Business Without Borders – International Business and Tax Planning Blog

Archive for October, 2011

Combined incentives from the United States federal government and the State of New Jersey have made New Jersey an extremely attractive market for European and Asian manufacturers of solar panels.  Published reports consistently rank New Jersey as number one or number two in terms of solar installations, neck and neck with the much larger (and somewhat sunnier) State of California.

However, the looming expiration of a key federal program has helped stimulate a feverish acceleration of developments that in turn has had an impact on the value of New Jersey’s Solar Renewable Energy Certificates, or SRECs.  Section 1603 of the American Recovery and Reinvestment Act (ARRA) offered certain owners of renewable energy projects, including photovoltaic solar, the opportunity to receive a cash grant in lieu of the usual 30% investment tax credit for such projects.  While taxpayers with large amounts of taxable income might regard a cash grant and tax credit as equivalent, the grant is a very attractive option for taxpayers that have limited taxable income and that accordingly would need many years to use up the full amount of the credit.

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Non-U.S. based insurers and reinsurers beware. Rep. Richard E. Neal, D-Mass., ranking member of the House Ways and Means Select Revenue Subcommittee, and Sen. Robert Menendez, D-N.J., a member of the Senate Finance Committee reintroduced revised legislation in both the House and Senate designed to close a tax loophole that benefits property and casualty insurers based offshore. Insurance industry trade groups have been engaged in an on-again, off-again battle over the tax treatment of off-shore insurers and reinsurers for the last 10 years with various bills dying on the vine. The revised bill (H.R. 3157 and S. 1693) has been crafted to defer the deduction for reinsurance premiums paid to a foreign affiliate if the premium is not subject to U.S. tax. The revised law allows foreign-based insurers to elect to be taxed similarly to a U.S. company on the income from affiliate reinsurance transactions and provides for a tax credit to offset any foreign taxes paid on income from affiliate insurance transactions to prevent double taxation.

Offshore Insurance Tax Bill Reintroduced

The 2011 IRS Offshore Voluntary Disclosure Initiative (“2011 OVDI”) closed on September 9, 2011. The 2011 OVDI gave certain taxpayers the opportunity to come forward and report items of offshore income and file information returns, such as Reports of Foreign Bank and Financial Accounts (“FBARS”) in exchange for a streamlined penalty configuration. Though 2011 OVDI has closed and its New Jersey 2011 counterpart closed September 30, 2011, taxpayers with unreported offshore income issues still have options they can consider if they wish to enter the U.S. taxing system and become compliant. We have been meeting with taxpayers since 2011 OVDI closed advising them on their options. You should consult with a tax advisor as to the facts of your particular situation to craft an approach to your case.

It seems that every day there is some announcement about U.S. immigration policy or immigration reform. It also seems that with every such announcement, immigration lawyers are flooded with inquiries by the documented and undocumented, as well as their U.S. citizen friends, seeking ways to take advantage of this perceived newfound benefit. Unfortunately, some “immigration advisors” also get those inquiries and seek to take advantage of what to them is a golden opportunity to reap great financial rewards from those who can ill afford the loss. The desperate, the poor and uninformed are easy prey for those notarios, “immigration advisors,” or others involved in the unauthorized practice of law.

The most recent rumor is the specter of amnesty for those illegally in the U.S.  The truth of the matter is there is no amnesty.  The policy announcements made by the Obama Administration in August only concern a slight change in the attitude of the government to the priorities and process to be considered by the immigration service in seeking the deportation of undocumented individuals from the United States who have been convicted of crimes.  The August announcement in no way confers a right upon any non-citizen to either remain in the United States, obtain permission to work, bring other relatives to the United States, or any other independent immigration benefit.  If you know of anyone who is either undocumented or simply a non-citizen, who is here legally and is seeking a change of their status, encourage them to either seek the advice of an experienced immigration lawyer or to contact a legitimate non-profit service organization that can properly evaluate that individual’s status and advise her or him as to the best path to follow for the particular immigration benefit sought. The detention facilities of the USCIS are filled with unwary individuals who have paid thousands of dollars to unscrupulous so-called “immigration advisors” who take advantage of the poor or uninformed and often leave them worse off than before they sought the advice of that so-called “immigration advisor.” Do not let someone you care about become a victim who looses more than just money; they can forever be barred from remaining in or returning to the U.S.

