Tag: US Immigration Law


IRS Makes Foreigners To Conduct Businesses In USA

Sanjiv Gupta CPA - 2 years ago
Over the past year, the IRS has been clamping down on tax fraud cases, making it very hard for people with ill intentions to actually conduct their businesses. To start with, the pace with which tax refunds are being submitted has been increased to allow for time to handle tax fraud cases. This, in essence, means that the IRS is looking at the avenues through which identity thieves can get to defraud the government. The IRS not only made it difficult for the identity theft victims and fraudsters to get their refunds but it also made it much more difficult for Americans who live abroad and foreigners to mail in their fraudulent refunds. The IRS seems to have something else in mind; to them, they seem to be moving towards decentralization of the whole system. It is moving towards the creation of a specialized identity theft unit, which is set to operate within 21 separate functional areas.For a while now, some of the laws that have been passed by congress have had the net effect of making the process of doing business abroad for Americans much more strenuous than it was. As if this was not enough, the congress and the IRS are back at it again. This time, they are in the process of making it much harder for foreigners to conduct business in the USA. Whether this is a good thing or a bad thing remains to be seen over time. However, as the IRS and congress harden their stance on taxation issues and fraud, the pinch is being felt by the normal American who has the small and medium-sized business. With the new laws, the process of acquiring a tax certificate has become much longer and more of a hassle. In most cases, the law requires that the applicant sends his or her passport to the IRS for extended periods, during which period the IRS processes the paperwork. However, this does not mean that the new laws do not have their advantages. One such advantage is the fact that the process of application has been blown wide open giving applicants more avenues to apply. On the other hand, these laws have also made ITINs (International Tax Identification Numbers) expire after five years. This means that every five years, businessmen across the country will be required to go through the whole process over again if they are to remain tax compliant. This requirement does not only affect foreigners investing in the USA, but it also affects those Americans who are willing to invest out of the country.  Just another little effort by the IRS does to make staying legal as difficult as possible.Even then, the average American and the business community should be happy with the new requirements since it means that the government will be able to net previously excluded tax avenues. The result is that the government will be better able to handle its financial commitments and provide the relevant services to the populace.

How To Bring Money from India to the US ?

Sanjiv Gupta CPA - 4 years ago
Many American Indians, non-resident Indians (NRIs) and persons of Indian origin (PIOs) have immovable assets like a house that they have left behind in their country. They may also have inherited assets like house or money from their dearly departed.  Most of the time, these people plan to liquidate these assets and bring them to the US. This is particularly true if they don’t have plans of going back to India, or they rarely visit their motherland.American Indians, non-resident Indians (NRIs) and persons of Indian origin (PIOs) who want to bring money from India to the United States will have different processes to go through.The processes may depend on the method by which the money was acquired, like selling a property in India, getting an inheritance, or investing in financial instruments. This article will look at the different ways of bringing money from India to the United States.Selling of propertyAny NRI can sell a commercial or residential property in India to another NRI, PIO, or a person who resides in the said country. But NRIs cannot sell agricultural land or farmhouse to another NRI, as they are only allowed to do so to an Indian citizen who also resides in the Asian country.NRIs are also allowed to repatriate or bring money from India from the sale of a maximum of two residential properties.Sale proceeds should be credited to a non-resident ordinary (NRO) account. This is a savings account where the NRI or PIO can maintain and manage their income earned in India like dividends, pension, and rent, among others.If the property was sold at least three years after the date of purchase, the individual will be levied a long-term capital gains tax of 20 percent. This is calculated by subtracting the sale value from the indexed cost of purchase, or the cost of purchase as adjusted for inflation.NRIs are allowed to repatriate or bring their sale proceeds of property sold in India to the US. However, the