The Hiring Incentives to Restore Employment (“HIRE”) Act, signed into law in 2010, included modified provisions of the previously proposed Foreign Account Tax Compliance Act of 2009 (“FATCA”). These provisions involve two broad categories of tax compliance: reporting by foreign financial institutions on accounts held by U.S. persons, and reporting by U.S. individuals on specified foreign financial assets. It is the latter category that led to the new Form 8938 Statement of Specified Foreign Financial Assets, to be filed in 2012 as part of an individual’s 2011 federal income tax return.

A little over a year ago, Google made headlines with news that its offshore tax rate was a mere 2.4% thanks to a complex structure involving jurisdictions such as Bermuda, Ireland, and the Netherlands. Can today’s technology start-ups hope for similar benefits from a global strategy by transferring non-U.S. rights for their valuable intellectual property to a foreign corporation? The answer, as with most things involving U.S. income tax, is an unequivocal “yes, but,” plus the admonition that planning for various alternatives will still be key.

UHY Advisors TX, LLC is not the only one with a milestone birthday in 2011. Although not yet celebrating 40 years, such as UHY in Texas, UHY International as a network of Member Firms marks its 25th anniversary this year.

This month we look at the importance of checking for special terms covering energy-related activities in double taxation treaties (“DTT”) between the U.S. and other countries so U.S. companies can gauge potential PE exposure before they submit a bid or sign a contract.

This month and next we focus on the risks of having a Permanent Establishment (“PE”) in a foreign country and accidentally becoming subject to the full panoply of taxes imposed there. Part I, this month, focuses on the general concept of a taxable Permanent Establishment (“PE”) as it is used in double taxation treaties between the U.S. and foreign countries, but does not rely upon any specific treaty.