Tomorrow, President Barack Obama will sign three trade deals with South Korea, Columbia and Panama that were passed by Congress last week. The deals, which originated under the George W. Bush administration and have since been revised by the Obama administration, were achieved through a compromise by Republicans on aid for workers who lose their jobs to foreign competition. According to the U.S. International Trade Commission, the South Korea deal would increase U.S. exports by an estimated $10.9 billion in its first year in full effect, while the accord with Colombia would increase exports by as much as $1.1 billion a year. Companies such as Ace Ltd., Citigroup Inc., and Pfizer Inc. have led the effort to get the South Korea deal passed. Caterpillar Inc., General Electric Co. (see also IN THE NEWS: GE Co-CEO Immelt Says Try Harder), and Whirlpool Corp. pushed for the deal with Colombia.

To learn more about the trade deals and their potential impact on U.S. exports to South Korea, Columbia, and Panama, read:

South Korea, Colombia, Panama Trade Accords Clear U.S. Congress

Obama to Sign South Korea, Colombia, Panama Trade Deals Oct. 21

On September 29, 2011, a New Jersey Appellate Division panel affirmed Judge Happas’ summary judgment order in Bailey v. Wyeth, 2008 WL 8658571 (N.J.Super. Law Div. 2008), for substantially the reasons expressed by Judge Happas in her opinion. DeBoard/Bailey v. Wyeth, 2011 WL 4482558 (N.J. Super., App, Div. 2011). In Bailey, Judge Happas granted summary judgment to pharmaceutical defendants based upon the New Jersey statutory rebuttable presumption of adequacy provided to FDA-approved warnings on prescription drugs. See N.J.S.A. 2A:58C-4. The affirmance of Judge Happas’ opinion is significant because her opinion defined the effect and operation of that rebuttable presumption, and severely limited the methods/grounds available to plaintiffs for rebuttal. Judge Happas also discussed why collateral claims of statutory consumer and common law fraud must be dismissed in the context of a products liability lawsuit brought under the New Jersey Product Liability Act. To read Judge Happas’ opinion in detail, see Bailey v. Wyeth, 2008 WL 8658571 (N.J.Super. Law Div. 2008), aff’d, DeBoard/Bailey v. Wyeth, 2011 WL 4482558 (N.J. Super., App, Div. 2011).

Reuters reports: Jeff Immelt, co-CEO of the largest U.S. conglomerate GE and a top adviser to the Obama administration on jobs and the economy, says the U.S. is not trying hard enough to boost exports, which is contributing to the poor economy and high unemployment. He thinks if U.S. companies focus on exporting more goods, making the effort “to compete, educate and sell our products around the world,” the U.S. economy would improve. Immelt notes the vigor with which German manufacturers support Chancellor Merkel in promoting German products around the world and believes that American business should support Obama’s drive to double exports over the next five years in the same way. He believes that the U.S. can compete with China and sees Russia and resource-rich African countries as significant investment opportunities. Ultimately, Immelt notes that stronger growth is the only real answer to the rising disillusionment and unemployment. “The only way to solve this specific problem is growth,” Immelt said. “If unemployment comes down, people will feel better. If unemployment goes up, people will feel worse, no matter what goes on Wall Street.”

U.S. not “trying that hard” on exports: GE’s Immelt

On September 8, 2011, the U.S. Senate passed the Leahy-Smith “America Invents Act” — perhaps the most significant reform of U.S. patent law in living memory. The Act was signed into law by President Obama on September 16, 2011 which enacted its provisions. Certain provisions have immediate effect, while others will come into effect at a later date, typically 12 months (September 16, 2012) or 18 months from (March 16, 2013) from the date of the President’s signature. Please click here for a summary of the major points of the Act. Note, the Act, however, does not include all of the final provisions and rules, as parts of the Act include authorizations for subsequent rulemaking to be made by the Commissioner for Patents. These are expected to be promulgated within the next several months, and are expected to be published in the U.S. Federal Register for public review and comment prior to their enactment.