Potential Scam.

Many Canadians and others have been receiving letters that appear to be coming from the IRS that are not coming from the IRS at all. The letters often assert some "problem" with documentation on file with the IRS and request certain information be returned to the sender, such as date of birth, mother's maiden name, bank name, address and account number. The letterhead is often drafted to appear as if it is coming from the IRS.

IRS Warning.

The IRS has issued a warning to real estate and tax professionals about US tax obligations on two types of real estate transactions about which it is deemed there has been unsatisfactory compliance. The IRS issues a reminder that the sale or other disposition of a contract or other option to purchase real estate constitutes the sale of real estate itself. Thus, the "FIRPTA" 10% withholding tax requirement must be addressed, and a US income tax return must be filed by the seller/transferor. The second warning relates to a transaction where a corporation owned by a nonresident alien transfers its real estate to its shareholder and then immediately sells the real estate to an unrelated third party. The IRS concern is that in some such cases the corporation and shareholder have taken the position that all or part of the gain on the sale to the third party was allocable to the shareholder.

Nexus News.

The US Supreme Court has denied the request to decide whether the "physical presence" standard for "substantial "nexus", as decided in Quill Corp. v. N. Dakota (504 US 298), applies to all state tax or just to State sales and use tax.

The Michigan Department of Treasury is levying its "single business activity tax" (SBT) retroactively, having decided that the presence of an individual soliciting sales in Michigan would, after all, subject his employer, an out-of-state corporation, to Michigan's SBT.

Sales Tax.

The States' Streamlined Sales and Use Tax Agreement (SST Agreement) went into effect on October 1, 2005.