Collaborate on Moving Company Invoice PDF for Non-profit Organizations with Ease Using airSlate SignNow

Moving company invoice pdf for non-profit organizations

good afternoon everyone good morning to those of you joining us from the west coast welcome to our program today entitled moving money overseas and back what every nonprofit operating internationally needs to know my name is Jeff Tenenbaum chair the nonprofit organizations practice at the Venable law firm and as many of you know this program is part of the monthly series of venable programs on nonprofit legal issues that we do here in our DC office for those of you who can come by and join us for lunch as you did here today and welcome to the approximately 250 of you who are joining us by webinar and video webinar across the country today let's see first to get started for those of you in the trade and professional Association community and there are some of you participating today from that world these programs are eligible for CAE continuing education credit next month our program is entitled an independent contractor unemployed and their attorney walk into a bar why this is no joke for a nonprofit credit to our colleague Doug Michigan one of the panelists on next month's program for that title and it is going to be a terrific program that I hope you guys can can join us for we are going to be taking the months of July and August off but we will be back and rejoining a restarting our monthly programs in September today's program is being recorded like all of our programs are including now with video recording the program will be available tomorrow on our nonprofit YouTube channel all of you will receive an email tomorrow with a link to the recording of today's presentation along with the PowerPoint slides and handout materials and full speaker BIOS those of you in the room have a handout booklet that has a copy of the PowerPoint slides along with our speaker BIOS and some related articles and handout materials and then those of you on the webinar received in your confirmation email today a link to the PowerPoint slides and like I said you'll all get that email tomorrow which you should feel free to forward onto colleagues and others who you think may benefit from this in terms in terms of questions today those of you in the room feel free to ask questions at any time like most of our programs we like to make them as interactive as possible just raise your hand wait till I call on you and wait until the microphone comes to you so that everyone on the webinar can hear your questions those of you in the webinar please pose your questions to me using the chat feature on the webinar software and I will pose those to our question to our speakers at the appropriate times but definitely feel free to ask questions throughout and be patient those of you in the webinar if I can always pose questions exactly when they are asked now I'm going to give brief introductions of our speakers unfortunately the BIOS are too impressive and too long to to cover extensively right now but you have copies of those in front of you but we're very fortunate to have three of my close colleagues joining us for the program today I work very extensively with all three of them in these areas in many other areas and you are most definitely going to benefit from their wisdom and experience here today to my immediate left is Lindsey Meier Lindsey is a partner and chair of our international trade practice for over 30 years Lindsey had been with Venable and worked in this area I've worked with Lindsey extensively in all aspects of international trade and regulatory issues relating to our nonprofit clients she's a true expert in this area and concentrates on all aspects of international trade and customs she regularly advises our clients on compliance with their import and export control laws and regulations the Foreign Corrupt Practices Act and appears before numerous regulatory authorities such as the US Customs and Border Protection International Trade Commission the Treasury Department's Office of Foreign Assets controls and the Committee on foreign investment in the United States Cephas - Lindsay's left is freedom in Tomah thank you for him in for flying in from our San Francisco office for today's program freedom in is a is the the newest of our colleagues on the panel today but by by no means any any less significant many of us throughout the firm have discovered freedom and in his group and his talents in kind of the International Tax in employment area he has quickly become he's become very popular amongst many of our nonprofit clients that operate overseas become a become a big fan of his and he's a terrific addition to our firm and particularly to our nonprofit practice freedom and as a partner in Venables tax and wealth planning group who focuses his practice on corporate international tax planning and u.s. taxation of foreign operations he has managed large-scale global structuring projects including the design implementation and post implementation phases for organizations in various industries and jurisdictions Friedman began his legal career at an international law firm advising domestic and foreign investment funds and investors in matters relating to inbound and outbound tax partnership tax real estate tax and executive compensation and last but not least two freedoms left is yesyes if ur yes E is a partner in our nonprofit group or straddles our non profit group and our tax and wealth planning group he focuses his practice on the full array of tax corporate and strategic needs of tax-exempt organizations including public charities private foundations hospitals private schools and trade and professional associations yes he also does extensive work with our us-based nonprofits that make grants overseas and that's the topic that he's going to be focusing on here today he's a key member of our nonprofit group and we're really pleased to have him here today so without any further ado I'm eternity over to Lindsay to get us started Lindsay great thank you very much Mike I really enjoyed the introduction except for the thirty that made me sound really old so I started when I was twelve let's just go with that so I'm going to be discussing the non tax issues today and most folks would you know when you're thinking about following the money people immediately think tax well there are a lot of little traps that are out there from an international perspective that are beyond the realm of tax so I'm gonna cover those areas as Jeff said please feel free to jump in we are here in Washington I have a difficulty of talking into the alphabet soup speak so if I speak in acronyms and you don't understand give me a give me a signal and I'll define what I'm saying so just briefly in terms of the topics that I'm going to cover today we're going to start really at a very high level just thinking about what is the form of the entity because your form of your entity can dictate some of the liability and traps so we'll start there will touch upon foreign jurisdictions give some consideration to the places where you're doing your activities to