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IRS Targets Non-U.S. Vessel Owners in Gulf of Mexico Shawn O’Brien Jackson Walker L.L.P.

IRS Targets Non-U.S. Vessel Owners in Gulf of Mexico Shawn O’Brien Jackson Walker L.L.P. (713) 752-4544 sobrien@jw.com. IRS International Enforcement Effort. Foreign Financial Accounts Held by U.S. Persons U.S. Activity of Non U.S. Persons

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IRS Targets Non-U.S. Vessel Owners in Gulf of Mexico Shawn O’Brien Jackson Walker L.L.P.

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  1. IRS Targets Non-U.S. Vessel Owners in Gulf of Mexico Shawn O’Brien Jackson Walker L.L.P. (713) 752-4544 sobrien@jw.com

  2. IRS International Enforcement Effort • Foreign Financial Accounts Held by U.S. Persons • U.S. Activity of Non U.S. Persons • U.S. Permanent Establishments by Foreign Companies • Transfer Pricing of Inter-Company Transactions of Multi-National Companies

  3. IRS Targets Gulf of Mexico

  4. IRS InitiativeU.S. Outer Continental Shelf Activities • Three Categories of Activities Targeted: (1) Contractors performing seismic, testing, drilling repair and salvage services; (2) Vessel Operators transporting supplies and personnel; and (3) Bareboat or Time Charter vessels.

  5. IRS Research of OCS Activities • U.S. State Department Records – B-1 OCS Visas • U.S. Coast Guard Filings • Internet Sites - • Company Websites • Blogs Tracking Vessel Movement

  6. U.S. Activity Subject to Tax • Income Tax – Form 1120 F • Payment received for services performed on OCS is considered taxable income under U.S. Internal Revenue Code • Payments to a Foreign company may require withholding by Payor using a Form 1042 • Employment Tax – Forms 940 and 941 • Foreign Crew compensation taxable • Payor/Employer may be required to withhold

  7. IRS Correspondence • IRS “Soft Letter” Regarding Activities • IRS Information Document Request • Proforma Tax Returns if Non Compliant

  8. How to Navigate IRS • Do Not Ignore the Issue • Treaty May Lessen the Blow of Taxation • Communicate with IRS Agent Through a Representative • Become Compliant with IRS Filing Requirements

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