limit to the amount brought from India is $1 million per the calendar year, including all other capital account transactions. NRIs, though, can petition to the RBI for an increase in the repatriation limit as long as they can prove that there is a genuine need for it.However, NRIs who were able to purchase a property in India while they were still a non-resident can still repatriate the proceeds from the sale. But they should have bought the property by foreign exchange laws during the time of the purchase.The amount to be transferred must also not be more than the amount remitted through a foreign exchange to India through banking channels. If the NRI purchased the property using funds in a Foreign Currency NonResident account, then the repatriated amount or proceed from the sale must not be more than the amount paid through the said account.  Also, if the NRI purchased the property via a home loan, then the amount to be brought from India should not be more than the amount of loan repayment.To bring the proceeds of the sale of property from India to another country, NRIs or POIs should course it through legal banking channels. This would give them the peace of mind knowing that their money will be safe.  NRIs are cautioned against relying on private money transfer or “Hawala” as this is considered illegal. There’s a risk that they may not get their money out of India if they opt for the said process.To begin the transfer of money from India to the US, the NRI should get a certificate from a chartered accountant (CA) in India.  The CA will issue certificate information or “Form 15CB” which is also downloadable from the Indian government tax website. This is the link to the download page.The form is basically a certificate that the money to be sent abroad has been acquired from legal means like the sale of a property. It also vouches that all taxes due have been paid. The CA must fill in the form and sign it.Once the Form 15CB has been completed, the NRI must fill another form called Form 15CA.  This is a form that is to be filed online with the Indian tax department. It can be downloaded from this link. Some of the information needed in Form 15CA can be found on Form 15CB.The form is to be submitted online, with the NRI receiving a system-generated acknowledgment receipt or number. The filled form 15CA along with the acknowledgment number must be printed out and signed.Then the NRI will have to bring the signed undertaking along with the CA certificate on Form 15CB to the bank where he/she has an NRO account.Aside from Forms 15CA and 15CB (in duplicate copy signed by the CA), the bank will also request the NRI to fill up Form A2 as well as an application for foreign exchange form. The latter is used to vouch that the person who will be sending the money to another country did acquire the money through legal means; in this case through the selling of a property.Some banks may also require the NRI to provide documents like a copy of the sale document of the property. If the NRI inherited the property, then he will have to present a copy of the will, death certificate of the original owner of the property, and legal heir certificate.The bank will then process the transfer of the money abroad.Getting an Inheritance or GiftIn India, the property inherited is fully exempted from gift tax. However, the amount on the sale of the asset is taxable under capital gains. Calculation of capital gains from an inherited property is the sales proceed less than the original cost of purchase of the bequeathed.It may be short term or long term, depending much on the period for which the property or asset was held.In the US, there is an inheritance or estate tax levied at the time of inheritance. But this is only levied if the bequeathed or the deceased individual was a US citizen, resident, or Green Cardholder.NRIs, PIOs, or American Indians will have to report the money that they are bringing in to the US from India. They are to do this by filing Form 3520, an information return and not a tax return. Significant penalties are awaiting those who cannot file the said information return.Form 3520 is an annual return to report transactions with foreign trusts and receipt of certain foreign gifts. It can be downloaded from here. It must be filed along with the tax return of the NRI, PIO, or American Indians who inherit a property in India. This not only applies to property but also other financial assets such as cash and investments.There are two reasons why Form 3520 has to be filed by those who want to bring money from India to the US. One is that it proves a trail of the individual’s receipts. For example, an American India who inherited $100,000 or more and wishes to repatriate that amount to his US bank account will be able to establish the source of that money by filing Form 3520. The same goes for an NRI who sold a property in New Delhi and wants to transfer the proceeds to his US bank account.It