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    • Ronson J. Shamoun, ESQ., LL.M.
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  • Home
  • About
    • Ronson J. Shamoun, ESQ., LL.M.
    • Chandara Diep, ESQ., LL.M.
    • Devon J. Arabo, ESQ., LL.M.
    • Brian M. Malloy, Esq.
    • Andrea Cisneros Valdez, Esq., LL.M.
    • Sam Imandoust, ESQ., LL.M
    • Lauren Suarez, ESQ., LL.M.
    • John I. Forry, Esq.
    • Martin Schainbaum, ESQ., LL.M.
    • Kaveh Imandoust, JD, MBT, CPA
    • Joseph Cole, ESQ., LL.M.
    • Christopher Engelmann, ESQ., LL.M.
    • Remy Hogan, Esq., LL.M.
    • Steve S. Mattia, Esq.
    • Dod Ghassemkhani, ESQ.
    • Vincent Renda, Esq.
    • Pedro Bernal, Esq.
    • Sabri P. Shamoun 1938-2023
    • Melanie M. Shamoun
    • Renae Arabo
    • Hilary Dargavell
    • Sandie Portilla
    • Lupita C. Torres
    • Jewell Cornejo
    • Kesia Belford
    • Danielle N. Misleh
    • Judith G. Jeremie, JD
    • Rebecca Shuman
    • Michael Lutzky, CPA
    • Gianna Iskander
  • Practices
    • Tax
      • IRS TAX MATTERS
        • IRS Appeals
          • IRS Appeals Process
          • Contesting an IRS Levy
          • Why Retain RJS LAW for IRS Appeals
          • 4 Tips For Navigating The IRS Rapid Appeals Process
        • IRS AUDITS
          • IRS Correspondence Audits
          • What are IRS Field Audits?
          • Initial IRS Compliance Center Audits
          • IRS Office Audits
          • What happens in an IRS Audit?
          • Taxpayer Rights Under IRS Publication 1
          • IRS Warns Taxpayers About Scam
        • NOTICES
          • IRS Notices
          • IRS Letters
          • FTB Notices
          • Avisos en Español
        • IRS Collections
          • Avoiding and Eliminating IRS Tax Liens
          • Collection Due Process Hearing
          • CP 501 – IRS Notice
          • Failure to file a tax return: What happens?
          • How the IRS calculates interest
          • How to get a tax levy released
          • ACS – Automated Collection System
          • IRS Collections Process
          • IRS Interest Abatement
          • IRS Revenue Officers
          • Jeopardy Assessments and Jeopardy Levies
          • National Tax Agencies
          • RJS LAW Approach to Collections
          • IRS Statute of Limitations on Collections
          • Streamlined Installment Agreements
          • Tax Penalty Abatement
          • Taxpayer Assistance Orders TAO
        • IRS Payroll Tax
          • Independent Contractor Reclassification Audits
          • IRS Forms 940 and 941
          • IRS Trust Fund Interviews
          • Payroll Tax Liability Payment Options
          • Trust Fund Recovery Penalties
        • IRS Wealth Squad
        • Offer in Compromise & Tax Settlements
          • OVERVIEW OF OFFER IN COMPROMISE PROCESS
          • The Offer in Compromise Process
          • Appealing an Offer in Compromise to the IRS
          • How does the IRS evaluate an Offer in Compromise
          • Offer in Compromise and Dissipated Assets
          • Offer in Compromise Requirements
          • Pros and Cons of an Offer in Compromise
          • Why Choose RJS LAW?
          • Offer in Compromise Alternatives
          • Actual IRS Offer in Compromise Results
      • STATE TAX MATTERS
        • EDD California Payroll Tax Lawyer
          • EDD Investigations
          • EDD Collections – Liens, Levies, and Garnishments
        • CDTFA – California Sales Tax
          • California Sales Tax Appeals
          • California Sales Tax Audits
          • California Department Of Tax And Fee Administration – CDTFA
        • California State Tax Matters – California Franchise Tax Board | FTB | EDD
          • California Residency Audits
          • Discharging State Income Taxes in Bankruptcy
          • State Tax Practice – Outside of California
      • CRIMINAL TAX ISSUES
        • Criminal Investigation Division
        • IRS Criminal Investigation Division Tactics
        • Criminal Tax Defense – Tax Crimes
        • Currency Transaction Records & Suspicious Activity Reports
        • IRS Methods of Proof: Tax Fraud and Evasion
        • Methods IRS Agents Use to Locate Assets
        • IRS Special Agent Visits
        • Are You a Criminal Investigation Target?
        • Criminal Tax Attorney vs. White Collar Defense
      • CORPORATE TAXES
      • TAX COURT LITIGATION
      • Innocent Spouse Relief
    • International Tax
    • Visa Gold Card
    • Estate Planning
    • Trust Litigation
    • Trust, Estate & Probate Litigation
    • Trust & Estate Administration
    • Probate
    • Bankruptcy
      • Bankruptcy (FAQ’s)
    • Civil Litigation
    • Criminal Defense
    • Accidents & Injury
    • Corporate & Transactional
    • Private Wealth Services
    • Real Estate Law
      • Landlord Tenant Law
    • Employment Law
  • Tax Institute
    • 10th Annual USD School of Law – RJS LAW Tax Institute
    • 9th Annual USD School of Law – RJS LAW Tax Institute
    • 8th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 28th, 2023
    • 7th Annual USD School of Law – RJS LAW Tax Controversy Institute – July 15th 2022
    • 6th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 5th Annual USD School of Law – RJS LAW Tax Controversy Institute
    • 4th Annual USD School of Law – RJS LAW Tax Controversy Institute
  • Testimonials
  • Giving
    • Giving
    • RJS LAW Donates Billboard to the Girl Scouts
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    • Ronson J. Shamoun at events with various dignitaries
    • SD50 Extraordinary Leadership
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Tax Treaty Provisions Are an Important Part of International Tax Reporting File IRS Form 8833 to Avoid Penalties!

