International Taxation and Policies

            The international taxation policies of United States define the rules of taxation for the residents and nonresidents individuals.  In this paper, there would be discussion on the Section 7701(b) rules and regulation in the United States. There are two cases discussed in the paper on that are about the nonresidents of United States and the rules of their taxation under Section 7701(b).  There is also discussion about the getting the lawful permanent residency of United States. While doing business there are some kind of income depending on the resources that is obligatory to pay tax of specific percentage in order to run business lawfully (HODGEN, 2013).

Question 1

The Section 7701(b) of the United States basically provides the regulations and laws, in case an alien resident of the country satisfied the test for the substantial presence.  Under Section 7701(b) it is determine that under which rule the alien resident of the United States maintained the tax of his/her house in the foreign country that eventually help him to have a good connection with the foreign county.  The Section 7701(b) also determine the rules, if an individual because of his medical condition can exclude his presence days in US because he is not able to leave his country. Some of the rules provided by Section 7701(b) also apply the 877 to the individual who are not residents. The Section 7701(b) also determine any individual taxable year (KAGAN, 2018).

Section 301.7701(b) offers the laws and rules for determining the outcome of rules in tax agreements to which US is a party. The Section 301.7701(b) also offers bureaucratic rules for founding that a person who is an alien nonresident in US. This Section determines the operational section 7701(b) dates and the rules under this section. Except the situation indicates, the rules under 7701(b)-1 towards the 301.7701(b)-9 apply for objectives of determining whether a citizen of United States is also a United States resident. (This purpose may be applicable, for instance, to section 861(a) (1) application of that treats income from obligations of residents interest-bearing as revenue from sources in US.) The rules do not continue to apply for resolutions of bona fide residence section 911test.

Lawful permanent resident

(1)Green card test.

An alien in the US is resident alien if the person is a permanent lawful resident at throughout the calendar year. A permanent lawful resident is a person in US who has been legally approved the residing permanently privilege in the US as an immigrant with the laws of immigration (Revenue-pa.custhelp.com, 2017).

(2)Rescission of resident status.

The status of the resident is measured to be rescinded in case a final managerial or legal order of deportation or exclusion is dispensed concerning alien individual. The term “final judicial order” is basically an order that is no more willing to demand to an advanced court of skilled jurisdiction.

(3) Judicial or administrative determination of resident status abandonment

A Judicial or administrative determination of resident status abandonment may be introduced by alien individual in the United States, the consular officer, or an Immigration and Naturalization Service (INS).

Questions 2

The United States taxation of aliens is considerably affected by the individual’s status residency. In case of Wolfgang, it can be seen that he is not a permanent resident of United States and under the immigration law of the United States he is refers to the immigrants on temporary visa in the US.

In general, the regulatory norm is that aliens resident of the US are taxed similar to the U.S. resident on their international income, and aliens nonresident are taxed as stated by special rules confined in specific Internal Revenue Code parts (denoted as I.R.C). A main individual aspect of this distinct tax command concerns with their the income source: an alien nonresident have to pay the tax related to the federal income on the income that is resulting from sources inside United States and income that is efficiently linked with a U.S. business or trade. The although doing his work for a long time in the United States but still he is having a lot of restriction in doing his work. The Wolfgang only have to have the tax on the income that is earn from the US sources.

According to the rules of residency the purposes of tax are found in I.R.C. Although rules of tax residency are depends on the laws of immigration regarding nonimmigrants and immigrants, the rules describe placement for tax purposes that is different from the laws of immigration. In case of Wolfgang, who is not a U.S. citizen, he is considered a nonresident, now to be the resident of the United States he must have to apply for the test for green card in the calendar year. Wolfgang can admitted to be the permanent resident of United States as, or change his current position to, a Lawful Permanent Resident under immigration laws by applying for the Green Card Test (SEGAL, 2018).

Wolfgang can also pass Substantial Presence Test (that is an arithmetical formula to measures presence days in US); in many of the cases the alien’s residents of the US are permitted to make votes that dominate the Substantial Presence Test and the Green Card Test, as follows:

         The Wolfgang can make the "First-Year Choice" (that is also a numerical formula that an alien might pass Substantial Presence Test 1 year before under rules). They selected with their alien resident or citizen of U.S. to be treated as US resident; they are also likely to claim a nearer link to foreign country; or they get benefit of the tax treaties effect for the tax definition residence. Under all of these rules of residency and immigration, an undocumented alien in the immigration laws who has passed the Substantial Presence Test will be preserved for purposes related to tax as resident alien. So it can said that the Wolfgang needed to first pass the tests to get the green card and because he already have some sort of property and business dealings in the united states that would also make the whole process  of getting a green card and being the resident of united states more easier.

Questions 3

 In the case of Marry, she is a nonresident of United States and in the first years she have visit the united states a lot of times for business meeting and holidays. She also got admitted to the hospital because illness. When the marry exceed 184 days stay in the united states in different time and places she has become temporary resident of United States  and now during her stay in the united states when she came here for work, she is needed to pay the taxes on the incomes earn from the Unites States resources (SEGAL, 2018).