also establishes the basis of the inheritance of the individual. The basis here pertains to the fair market value of the inheritance during the death of the person who bequeathed the property to the individual filing the Form.The IRS requires the filing of Form 3520 during cases wherein the individual receives an inheritance of $100,000 or more. But tax experts suggest report inheritance even if the value is lower than $100,000 because it can establish a trail of receipts.If the individual received separate gifts from related parties, the amount should be aggregated. For instance, the individual received $70,000 from an uncle in India and another $50,000 from another aunt. Because the aggregate amount of the cash gifts is $120,000, then he or she should file the Form. This must be particularly reported in Part IV of the said form.The due date for filing the Form 3520 is the same as the due date for annual income tax return filling.There is another form that American Indians have to file if they inherited financial assets in India and wish to bring those assets to the US.Form 8938 is a requirement for all US residents, citizens, and Green Card holders to report foreign financial assets like bank balances, mutual funds, shares of stocks, government securities, and others if the aggregate of these assets is more than $50,000 for single taxpayers and $100,000 for couples.Investments in Financial Instruments Another way for NRIs or PIOs to bring money from India to the US is to invest in financial instruments like debt investment and equity investment.For debt instrument investment, NRIs and PIOs can invest in a non-resident ordinary (NRO) fixed deposit or a non-resident external (NRE) fixed deposit. Many NRIs and PIOs are attracted to these financial instruments, with the relatively high rates of 8-9 percent.American Indians can remit proceeds from their NRE accounts freely or without the cap. But for NRO accounts, they are limited to a ceiling of $1 million in a year.Also, the interest earned in NRE accounts is not to be levied with tax. On the other hand, interest earned in NRO accounts is subject to tax.Other financial instruments that NRIs can invest in are foreign currency non-resident or FCNR deposits where the investment is in dollar, yen, and the euro. These are term deposit with the interest dependent on the LIBOR rate for the particular currency. Interest income from FNCR deposits is not levied with tax.However, NRIs are not allowed to invest in the Public Provident Fund and National Savings Certificates debt instruments issued by post offices.For equity investment, NRIs can invest in direct equities or equity mutual funds.Whenever interest or proceeds of financial instrument investments is remitted or repatriated by an NRI, he or she has to submit Form 15CA at the Indian income tax department’s website.Most of the time, a certificate coming from a chartered accountant as provided in Form 15CB is also needed before the NRI can upload Form 15CA online. In Form 15CB the CA vouches for the details of the payment, Tax Deduction at Source (TDS) rate and TDS deduction, as well as other details of the remittance.This certificate is very important because banks won’t remit the money until this certificate has been provided.But Form15CB won’t need to be filed when a single remittance is less than 50,000 rupees, and the total remittance in the year is not more than 250,000 rupees. In this case, the individual only has to file Form 15CA.  Exemptions to Form 15CB filing also include the deduction of lower TDS, as well as the receipt of a certificate from the assessing officer under section 197.Also, any remittance of funds to an NRI will require the remitter to present a certificate from a chartered accountant that Form 15CB ad Form 15CA has been filed at the Indian tax department’s website.Finance Bill 2015 imposed this requirement starting June 1, 2015, stating that all forms have to be filed for all remittances whether it is taxable or non-taxable. Central Board of Direct Taxes had earlier required the said forms to be filed for taxable transfers, while most banks asked for said forms even for non-taxable transfers.While repatriation of funds from India to the US is not as complicated as it appears to be, it would still be recommended that NRIs, PIOs, or American Indians work with a chartered accountant in India and a professional CPA familiar with Indian laws in the United States. The professionals can counsel them in the intricacies of the Indian tax code, particularly those that affect their assets that they would want to be repatriated to another country.  The CA can also help in the filing of appropriate forms as required by the IRS for people who will be bringing their assets from India to the United States.   Our office specializes in these kinds of cases, so feel free to contact us with any questions.

Common US Immigration Law Misconceptions: Can H-1Bs Be Transferred?

