UNCLE SAM WANTS YOU(r money)!!!

[Panama Jack]

Sounds like the national debt and deficit are getting desperate in the United States.

:mad: :mad: :mad: :mad: :mad: :mad: :mad: :mad:

US Tax Probe Of Latin American Airliners Draws Fire
Wednesday February 16, 4:48 PM EST


NEW YORK (Dow Jones)--The International Air Transport Association is moving to counter any possible claims by the U.S. Internal Revenue Service against foreign airliners for taxes on salaries of their flight crews and ground-personnel flying over and operating on U.S. territory.

If the IRS were to press back tax claims on foreign carriers, the U.S. airline industry could face retaliation abroad, industry officials warned.

The Financial Times reported Wednesday the IRS has approached several Latin American airlines and initiated audits against at least two, including LanPeru of the Lan Group (LFL).

An IRS press officer wasn't able to comment on the matter. LanPeru referred a query to the IATA and the International Association of Latin American Aerial Transport, or AITAL.

AITAL executive director Alex de Gunten confirmed IRS audits have begun on two airlines, but declined to name them. "Latin American airlines are not happy at all with this," he did say. Beyond the region, "It's a global issue," he added.

Patricio Sepulveda, the IATA's regional vice-president for Latin America and the Caribbean, said the scope of the IRS probe isn't yet clear. But because "all airlines fly with their own crews," the probe would have to be extended to all foreign carriers if it's not to be discriminatory.

The IATA has 275 members worldwide that account for 95% of total international passenger and cargo traffic. He noted that 30 of its members hail from Latin America. Sepulveda also pointed out that foreign airliners already pay taxes and fees on their operations in the U.S.

The FT quoted an IRS official in Dallas, where the audits have been initiated, as saying countries that have treaties with the U.S. to avoid double taxation would be exempt from the measure, which reportedly derives from a tax law change a decade ago.

But the AITAL's De Gunten also said the legality and reach of the IRS's initiative are still far from clear.

At any rate, "it doesn't make economic sense," he said, arguing that other types of transportation such as cruise ships, trucks and trains entering U.S. territory don't appear to be affected by the IRS measure.

Furthermore, its information requirements on the time foreign airline crews and ground personnel spend in and over U.S. territory and territorial waters are onerous. "It's an incredible burden on airlines to comply with," De Gunten said.

The potential for retaliation would be high and the impact on U.S. carriers considerable. For example, a U.S. airline with flights to Chile would likely have to fly through several countries' airspace, he added.

Sepulveda said the IATA will make "all the presentations necessary to demonstrate to the U.S. (authorities)" that the IRS initiative isn't viable. " I'm sure governments elsewhere in the world would take similar measures" against U.S. carriers, he warned.

He expressed optimism that the IRS probe won't advance because "it's unrealistic."

-By Charles Roth, Dow Jones Newswires; 201 938 2226; [email protected]



Link to article (http://money.iwon.com/jsp/nw/nwdt_rt.jsp?cat=USMARKET&src=704&feed=dji&section=news&news_id=dji-00111320050216&date=20050216&alias=/alias/money/cm/nw)

My conspiracy theory-- there is some sort of secret government branch that plans ways to raise the ire of foreigners everywhere. :yuk:

http://members.ij.net/rex/usam3.jpg

[Hunter58]

Oh, what is the problem?

First of all they will need some 15000 people to calculate that exact portion of the income that is taxeable, and then they will need new airlines becasue anybody flying south of Miami will get charged too. For simplicity we will charge the airline and not the crew member, otherwise that is too much bureaucracy involved.

So after the US airlines get bankrupt over the tax they have to pay to all latin american countries (otherwise some vital piece of asset could be seized) the field is open for all latin american airlines to raise ticket prices to pay that 'income tax'.

Or maybe the IRS will start to understand that they might be the reason for a hefty problem and better stop doing stupid things...

