Archives For olympics

People do not like FATCA and they are not shy about it.  If you bring up the Foreign Account Tax Compliance Act, don’t be surprised if the response is riddled with curse words.

U.S. expats hate it since some foreign banks just shut out Americans they see as more trouble than they’re worth.

Financial institutions hate it for the high standards and hassles it causes.

Foreign governments hate it for making the IRS more powerful than their own countries’ tax agencies.

At the end of the day, FATCA won’t even make the IRS much money. But the Obama administration has done a slick job of greasing the wheels of international commerce and quelling what could have been veritable repeal riots.

Now FATCA has a new fan base from an unlikely source: the Brits. Sure, there’s a post-Olympic glow and international goodwill. Yet it turns out British legislators want their own FATCA. Just like Brits embraced the hamburger, they want a U.S.-style automatic disclosure by foreign banks and tax authorities on U.K. citizens. Why? Cross-border tax evasion.

That means U.K. citizens and U.K. companies will get reported for foreign accounts just like Americans. The Brits even want to drum up support from other European nations to join the FATCA bandwagon. It’s too soon to say if British legislators will enact a right-hand drive version of FATCA. But who would have thought it?

FATCA isn’t even fully implemented yet. Many think the true test is coming in January 2013. In 2012, most taxpayers with foreign financial assets worth $50,000 or more must file a Form 8938. Unlike FBARs, this form is filed with your tax return. If you extended your tax return filing to October 15, 2012, it extends the date to file your Form 8938. That gives you a little time to figure this out.

Yet this filing is nothing compared to what’s facing foreign financial institutions. January 1, 2013 is D-Day for FATCA implementation. Foreign institutions have to comply or face serious U.S. actions. This has lead to many foreign banks not wanting to open new accounts or even keep existing accounts for Americans

FATCA seems pretty secure now despite resounding critiques. The Wall Street Journal’s William McGurn castigates FATCA here: Obama’s IRS Snoops Abroad. But as they say, imitation is the sincerest form of flattery.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

The Price Olympians Pay

August 3, 2012 — 1 Comment

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We all know winning a medal at the Olympics comes at a price and we normally think of that price as hard work and dedication. In this case, it’s the taxes America’s victorious athletes can expect to pay when they return from the London games.

Medals and prize money are both currently subject to income tax, according to the Americans for Tax Reform.

A gold medal, which is worth $650, according to CNN, could cost athletes about $236 in taxes. While a bronze metal, which is worth $5, could only cost an athlete $2 in taxes

Athletes will also be taxed on the cash bonuses given by the U.S. Olympic Organizing Committee, which are much more substantial than the cost of the medals.

The U.S. Olympic Organizing Committee will award London champions $25,000 for a gold medal, $15,000 for silver and $10,000 for bringing home a bronze, Reuters reports.

At a 35 percent income tax rate, bronze medalists will owe the IRS a total of $3,500, silver medalists will owe $5,250 and top finishers will be liable for $$8,750.

Of course, many high-profile athletes will also come home to lucrative sponsorships offers, also all taxable.

For example in 2008, Michael Phelps earned a $1 million bonus from Speedo, which he donated to charity. This summer, Phelps’ teammate and primary competition Ryan Lochte could earn even more from ads for Gatorade, Gillette and other sponsors.

But American athletes aren’t the only Olympians vying for the gold — or big prize money.

Though Malaysia has never won a gold medal in an Olympic Games, Andrew Kam, the owner of a gold mine and the Kuala Lumpur Racket Club, will award a 12.5 kilogram (27.5 pound) gold bar (market worth $630,000) to any badminton player who wins gold (someone should have told the badminton players who purposely tried to lose).

A recent Yahoo! Finance story also notes that during the 2010 Winter Olympics, Russians received $135,000 for gold medals and $54,000 for bronze.

There had been controversy leading up to London Games regarding Britain’s stringent tax laws, which ordinarily take a large cut of the global income of any international athlete competing on its soil.

Worried the policy would discourage participation from Olympic superstars like sprinter Usain Bolt, who has previously criticized the law, British taxing authorities agreed to an exemption for London 2012 Olympic athletes.

