US Based 3PL Companies - International Trade Tax Compliance Requirements
US based 3PL companies are required to file an Annual Return that lists the income and expenses they have incurred during a one year period. This also becomes an asset verification report and a company proxy that are used in international disputes. If a company is not registered under the Income Tax treaty, it is obliged to file an income tax return with US tax authorities.
The purpose of an annual return is to provide information on how the company's performance was evaluated for the previous year and list any tax payments made, either by the company or the government. fulfillment is also necessary to note the assets and liabilities that have been converted into cash and also list the stock holders as well as dividend payment status. All transactions in foreign currency are reported here including sales and purchases, sales amounts and the outstanding balance.
All investment decisions are subject to the review and approval of the CPA. US companies that engage in Business in Foreign countries are required by law to register with the Department of Treasury and comply with their tax provisions. A certified public accountant (CPA) acts as an agent for US companies on their behalf. The CPA reports this information and the annual financial statement on a US company's behalf to the US Taxation Office. Information provided by CPA also helps the IRS to prepare its tax return.
All investments and financing activities must be reported on an audited financial statement by a qualified person. The CPA must be a US tax professional with experience in business taxation. The CPA must not be connected to the company or acting on behalf of the company. Reporting of tax activity requires US taxpayers to retain records for two years.
All investment activities must be reported to the relevant tax authority including: dividends paid and capital gains and interest. A company's accounts payable and accounts receivable must be managed by a department certified to do so. All payments to investment related parties must be made in U.S currency. US companies must be aware that the laws of the jurisdictions in which they conduct business differ and may require them to file additional reports that may be considered a U.S. tax obligation.
US based 3PL companies are required to conduct regular audits of their accounts to ensure compliance with statutory reporting requirements. Audits must be conducted at least once each year, but may be more frequently due to increases in risk or for other reasons. To assure compliance with audit requirements for all US tax professionals engaged in international tax practices must continually participate in IRS education and training programs. This tax professionals' education and training programs are very specific and provide specific training for U.S. citizen and non-resident alien individuals to assist them properly in their interactions with IRS representatives, and to maximize their chance of reducing the tax liability of their clients.
All transactions involving money must be documented, the transaction documents retained by the client and sent to the appropriate IRS Tax Lien Office. The documents must clearly identify who the money belongs to, when it was spent and for how long the money spent was lawful. The company will also be required to submit proof of insurance, or an equivalent security which serves as protection from acts of fraud or default by their clients. It is also important for the companies to notify their clients promptly when changes occur regarding the accounting policies.
In fulfillment , it is absolutely critical for US companies engaged in international trade to ensure proper documentation of their assets and liabilities. They should engage a professional taxation firm to assist in completing these documents and to advise them on the proper tax reporting requirements. Failure to comply with these reporting requirements may result in the authorities taking legal action against the business.