see you know where where there might be challenges and restrictions the old follow the money theme is very well known these days from a corruption standpoint it used to historically be limited to the US but now the world has gotten on to that - gravy train of finding an type of finding corruption and battling it with anti-corruption efforts so we'll talk about that we'll also discuss some other US law considerations that that impact your overseas transactions when there is cross-border money movement and then we'll talk a little bit about some steps to enhance your compliance some ideas and then finally you know you can't make this stuff up we'll talk about a couple of real-life examples for you okay so let's jump in so as you sit here today thinking about what your activities are you want to consider what your goals are how whether you're just putting your toe in the water or whether you're actually diving in for a full swim when you're talking about the cross board or money issues those also follow your level of involvement so many times this is an evolving process that most nonprofits will start with putting their toe in the water you know working with a group overseas that's affiliated like them in the same line of goals and missions up to establishing an actual presence in a particular country now just because you only have put your toe in the water doesn't necessarily mean that you don't have liabilities and potential restrictions with your business activities in other words you can't outsource the problems so give some thought to that and generally you know for operations overseas for nonprofits you often see it in the educational realm you may see event coordination you may see the distribution of materials whether that's gratis or for licensing fee or the like so there can be any level of involvement and actual participation in a particular country so when you're thinking about this generally the more established you are the greater the risk so if you've got actual presence in there you've got employees you've got ongoing activities you have a physical presence generally your your level of restrictions are greater but please don't take it as if you're just working at with an independent contractor in a particular country doesn't necessarily mean that you know you're free and clear so it's a whole range and we often see the start being hosting a one time conference all the way down to then starting a joint venture and then next establishing an in-country branch up to actually establishing a nonprofit entity under the local law so it's a it's an evolution is what we tend to see and at each stage each different level of involvement can present different levels of risk so more importantly how are you how are you supporting those activities what are the needs to either transfer money establish a bank account there are there are there various restrictions that will be imposed so let's let's dig in a little bit more okay and before we move on to that as Lindsay well knows these basic steps that we're talking about and in basic options and kind of deeper and deeper levels of involvement they also vary very much from country to country and the rules are different from country to country sometimes you don't have the option to establish just an in-country branch depending on you know the nature of your activities in what country it is sometimes you might want to establish a separate local nonprofit entity under local law but it's really not possible and you have to do it as a for-profit entity instead and so it's important to understand that while we're we're giving a high-level generalization the rules really do vary country by country and it's important to be aware of the various options per country and the pros and cons of different approaches yeah that is a good point because you it's certainly not a one-size-fits-all and you may have started a nonprofit organization in one particular country say well this is great this has worked very well for us we've got good communications it's you know fulfilling our mission let's just take that and replicate it in the next country and frankly it doesn't work that way so it's a good point and one thing to add about this is what we often see kinda like when when organizations go go abroad that there is a tension between what's the right thing to do and what kind of like the costs involved in that and so if you put your toe into a jurisdictions you have some some folks going overseas and doing some activities organizing some events from a from a legal perspective many times the answer would be well set up a local entity in country in order to mitigate some of the legal risks but that's of course in kind of like in tension with the cost associated with those setting up those structures so what we often see is that companies kind of like start kind of dipping their toes in and there's kind of a scale that at some point when you really start having too much activities at that point to come at the cost justifies having a more comical structure that they're legal structure that is more solid from from tax employment etc and one last point to mention and kind of the last bullet point in this slide gets to it but this whole program is about money and moving money and of course and you guys know this even better than I do but in certain countries with certain depending on the nature of the the corporate and tax form of the entity there may be restrictions in prohibitions even on moving money for instance back to the states or moving money into it or the ability of donors in that country to take the equivalent of a charitable tax deduction so all these considerations have to be taken into account like for instance in the UK if you set up a registered charity then UK donors can take a charitable tax deduction but then the flipside is that the UK laws don't allow for instance the parent entity in the u.s. to exercise as much control over that entity as you might otherwise like so there are trade-offs in these various jurisdictions depending on lots of different factors and these are the kinds of things that you need to really think through talk through with your council and advisers and make informed decisions perfect segue to the next slide which is you know in the world of doing business not all countries or equal and so this is from an organization transparency international which many of you may know it's a heat map so the darker the red the greater the level as as denoted by transparency the greater the level of corruption you will note however that the u.s. is not kind of that light yellow some say that's due to activity in new jersey in chicago i don't know that for certain just hear it so you do want to give some consideration because not all countries are alike and from both the restrictive standpoint as well as the risk standpoint so it is smart to think about where are you doing business and how you know how red how deep is the red in that particular country okay so the Foreign Corrupt Practices Act is is really the big heavy for us when you're doing business overseas and when you're when you're transmitting money