 In order to know about the residency time of the Marry, there is a need to evaluate the time spend by the Marry in the particular region of United States in the calendar year. The Marry being the non-resident who worked in United States for more than 184 days and now needed to file 2 tax returns –a non -resident return and a resident return. The Marry who is a non-resident of United States only needed to file in non-residency state of in case she grossed some source of income there.  The tax in the on the Marry is sue only she is getting some source of income by using the resources of united states  but if she is in the country for vacation or medical she would not need to pay any tax because she is not earning anything.

So in the case of Marry it can be said that  the tax is due on her from the time she have complete 184 days of working in the united states by using the sources of the country for earning.

Questions 4

The First-Year Election is used by alien nonresident individuals who either stay in United States for earning purpose or residence. Afterward the tax year midway-point and do not get a permanent lawful residency in this year but meet the requirements as an alien resident in the calendar year under Substantial Presence Test . These persons not likely to meet either the Substantial Presence Test or Green Card Test, they normally not considered United States alien’s resident for tax year when they first visit the United States. By conducting First-Year Election, nevertheless, these persons may be deliberated as alien resident of U.S. as part of tax year, as opposite to being an alien nonresident for whole taxable year. The main determination is to control what a person who is not a permanent resident has met the requirements, and properly, an election under the law of 7701(b) (4), it is normally mentioned as the “First-Year Election” (Revenue-pa.custhelp.com, 2017).

To make the First-Year Election, the nonresidents must satisfy the following 5 requirements:

Must not fulfill the Green Card Test or Substantial Presence Test in present year,

Must have been an alien nonresident in previous year,

Must satisfy all of the requirements of 31-Consecutive-Day,

Must satisfy all of the requirements of the Continuous Presence Period, and

Must meet Substantial Presence Test in the following year.

Some of the Individuals also wish to make the First-Year Election considered aliens nonresident for the purposes of U.S. tax in current year beforehand they demand to create the selection. This also means that these are the individuals must have not met the Green Card Test or the Substantial Presence Test and not need to make First-Year Election for the year formerly the year of election.

9. In the United States the tax is obligatory on net income taxable by federal government, and also in some of the local administrations. The tax in the income is forced on corporations, individuals, trusts and estates.   In the U.S. Cleanliness, Inc. the taxes are imposed on the corporation distinctly by each tax imposing jurisdiction. Outstanding dates and procedures of administrative differ by jurisdiction. In April 15 subsequent to the last day of tax year for the corporations to file returns on the tax for federal and numerous local and state returns. Tax as resolute by taxpayer might be familiar by the jurisdiction of the taxing (MURRAY, 2018).

Some of the item that are taxable for the U.S. Cleanliness, Inc. are the dividends on 1,000 General Motors stock shares owned by the Camclean as investment portfolio, Capital gain on the General Motors stock 1,000 shares sale, Capital increase from the U.S. patent sale owned by Camclean for annual expenditures, dry cleaning business in Campania, dry cleaning business in numerous countries of Latin American. In case of the dry cleaning business of the U.S. Cleanliness, Inc. there would be about 30 percent flat taxation rate imposed on the company. For the net income of the company the tax rate is about 25% (MURRAY, 2018).

Conclusion on International Taxation and Policies

Summing up the discussion it can be said that the Under Section 7701(b) it is determine that under which rule the alien resident of the United States maintained the tax of his/her house in the foreign country. The Section 301.7701(b) provides bureaucratic rules for founding that a person who is an alien nonresident in US. A permanent lawful resident is a person in US who has been legally approved the residing permanently privilege in the US as an immigrant. Laws of immigration regarding nonimmigrants and immigrants, the rules describe placement for tax purposes that is different from the laws of immigration. Undocumented alien in the immigration laws who has passed the Substantial Presence Test will be preserved for purposes related to tax as resident alien. These persons not likely to meet either the Substantial Presence Test or Green Card Test, they normally not considered United States alien’s resident for tax year when they first visit the United States.   In the U.S. Cleanliness, Inc. the taxes are imposed on the corporation distinctly by each tax imposing jurisdiction. In case of the dry cleaning business of the U.S. Cleanliness, Inc. there would be about 30 percent flat taxation rate imposed on the company.

References of International Taxation and Policies

HODGEN, P. (2013, SEPTEMBER 11). Electing Resident Alien Status Under Section 7701(b)(4). Retrieved from https://hodgen.com/electing-resident-alien-status-under-section-7701b4-2/

KAGAN, J. (2018, May 9). Non-Resident. Retrieved from https://www.investopedia.com/terms/r/nonresident.asp

MURRAY, J. (2018, December 11). Corporate Tax Rates and What You Owe. Retrieved from https://www.thebalancesmb.com/corporate-tax-rates-and-tax-calculation-397647

Revenue-pa.custhelp.com. (2017, December 11). What is the definition of a resident and non-resident? Retrieved from https://revenue-pa.custhelp.com/app/answers/detail/a_id/3029/~/what-is-the-definition-of-a-resident-and-non-resident%3F

SEGAL, T. (2018, February 6). How are effective tax rates calculated from income statements? . Retrieved from https://www.investopedia.com/ask/answers/102714/how-are-effective-tax-rates-calculated-income-statements.asp