In a rare case for the Supreme Court involving trusts, the court by unanimous decision found that one state cannot tax the beneficiaries of a trust under the laws of another state simply because the beneficiaries live in the taxing state. In this particular case North Carolina sought to tax a New York based trust’s income even though it had not distributed income to the North Carolina beneficiaries. Similarly, the trust did not earn income in North Carolina. There were a number of states seeking do the same so this had a broad affect not only for domestic trusts but also for foreign trusts. The U.S. government is looking to raise the limit on the EB-5 investor visa program from $500,000 to $1.35M. This is a substantial increase which will greatly limit those who can apply.
U.S. individuals with foreign accounts that they fail to report, may face stiffer penalties. The U.S. District Court for the Central District of California recently ruled that the $10,000 penalty for failing to file under the foreign bank and financial account (FBAR) rules applied to each account rather than only $10,000 per year for all accounts. Therefore, U.S. individuals with multiple foreign accounts would face higher penalties if they don’t comply with the FBAR rules. The Senate is voting to ratify several bilateral treaties which have been languishing. The treaties are between the U.S. and: Luxembourg, Switzerland, Chile, Spain, Poland, Hungary and Japan. The U.S. currently has tax treaties with more than 60 countries.