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This is the fifth in a series of articles on the US taxation of shipping income, \u00a0and begins the explanation of USSGTI obligations.<\/p>\nThis is the fifth in a series of articles on the US taxation of shipping income, \u00a0and begins the explanation of USSGTI obligations.<\/p>\n
Next week, we will discuss exemptions from the tax available pursuant to Section 883.\u00a0Future articles will cover the \u201clook through\u201d rule and what must be done to comply with the filing requirements associated with these exemptions.<\/p>\n
An earlier article<\/a> in this series explained how the Tax Reform Act of 1986 (\u201cTRA86\u201d) substantially altered the US taxation of international shipping income. It changed the \u201csource\u201d rules for international shipping income, (1) deeming 50% of such income to be \u201cUS source\u201d; (2) imposing a 4% tax on that income; and (3) creating an exemption regime that permits foreign corporations that meet certain criteria to claim exemption from tax.<\/p>\n TRA86 created a US tax filing obligation for every foreign corporation that has US source gross transportation income (\u201cUSSGTI\u201d) in any tax year.\u00a0 Thus, any foreign corporation that received USSGTI income during 2011 must file a US tax return on Form 1120-F by 15 June 2012, even if the corporation qualifies for exemption from the tax. \u00a0There are no exceptions to this rule.\u00a0<\/strong><\/p>\n Companies earn USSGTI when they receive any form of income (bareboat, time, or voyage hire, i.e.<\/em>, freight) for the use of a vessel that transports cargo to or from the United States.\u00a0 The only parties not subject to the US tax are those who pay the ultimate freight bill.<\/p>\n IMPORTANT NOTICE TO READERS<\/strong><\/p>\n The information contained on this blog is not legal advice. \u00a0It is provided only as general information, and may or may not reflect the most up-to-date legal developments. \u00a0This information is not provided in the course of, and receipt of it does not constitute, an attorney-client relationship.\u00a0 It certainly does not substitute for obtaining legal advice from a licensed attorney. \u00a0Legal advice should take into account the specific facts and circumstances applicable to each individual situation. \u00a0Viewing this site and reading this blog does not create an attorney-client relationship between you and our firm.\u00a0 Likewise, sending us an email does not create an attorney-client relationship between you and the firm.\u00a0\u00a0 While we would be happy to hear from you, Flott & Co. PC cannot represent you until we have determined that doing so will not be a conflict of interest. \u00a0The only way for you to initiate legal representation with the firm is to call us at\u00a0(703) 525-5110. \u00a0If and when Flott & Co. PC enters into an engagement agreement with you, you will be a client of the firm, at which time we will be able to exchange information freely.<\/p>\n Unless otherwise indicated by Flott & Co. PC in writing, any US federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for either (i) avoiding penalties under the US Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matter addressed within. For further information regarding this notice, please see\u00a0http:\/\/www.flottco.com\/ This is the fifth in a series of articles on the US taxation of shipping income, \u00a0and begins the explanation of USSGTI obligations. Next week, we will discuss exemptions from the tax available pursuant to Section 883.\u00a0Future articles will cover the \u201clook through\u201d rule and what must be done to comply with the filing requirements…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[15],"class_list":["post-124","post","type-post","status-publish","format-standard","hentry","category-shiptax","tag-the-associates-at-flott-co-pc"],"_links":{"self":[{"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/posts\/124","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/comments?post=124"}],"version-history":[{"count":2,"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/posts\/124\/revisions"}],"predecessor-version":[{"id":1740,"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/posts\/124\/revisions\/1740"}],"wp:attachment":[{"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/media?parent=124"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/categories?post=124"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.flottco.com\/doingbusinessacrossborders\/wp-json\/wp\/v2\/tags?post=124"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}