[flufdriver]

:rolleyes: well now, lets see the year end summary of one of my major credit cards shows that I spent around US$ 14 000.00 last year (2004) in the US for such things as Hotels, Car rentals, clothing , household supplies, gifts etc. I think it is fair to say that sales tax usually runs around 6.5% while Hotel and car rentals are quite a bit higher. Therefore if we assume that the average tax that i paid on my purchases (in the US) is around 10%, then it seems to me that I have already contributed a fair share to Uncle Sam's deficit and overseas military excursions.

After all, I'm not going to be benefitting from any of the services that the US provides for its citizens, such as social security and unemployment benefits.

Now lets look at my wife's credit card summary..........

It is a pity to see what a once great nation has come to.

[Panama Jack]

Hmmmm, in what country did they say "no taxation without representation???"

[B Sousa]

PJ
That was the statement back when the ordinary citizen could defend himself against big Government. Cant do that anymore and folks are like Lemmings anyway.
You think taxes are something, I just went down to sign up for Social Security ( a supposed guarantee) and was told I make too much money so they were cutting it in half. Seems I made the mistake of earning money during my lifetiome.
I think if you look you will find more peolpe in the states now who just are not paying any taxes either due to good accountants if they make tons of money or are following preceived Consitutional lines and not paying out of protest.
If you contact IRS with a question and ask the same question to say 10 people, you will probably get 10 different answers, just to show how ridiculous the tax codes are.. Just another Government agency that keeps thousands of people employed.
Personally if I had a choice, Im in favor of usage tax, but that would really kill all those jobs and then what would we do with those folks.
Americans really no longer have any say in things, no matter what they are told. If I remember correctly when that happened a few hundred years ago it called for some drastic action.

[Panama Jack]

Press Release Source: Latin American Airline Association (AITAL)


IRS Targets Latin American Crews When Flying Over U.S. Airspace, According to AITAL
Tuesday March 22, 9:48 am ET


WASHINGTON--(BUSINESS WIRE)--March 22, 2005--In a press conference in Washington today, AITAL, the Latin American Airline Association, deeply criticized the U.S. government for seeking new taxes from Latin American airlines and their employees that use U.S. airspace on their way to/from a U.S. gateway. The Internal Revenue Service has begun selectively targeting Latin American airlines in seven countries: Brazil, Chile, Costa Rica, El Salvador, Guatemala, Peru, and Panama, and advised that it would be targeting other carriers in the region, AITAL said. The IRS is expected to go after international airlines in other countries as it seeks to implement arcane discriminatory regulations that go against bilateral treaties and other conventions in place for many years, AITAL said.

This targeted attack on Latin American airlines is aimed at pilots and flight attendants of international airlines flying to the U.S. and subjects them to U.S. tax withholding and filing requirements for salaries earned when they are on their way to the U.S. from the moment they enter U.S. airspace, and from the time they start preparing to take a return flight home, AITAL said.

"The IRS has given no reason why airlines alone are being targeted, and why cruise lines and other modes of transportation are exempted. The U.S. government also has given no reason why it has only targeted airlines from Latin America, and not airlines of other regions of the world."

"Why airlines and why Latin America? If the U.S. authorities are targeting Latin American airlines, they should be ready for significant and swift retaliatory measures by Latin American governments," said Alex de Gunten, Executive Director of the Latin American Airline Association (AITAL). "U.S. airlines have the majority share of air service between the U.S. and Latin America and pay much higher salaries to their crew than Latin American carriers. Any reciprocal penalties would hurt U.S. airlines, pilots and flight attendants even more."

"These regulations are being enforced on a selective, discriminatory and arbitrary basis in an ill-advised attempt to offset U.S. budget deficits. This is not what allied countries do to each other. It would be as if international governments decided to tax reporters' income for the time spent conducting regular assignments during short visits to other countries," de Gunten said.

AITAL member airlines are as equally concerned about the administrative burden of undertaking these audits as the potential back taxes themselves. Airlines would be required to research more than 100,000 individual time sheets over the last decade, try to figure out when each employee was over U.S. airspace and for how long, and when they reported for work. There is no guarantee that records needed to comply are even kept beyond a reasonable period.