Sanjiv Gupta CPA - 3 years ago
One way virtually everyone refers to getting a new job is transferring to a new company. It is an all-encompassing phrase that covers everything about the employee’s new job, including his H-1B if he has one.Assuming so is a misinterpretation of the country’s immigration laws which can lead to trouble, like being unable to start working because the employer is forbidden by law to employ the new hire.What Is the H-1B?To clear up the misunderstanding of the H-1B, it is best to start with learning all about it.In the country, the H-1B is actually a nonimmigrant visa (NIV).An NIV is granted to a person living permanently abroad but wants to temporarily be in the country to work, do business, undergo medical treatment, study, or have a vacation.On the other hand, an immigrant visa (IV) is granted to a person who wants to live in the country for good.The H-1B lets companies located and operating here to hire graduate-level workers in “specialty occupations” that call for technical or theoretical expertise in specialized fields.What Are the Kinds of Jobs That I Need an H-1B to Be Qualified For?To be considered a specialty occupation, a job needs to meet at least one of the following criteria:#1) It requires the employee to have a bachelor’s degree, an advanced (i.e.., higher) degree, or it is equivalent as a minimum entry requirement.#2) Having a degree as one of the minimum entry requirements to be qualified for the job is common practice in the industry, or the job is so complicated or uncommon that only a degree-holder can perform it.#3) The employer usually requires applicants to have a degree or its equivalent to be considered qualified for the job.#4) The nature of the duties of the job is so complicated and specialized that the needed know-how to perform them is usually associated with attaining a bachelor’s degree, a higher degree, or its equivalent.Here are some examples of specialty occupations.MedicineScienceEngineeringMathematicsInformation Technology (IT)FinanceAccountingArchitecture How Do I Know If I Am Eligible for an H-1B? To be considered qualified for a specialty occupation, you need to meet at least one of the following criteria:#1) You need to have completed the required bachelor’s degree or a higher degree from an accredited college or university in the country.#2) You need to have a foreign degree that is equivalent to the required bachelor’s degree or a higher degree to be considered qualified for the specialty occupation.#3) You need to have an “unrestricted” state license, registration, or certification that lets you fully practice the specialty occupation and be engaged in it in the state where you intend to be employed.#4) You need to have had been educated or trained or have experience in the specialty occupation that is equivalent to completing the required bachelor’s degree or a higher degree to be considered qualified for it, as well as be recognized for your expertise in it through the previous jobs you have held that are all directly related to it.#5) You need to have an employer-employee relationship with your prospective new employer. This is determined by whether it is allowed by law to hire, supervise, pay, or fire you. In short, it has been authorized to have control over your work.In some cases where the facts show that it has the right to have control over your employment, the company’s sole or majority owner may be able to establish a valid employer-employee relationship between you and the prospective new employer.The Additional Benefits of Having an H-1B There are more benefits from having an H-1B than being qualified to work in a specialty occupation in the country:#1) The H-1B holder is allowed to simultaneously seek lawful permanent residency for himself and his family, if he has one, and potentially become lawful permanent residents (LPRs).An LPR is a noncitizen (i.e., a person who is not a national, or inhabitant, of a country) who has been authorized to live and work in the country permanently.To serve as proof of his status, he is granted a permanent resident card, which is commonly referred to as a “green card.”#2) The H-1B’s spouse and/or child (or children), who is (or are) under 21 as well as single, are allowed to enter and stay in the country for as long as he is authorized to stay.#3) The H-1B holder’s spouse and/or child (or children) are also allowed to go to school, either part-time or full time, based on their H-4 status.Having H-4 status means the H-IB holder’s spouse and/or child (or children) have been granted nonimmigrant visas that let them enter the country as his dependents. Being so means they may stay as long as the H-1B holder may stay.#4) The H-1B holder is allowed to enter and work in a professional capacity in the country for six years, regardless of whether he changes employers then.#5) The Government imposes no restrictions on how many H-1Bs he may have.How Can I Get an H-1B?Those who want to have an H-1B are not allowed to apply for it themselves. Their respective employers need to be the ones to do it for them.If you are planning to change employers and you already have an H-1B, keep in mind that your H-1B will not actually be “transferred” from your current employer to your prospective new employer after you change jobs. No H-1B is transferable from one employer to another. Many persons, including some immigration attorneys, mistakenly believe otherwise.Nothing gets transferred from your current employer to your prospective new employer except yourself.What actually needs to be done to keep your H-1B status is, your prospective new employer needs to file a new H-1B petition with the United States Citizenship and Immigration Services (USCIS) that shows you changed jobs and that requests for an extension of your status.To be granted the extension, you are required to present your most recent pay stubs as proof that you were indeed present and working in the