Thankfully, Senator Marco Rubio (R- Fla.) introduced a similar bill to Congress on Wednesday that would exempt Olympic winners from taxes on prizes received at the London games, as our victorious athletic representative justly deserve.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

There has been a lot of talk about the cost of the Olympics and what the impact has been on London financially.  There has also been a lot of talk about the cost Olympians have paid in order to compete in London athletically.  But something that has not been talked about as much is the financial cost to the athletes themselves.

Fortunately for the athletes their sole focus remains on their events because for them, this is a tax free event.

Yes, you read that correctly. Olympians at the games are getting a nice tax break under an exemption passed just for the London 2012 games. If not for the exemption, those at the games would have had to pay some pounds to play.

You see, the Brits, like the U.S., have a tax system that attempts to tax global income. Under British tax law, the amount of tax due is pro-rated based on the number of events that an athlete competes in inside the country; this is in addition to a 50% tax rate on appearance fees. If, for example, an athlete participates in ten athletics events in 2012 and one of those events is located in the UK, the Brits take the position that they are more or less entitled to 1/10 of that athlete’s worldwide income (some exceptions apply but you get the idea). The tax is imposed even though the athletes may not live in Britain.

The law has kept big names like Spanish golfer Sergio “El Nino” Garcia and Rafael Nadal out of the country for a number of events. Those omissions made sports news but didn’t make many waves beyond their individual sports. The Olympics, however, is on a completely different scale: you can’t have a competitive Olympics unless athletes from all over the world actually show up – and attendance was threatened by these tax laws.

Last year, Jamaican sprinter Usain Bolt famously declared “I am definitely not going to run [in London]” until the Olympics because of what he viewed as punitive tax laws. His declaration sent the country as well as the rest of the world into a tizzy, worrying that other athletes might make similar proclamations and then potentially even worse, follow through on said proclamations.

In order to stem any controversy, the British taxing authorities agreed to a limited exemption to the tax rule. The exemption covers those athletes who are visiting the UK in order to compete in the Olympic Games and a limited number of people who are visiting the UK to work on Games-related activity.  Exemptions also apply to certain non-UK residents working for broadcasters. But not everyone gets a break: those working on construction of the venues (UK residents and non-residents) will have to pay taxes just as always.

Many of the athletes at the Olympics work at something other than their sport for a living. But those that compete professionally – like our American basketball team and many of the world’s best soccer (er, football) players – were especially concerned about forfeiting taxes in order to compete in the Games.

Now, they don’t have to. Lucky them.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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The London 2012 Olympic Games begin next week and many sponsored companies are quick to add the ubiquitous Olympic logo to their advertisements. In addition, Olympic Park is serving as a tax haven for the entire duration of the games because of special tax rules included as part of the original bid in London. As a result, sponsors are not required to pay taxes on earnings from the Games. However, two companies – Coca-Cola and McDonalds – have stated they are intending to pay corporate and income taxes for the all of the Olympic Games.

The Revenues and Customs of England said the tax breaks are available to all foreign nationals and include corporations, athletes, judges, journalists, and any international workers for the Games. The relief is not available for U.K. based companies though. As a result of such a large-scale tax break for all these companies, the U.K. has the potential to lose a significant amount of money from the Games. One organization known as “38 Degrees” has collected more than 150,000 signatures to urge sponsors to reconsider their tax break.

The cost of McDonalds declining the break is extremely minimal – only  0.1% of its annual sales in the U.K. Coca-Cola and McDonalds are 2 of 11 international companies who pay nearly $1 billion to sponsor the Winter and Summer Olympics over the four-year cycle.

“Coca-Cola has never intended to, and will not be making, any corporate or income tax exemption claim with respect to any activity concerning our involvement with the London 2012 Olympic and Paralympic Games,” the corporation said.

In even more recent news, General Electric and Visa also declined the tax-relief offered by the Summer Games. The goodwill and public relations that will come from declining the tax relief will most likely outweigh the benefits of not paying taxes for revenues derived from the Games.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.