After this, Latin American airlines would have to assess taxes on all different salary levels, including differing levels for each person, since each employee would have received one or more pay raises during the last decade.

"The administrative nightmare this imposes on Latin American airlines is not just unacceptable and unjustified, but it is a colossal waste of time and resources," said de Gunten. "The consequences eventually could affect trade between nations and not add one cent to the U.S. Treasury; to the contrary it will decrease those funds." The market share for U.S. airlines operating to Latin America was 72.1% in 2004, compared to 27.9% for Latin carriers operating to the U.S.

"Latin American airlines already pay millions of dollars in U.S. taxes, fees, security costs, navigation payments and other fees that fund the U.S. transport industry. The industry continues to struggle to recover and the U.S. government continues to penalize its industry and international airlines, including recent proposals to increase security fees," de Gunten added.

"These actions must stop immediately, for the good of everyone involved," he said.

AITAL, http://www.aital.org was founded in 1980 as a non-profit organization and currently members 22 airlines in Latin America. Its member carriers have total revenue of more than $12 billion, operate more than 550 aircraft and employ 65,000 workers in Mexico, Costa Rica, Honduras, Guatemala, El Salvador, Nicaragua, Panama, Colombia, Venezuela, Peru, Ecuador, Bolivia, Brazil, Argentina, Chile, Paraguay, Uruguay and in other nations the airlines serve.



--------------------------------------------------------------------------------
Contact:
Latin American Airline Association (AITAL), Miami
Michael Miller, 703-608-2071



--------------------------------------------------------------------------------
Source: Latin American Airline Association (AITAL)

Just Amazing!!! Such gall!!! :hmm:

[Panama Jack]

IATA Opposes Unfair Taxing
Of Latin American Airlines and Flight Crews





(Washington) The International Air Transport Association (IATA) strongly opposes the U.S. Internal Revenue Service's (IRS) attempt to impose U.S. federal income withholding requirements and related taxes against non-US air carriers and their non-US based crew members.

IATA understands that the IRS has conducted audits of certain Latin American based carriers for their alleged failure to withhold U.S. federal income taxes on the wages of non-U.S. flight crew members for time spent working in the U.S., including flight time over the U.S. The IRS is seeking to hold these carriers responsible for amounts not withheld from their employees' paychecks.

"This initiative is not fair and it does not pass the common-sense test. It will adversely impact international trade and wrongfully discriminates against the airline industry," stated Giovanni Bisignani, IATA's Director General and CEO.

There is specific language in the U.S. tax code that should be read to exempt air carriers from these withholding taxes. In 1997, the U.S. Internal Revenue Code was amended specifically to provide that income earned by the crew of a foreign "vessel" engaged in transportation between the United States and a foreign country for services performed in the United States does not constitute U.S.-source income and is not subject to U.S. federal income tax withholding requirements.

These audits also violate the express terms and intent of various treaties agreements between the U.S. and these countries. The application of U.S. federal income taxes against the Latin American airlines and residents will also place undue administrative burdens on these airlines and create economic hardship for their non-U.S. flight crews who will be forced to pay taxes in the U.S., as well as their home countries.

"We believe the IRS's actions threaten to create a significant barrier to doing business in the United States that may deter these air carriers from servicing U.S. destinations. If continued, this policy could result in retaliatory actions against US carriers by foreign governments. At a time when we should be focused on reviving the air transport industry, this would not serve anybody's interest," said Bisignani.



