Daily Tax Update - February 3, 2016: IRS and Treasury Issue Temporary and Proposed Rules on Allocation of Creditable Foreign Taxes

IRS and Treasury Issue Temporary and Proposed Rules on Allocation of Creditable Foreign Taxes:  The IRS and Treasury Department issued temporary regulations that provide guidance relating to the allocation by a partnership of creditable foreign tax expenditures.  The regulations are intended to improve the operation of an existing safe harbor rule that is used for determining whether allocations of creditable foreign tax expenditures are deemed to be in accordance with the partners’ interests in the partnership.  The text of the temporary regulations also serves as the text of proposed regulations issued at the same time.

Expatriate Pleads Guilty to Tax Fraud in Connection with Swiss Account:  The Department of Justice announced that a former US citizen residing in Switzerland pleaded guilty today to one count of filing a false income tax return.  The charges relate to failure to report interest earned on a Swiss financial account.  The individual faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 and, as part of his plea agreement, agreed to pay $84,849 in restitution to the IRS.  The IRS criminal investigation division said that the “plea is a reminder that we are committed to following the money trail across the globe and will not be deterred by the use of sophisticated international financial transactions that hide the real ownership of income taxable by the United States.”