country.What If I Was Not Furnished with Pay Stubs?If you cannot present your most recent pay stubs because your current employer did not give you any, it unlawfully benched you, or it did not pay you following the requirements of the H-1B labor condition application (LCA), it may not be possible to prove that you have been maintaining a valid H-1B status. Therefore, it may not be possible to extend it.But that does not mean you are forbidden from getting another H-1B. You may do so by traveling overseas, applying to work for a prospective new employer, and reentering the country with a new I-94 card.The I-94 card is actually an electronic record of the arrival in and departure from the country of entering foreign visitors. This is issued to them by a Customs and Border Protection (CBP) officer. It comes in the form of an annotated stamp in their foreign passport. He creates it electronically upon their arrival and issues it to them at their port of entry (POE).How Does Traveling or Being Overseas Affect My H-1B?Other instances of being outside of the country concern H-1B holders as to whether being so affected their status, like:A person had an H-1B petition filed by his prospective new employer for him, but for some reason, he never entered the country or worked for itA person had been in the country as an H-1B professional at some point in time, but he then left to live in a different country If an H-1B holder is overseas, his prospective new employer is required to file a new H-1B petition for him. Since the petition is not for an extension of his status, presenting his most recent pay stubs is not required.Additional Important Things You Need to Consider to Avoid Having ProblemsSince nothing is transferred between your current employer and your prospective new employer except yourself when moving from the former to the latter, neither your new prospective employer nor you need permission from your current employer to let you do so.That said, if you have any contractual obligations with your current employer (e.g., notice and non-compete agreements), not needing to ask for its permission to move to your prospective new employer does not nullify your obligations.Make sure you can present proper pay records if needed. Lack of these may be a problem for you at the consulate in connection with obtaining your H-1B. Those who lack such records are often H-1B holders who were in the country but were not adhering to the terms of their status.Contrary to what many people mistakenly believe, getting an H-1B petition approved does not get easier. No matter how many employers you move to, each H-1B petition filed for you needs to be complete as well as fully establishes your eligibility and your prospective new employer’s eligibility and compliance with the requirements of the job you are applying for.Speaking of multiple H-1Bs, remember that, basically, you are allowed to have many H-1Bs. But know that having several filings can lead to problems.Say you are still working for your current employer, but you have a pending H-1B petition filed by a prospective new employer (Employer #2), and you would rather work for another prospective new employer (Employer #3).Issues arise from such a situation where a person has multiple pending H-1B petitions filed that can make keeping track of his status confusing.One such issue is bridging. To describe this using the same example, if you are counting on the pending H-1B petition filed by Employer #2 to bridge your status that will let you move to Employer #3, the former’s petition needs to be approved so that the petition the latter will need to file gets approved and extends your status. Since there is no guaranteeing this, get legal advice on how to best organize this situation.But if your status is unbroken, the needed H-1Bs may be approved as extensions with an attached I-94 at the bottom of the notice of approval.Your new employer’s H-1B petition may be subject to the H-1B cap, or whether an exemption from this applies to yours, based on your previous H-1B(s) that was (or were) approved.H-1Bs are subject to a cap each fiscal year in the country. This is the 12-month period that ends on September 30th of the current year and begins on October 1st of the previous calendar year (i.e., January 1st to December 31st).Employers in the country are allowed to begin filing H-1B petitions for their respective prospective employees six months before the actual start date of their H-1B. They may do so as soon as April 2nd, 2017, to avoid the cap next year, but this will not take effect until October 1st, 2017.Under immigration law, a total of 85,000 new H-1Bs is made available each fiscal year, including 65,000 new H-1Bs for overseas workers in specialty occupations who have at least a bachelor’s degree, as well as an additional 20,000 new H-1Bs for the specialty workers holding higher degrees from a US academic institution.Since the cap has been oversubscribed in recent years, USCIS now holds a lottery for the available H-1Bs.The H-1B is effective for up to three years at first, but the duration of its effectiveness may then be extended up to six years.While it is a nonimmigrant visa, the H-1B is among the country’s few visa categories recognized as dual intent. This means an H-1B holder may apply for and obtain a green card while in the country.If you are still here with an H-1B and you wish to stay longer than six years, you may apply for permanent residency to get a green card.If you are not granted permanent residency before your H-1B expires, you need to reside outside the country for at least one year before you may reapply.Obtain a new visa as soon as possible after your H-1B visa stamp expires.Having learned virtually everything there is to know about the H-1B while obtaining one for yourself can still be confusing and hard, you now have a significantly better chance at succeeding.
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