Andrew Mitchel LLC

International Tax Blog - New and Interesting International Tax Issues

Practitioner Cross-Border Activities Can be Costly


In a recent tax bulletin board posting, a tax preparer revealed that they had been designated as a resident agent for a foreign corporation.  After alerting the foreign corporation of the U.S. tax filing requirements, the foreign corporation terminated the relationship.  However, the tax preparer was never removed as the resident agent of the foreign corporation.  The Florida tax authorities then issued a summons to the resident agent, since the foreign corporation did not pay its taxes.  The taxes due were listed in the millions of dollars.

This is but one example of how getting involved in cross-border activities can be costly to tax preparers.  More typically, tax preparers that have not dealt with international operations often are unware of the various U.S. tax filing requirements related to cross-border activities.  The potential penalties for simply failing to report the existence of cross-border transactions can be amazingly large.

Tax practitioners should make certain they are prepared to delve into international waters prior to making the plunge.

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