income taxes or business taxes where the individual taxpayer has been found be to be a responsible party, such as in payroll taxes with respect to the trust fund penalty that usually applies to delinquent taxpayer who owns the business or even employees of the business responsible for deciding what vendors and suppliers get paid and when.  Also the $52,000 certification threshold can be reached for a single tax period or multiple tax periods combined.  Example No 1, the taxpayer owes the IRS $2,000 for 2009, $14, 000 for 2015, and $40,000 for 2018.  In this example the taxpayer is seriously delinquent and the IRS under FAST can certify them as seriously delinquent to the U.S. State Department.  Example No. 2, the taxpayer owns a windmill manufacturing company with twenty employees; their business slowed to a whisper in the third quarter 2019 and the business owner decided to pay office rent, utilities, employees and suppliers and not the IRS payroll taxes.  The IRS learns of this decision and finds the owner the responsible party under the germane tax section and access a $52,000 trust fund penalty on the owner.  In this case, the owner/taxpayer could be certified by the IRS as a seriously delinquent taxpayer under FAST.  The owner’s passport could be revoked or their passport renewal could be denied by the U.S. State Department.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Giving is good! Giving is Subject to Federal Taxation

By Coleman Jackson, Attorney and Certified Public Accountant
June 10, 2019

Giving is good!  Giving is Subject to Federal Taxation

The Holy Bible at 1 Timothy 6:17 says that God gives to us richly all things….  It is a blessing to be able to give.  Giving is an expression of gratitude and love.  It is good to give.  Every relationship should be based on the desire to give.  It is more blessed to give than to receive.

Giving in the United States creates tax obligations on the giver.  Internal Revenue Code Section 2503 defines “taxable gifts” as the “total amount of gifts made during the calendar year, less deductions provided in subchapter C (section 2522 and following).”  The federal gift tax rules applies to gifts of present interest to a donee as oppose to transfers of future interest by the donor to the donee.  Under United States federal tax laws, the donor (giver) is taxed on the fair market value of the gift.  The recipient of the gift or donee is not taxed on the gift.  But!   Special tax reporting rules imposes on the donee a duty to disclose to the IRS certain large gifts from foreign nationals.

 

Giving in the United States creates tax obligations on the giver

 

The total annual valuation of gifts given by a donor is a tally of all gifts given by the donor for the calendar year.  Such gifts are reported annually on Form 709, United States Gift (and Generation-Skipping Transfer) Tax ReturnForm 709, United States Gift (and Generation-Skipping Transfer) Tax Return is due on April 15th of the year following the year of the gift.  For example if Jose Giver gives the following gifts in 2019:

  • Stocks and bonds to Jeremiah Recipient worth $40,000 fair market value;
  • Wires $250,000 to the foreign bank account of Jennifer Recipient ; and
  • Gives $4,000 to his niece, Carolyn Recipient under 21 years of age at the date of the gift.

 

Form 709 United States Gift

Jose Giver must tally the three gifts to all recipients made in 2019 and report the gifts on April 15th 2020 on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.  The total amount of gifts for 2019 is $294,000. Internal Revenue Code Section 2503 provides an annual exclusion for gifts of present interests made to any person by a donor.  In 2018 the annual exclusion amount is $15,000 and pursuant to IRC Sec. 2523 the annual exclusion is $155,000 on gifts to spouses who are not U.S. Citizens.  For gifts given in 2019 the annual exclusion amount remains $15,000, but the annual exclusion for gifts to spouses who are not U.S. Citizens decreases to $152,000 for gift made in 2019.  Note that the annual exclusion amount is indexed to the inflation rate; therefore, it could change from year to year.

 

Form 114, Report of Foreign Bank and Financial Accounts

Other federal laws, including other tax reporting and disclosure rules could be implicated by the facts described in the above hypothetical.  For example, Jeremiah Recipient may have to report gains & losses realized on the stocks and bonds.  The $250,000 wired to Jennifer Recipient’s foreign bank account could possibly create reporting requirements under the Bank Secrecy Act which requires that U.S. persons; which includes U.S. citizens, resident aliens, trusts, estates, and domestic entities to file Form 114, Report of Foreign Bank and Financial Accounts with the Financial Crimes Network on April 15th 2020 if the foreign account balance is $10,000 or more at any time during the calendar year.  Further the $4,000 to his under aged niece implicates the Generation- Skipping Transfer tax rules. That applies when gifts skip a generation.   Giving is good!  Giving is subject to federal taxation.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432.