Tax Treaty - IRS Form 8833
Tax Treaty - IRS Form 8833

What is a Tax Treaty?

A tax treaty is an agreement between two countries intended to address and resolve issues such as double taxation of income for each country’s citizens or residents. The United States has tax treaties in place with numerous countries. These treaties seek to provide reciprocal reduced tax rates or exemptions for citizens or residents of both countries. The specific rate reductions or exemptions differ with each treaty as does the definition and determination of what types of income qualify for reduction or exemption. Often these tax treaties will include a “Savings Clause.”

The “Savings Clause”
A savings clause, which is included in most tax treaties, prevents a United States citizen or resident from using a treaty to avoid being taxed on income originated in the United Sates. If the treaty does not mention a particular type of income or no treaty exists, then the taxpayer must file tax returns and pay all income tax as required under applicable U.S. federal and state tax law.

Non-Tax Treaty Compliant States
However, some states choose not to conform with federal tax law and do not honor the provisions of federal tax treaties. As such, taxpayers in those states may be required to report and pay state taxes even when a treaty exists.

California is a non-tax treaty compliant state. As a result, a person or entity that pays taxes in California must still pay California state taxes even when their income falls under the provisions of a federal treaty.

How do I Claim Relief Under a Provision in a U.S.? File IRS Form 8833.
Internal Revenue Service Form 8833, Treaty-Based Return Position Disclosure, is required for each taxpayer who takes a position under Section 6114 or 7701(b) of the tax code, that a United States treaty overrides or modifies their obligations under regular Internal Revenue Service rules.

Who Must File and When?
Taxpayers who seek to take treaty-based relief must file an IRS tax return and include IRS Form 8833 for each treaty-based position taken unless a waiver has been granted. In situations where a taxpayer is not required to file a federal tax return, the taxpayer is still required to file a return to make the treaty-based return position disclosure using Form 8833.

What is a Treaty-Based Return Position?
A treaty-based return position occurs when a taxpayer claims that a provision under a U.S. federal treaty modifies or overrides a reporting requirement of the Internal Revenue Code and the modifications results in or may cause a reduction of the taxpayer’s tax obligation.

Penalties
The IRS requires full disclose for each treaty-based exemption. Failure to disclose a treaty-based return position may result in a penalty of $1,000 for an individual or $10,000 for a C corporation.

Conclusion
Understanding the intricacies and rules of tax treaties as well as the Form 8833 reporting requirements is difficult. The International Tax Department at RJS LAW, has qualified attorneys with experience regarding treaty deductions and reporting. Our sophisticated International Tax Department is ready to assist in preparing and reporting Form 8833 as well as assisting those who failed to report. If you have questions, please call for a free consultation and assessment at 619-595-1655 or contact us via the web at www.RJSLawFirm.com. We look forward to hearing from you.

Written by Andrea Cisneros Valdez, Esq., LL.M and Andrew Rice

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Filed Under: International Tax, International Tax Attorney, International Tax Reporting Requirements, IRS Form 8833 Tagged With: international tax, international tax attorney san diego, International Tax Reporting, International Tax Reporting Requirements

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