Contact Information:

Anthony Concil
Director, Corporate Communications

Tel: +41 22 770 29 67
Fax: +41 22 770 26 41
E-Mail: [email protected]



IATA Statement (http://www.iata.org/NR/exeres/6482D7C8-A98C-42AD-81A7-87B3FFE292CE.htm#)

Exerpt from Internal Revenue Service:

FEDERAL INCOME TAX WITHHOLDING ON COMPENSATION PAID TO NONRESIDENT ALIEN CREW MEMBER BY A FOREIGN TRANSPORTATION ENTITY

Revision Date: December 3, 2001

COORDINATED ISSUE - SHIPPING AND AIR TRANSPORT INDUSTRIES
FEDERAL INCOME TAX WITHHOLDING ON COMPENSATION PAID TO NONRESIDENT ALIEN CREW MEMBER BY A FOREIGN TRANSPORTATION ENTITY

UIL 3401.01-05

Revised for Years Beginning after December 31, 1997

REVISED:

The coordinated issue paper, "FEDERAL INCOME TAX WITHHOLDING ON COMPENSATION PAID TO NONRESIDENT ALIEN CREW MEMBER BY A FOREIGN TRANSPORTATION ENTITY" issued on July 24, 1995, is being revised to reflect additional support that section 3402(e) does not apply to compensation paid to nonresident alien crew members performing services partly within and partly outside of the United States during a pay period of 31 days or less.

The paper is also being revised as a result of changes made by Section 1174 of The Taxpayer Relief Act of 1997, Public Law 105-34. Section 1174 "treats gross income of a nonresident alien individual, who is present in the United States as a member of the regular crew of a foreign vessel, from the performance of personal services in connection with international operation of a ship as income from foreign sources." Thus, such income is exempt from U.S. income tax and withholding tax effective for taxable years beginning after December 31, 1997.

As Section 1174 applies only to foreign "vessels" and not to foreign "aircraft," the coordinated issue paper will only apply to U.S. sourced compensation paid to nonresident alien crew members of aircraft for taxable years beginning on or after January 1, 1998. However, this paper will continue to apply with respect to nonresident alien crew members of both ships and aircraft for taxable years beginning before January 1, 1998.

ISSUE:

Whether compensation paid by a foreign transportation entity to nonresident alien crew for services performed within the United States on trips between U.S. and foreign destinations should be subject to withholding tax under section 3402 or section 1441. . . . .


FULL LINK TO IRS (http://www.irs.gov/businesses/article/0,,id=135269,00.html)

[Panama Jack]

From the Miami Herald (it names the airlines targeted)

Posted on Wed, Mar. 23, 2005




AIRLINES


Groups criticize U.S. tax request

The U.S. government wants Latin American carriers to pay taxes for workers' time in the U.S. on international flights. Airline groups warn of retaliatory consequences.

BY JOHN HUGHES

Bloomberg News


International airline groups criticized the U.S. for trying to collect income taxes from Latin American carriers such as Chile's Lan Airlines SA. They also said U.S. airlines may face retaliation from other governments.

The U.S. government wants eight carriers from Central America and South America to pay taxes for workers' time in the U.S. on international flights, said Alex de Gunten, executive director of the Miami-based International Association of Latin American Airlines. The taxes and the cost of tracking them amount to ''several million dollars,'' he said.

''If this is allowed to continue, there no doubt will be retribution against U.S. carriers,'' de Gunten said in a statement at a news conference in Washington. The effort violates treaties with Latin American nations, which may try to collect similar taxes from U.S. flight crews, he said.

The Latin American carriers, with an annual revenue of more than $12 billion, are trying to hold down operating costs in the U.S. The tax effort is aimed at Lan, Panama's Copa Airlines, Taca International Airlines in El Salvador and carriers in Brazil, Peru, Costa Rica and Guatemala, de Gunten said. He didn't name all the airlines involved.

The U.S. effort places ''undue administrative burdens'' on airlines and ''could result in retaliatory actions against U.S. carriers by foreign governments,'' the International Air Transport Association, which represents 270 carriers worldwide, said in a statement.

De Gunten said the IRS started the tax effort in late 2004.




Miami Herald (http://www.miami.com/mld/miamiherald/business/international/latin_america/11204032.htm)

Also similar article here (http://www.sun-sentinel.com/business/local/sfl-zlatinair23mar23,0,7070150.story?coll=sfla-business-headlines)