 

 

 

What’s wrong with paying business expenses in cash?

By Coleman Jackson, Attorney, CPA
October 15, 2018

What’s wrong with paying business expenses in cash?

 

Pursuant to Internal Revenue Code Section 162, a business can deduct an expense incurred in the business if it is an ordinary and necessary expense.  An ordinary expense is customary to the taxpayer’s industry, trade or profession.   Business expenses must be necessary, useful or helpful in the carrying on of the business purpose, or conducting of the taxpayer’s business enterprise.  Part and parcel of the term “ordinary and necessary” is the reality that an expense must be reasonable.  Whether an expense is ordinary, necessary and reasonable depends upon all the facts and circumstances.

 

 

Taxpayer’s must prove expenses are deductible on their tax returns!  In order to deduct an ordinary, necessary and reasonable expense, a taxpayer must substantiate or prove the expense.  Substantiation simply means that the taxpayer must maintain documentation that shows the date, the amount, and the business purpose of the transaction.  The taxpayer should also substantiate the manner and method of payment for the transaction.  What’s wrong with paying business expenses in cash?  Cash is fungible, which means that, generally, it leaves no trace of where it is going or where it is coming from.  Therefore, if a taxpayer must transact business in cash, the taxpayer must create and maintain a contemporary record documenting the date, the amount, the parties, and the business purpose of the transaction.  A cash receipt could be a convenient way of documenting cash transactions.  Likewise, a contemporary diary could be a useful tool to use to document cash transactions.

 

 

Best business practices are to never conduct business in cash because large or frequent cash transactions could be indicative of tax fraud or other nefarious business dealings.  Undocumented cash transactions cannot be substantiated, and might be difficult to trace.  Taxpayer’s always must, upon request by the Internal Revenue Service, produce credible substantiation for all business expenses.  Unsubstantiated expenses do not satisfy the requirements of Internal Revenue Code Section 162.  Remember!  Business expenses are only deductible on the federal tax return if they are ordinary, necessary and reasonable.  Unsubstantiated cash payments spell super bad news— potentially huge tax bills and possible criminal prosecution for federal tax evasion.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Offshore Accounts? The Train Is Leaving the Station! IRS To End Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018

By:  Coleman Jackson, Attorney and Certified Public Accountant
September 22, 2018

The IRS is closing down the Offshore Voluntary Disclosure Program on September 28, 2018.  This voluntary international tax compliance program was designed to help people, organizations and business entities hiding money, accounts and assets overseas to get current and come into compliance with U.S. tax laws voluntarily under a reduced civil penalty structure and leniency with respect to potential criminal prosecution.  This program that has been in effect since about 2009  and extended in 2012 and again in 2014 is ending in about 7 days.

Non-compliant taxpayers with offshore accounts and assets have seven days to request permission to enter into the Offshore Voluntary Disclosure Program.  Entry into the program begins with submission to the IRS Criminal Division a request for preliminary consideration for disclosure under the OVDP program.  If the prelim request is granted, the disclosure, review, approval and closing process takes about 12 to 18 months.  Taxpayers who may have committed criminal international tax evasion or are holding undisclosed offshore accounts risk being reported by their offshore banking or financial institution since these overseas institutions are required to either directly or indirectly report United States Citizens and/or Green Card Holders with accounts in their financial institutions to the Internal Revenue Service.

Once the OVDP expires on September 28, 2018, the IRS might implement a replacement program or some procedure or method for non- compliant taxpayers to come into international tax compliance, but as of yet, the IRS has not announced any offshore accounts leniency programs or procedures that will replace the expiring OVDP.  Word to the wise— apply for the OVDP before it expires on September 28, 2018.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432