overseas this is a law that was enacted in 1977 that really was out there on its own and the US was out enforcing it frankly not as not as strictly as it certainly has over the last several years and the purpose of it really was tracing the money looking at mostly US organizations but that certainly has evolved in over the last several years activity by nonprofit organizations and the like are clearly within the target zone as well so the anti-bribery provisions which are the ones that are applicable here prohibit the paying of money offering promising to pay you don't actually have to have to undertake the whole payment itself but just merely making the offer to pay anything of value with the corrupt intent and let me just note on that the corrupt intent you can pretty much trip over as a bar and it's directly or indirectly so if you are paying that to a foreign government official even with a political party when you go overseas foreign government official is a much more broad basket so if you think about it most hospitals for example overseas are owned by the government so even the doctors working in the hospital and you want to provide them with something so that they get to know you better and you know it's the way things are done over there we here often the provision of money are offered to give money or something of value can run afoul of the anti-corruption law in the United States and more recently there has been a worldwide effort not only for the US law but cooperation with other country laws as well so if you look around the globe today most industrialized countries have anti-corruption laws that work in a similar but not identical fashion with the US so that's certainly a risk because this is a classic example of follow the money the US government the Department of Justice certainly follows the money we saw our heat map so there are certain red flag countries which are known to be more active in corruption whether it's trying to get permits for employees to work in your organization or whether it's trying to work with the Customs Service to get something in maybe you need equipment or the like so you have to be mindful that again foreign government officials very broadly defined here so you want to be sure that your activities in a particular country don't don't run afoul of that you also can't you can't outsource your your liability as well so if you recall it was directly or indirectly so even though you may be having an agent you say well I'm just I'm just paying agent to undertake certain activity to get us established as a nonprofit entity in a particular country whatever they do with the money you know I want to turn a blind eye I don't know well it's direct or indirect so you as an organization can run afoul of it through the actions of your agents overseas and frankly that's from our perspective that's the biggest risk it's not necessarily the activities of employees or personnel within an organization directly but it's those who are operating on their behalf and certainly other countries as I mentioned with the OECD there was a an international agreement to also enforce anti-corruption and so many countries that you wouldn't think of China for example Brazil have their own anti-corruption laws and they to see the activity of the US government these cases are they get settled frankly because people don't want to have an adverse judgment against them so they settle but the dollar figures that millions and multi millions of dollars that get assessed to go back into the coffers that then help support more enforcement and and more personnel who pursue these cases one other interesting note that there are there's the ability to have a national local law anti-corruption law applied you as well as the US government law the US government our laws tend to be more flexible in terms of gathering data and information so even if you have a cooperative investigation among different countries usually they'll say US you go first because you can subpoena information and then when you're done thank you very much in a very cooperative effort we would love for you to hand that over to us and then we'll take over with our side of the investigation so this is a classic example of you know follow the money and be careful and for those of you who might think that nonprofits doesn't really come into play here why would the Department of Justice care about nonprofits in granted we do Linda and I and others have done a lot of training you know for our nonprofit clients and their frontline program staff and others on the eff CTA and how to comply but we also deal with enforcement and just yesterday one of our nonprofit clients received a grand jury subpoena in connection with some overseas activities and just like Lindsay said there are other open overseas authorities investigating as well and a nonprofit in the middle of this has not been drawn in unfortunately and it does happen on a somewhat regular basis yeah and so what you want to do is really you want to build your first line of defense you want to put yourself in a position where you've got the procedures and it's not just some book on the shelf you know as in other things you want to have procedures and you want to educate and train your folks so that they have an understanding and not only your personnel but extend it to your agents and have them you know side go through a training program and sign a certificate that they've they understand the issues that gives you your first line of defense might not be a silver bullet at the end of the day but it certainly helps them in such matters it helps prevent violations from occurring but it also helps you negotiate a better and quicker and less expensive resolution in the event that that someone trips up yes question why being it's wait for the microphone if you don't mind going back one slide I was interested in the certain limited exceptions and affirmative defenses can you go over like what some of those might be sure so there's a there's a an affirmative defense of if it's written in the laws of a particular country that you can bribe the official then you're good that sounds good right okay there are no such laws the limited exception is for Greece payments and that's actually the term that is used Greece payments so if a payment is made for a non discretionary action then a particular activity is within the approved or authorized zone under the fcpa but if that becomes a slippery slope because number one only the u.s. permits Greece payments and they have to be at such a small denomination that they that they don't have an impact the reality is what you find oftentimes a Greece payment may be made to let's say we can't make this up so we had we had a matter where we'll just say we had a friend we had a friend who was operating overseas and they needed to get work permits for personnel to come in and they needed them in a significant number so it wasn't just 120 dollar payment which overseas in a particular country was a fair bit of money but 20 dollars here is you know two cups of Starbucks I think so but the problem was they needed them regularly consistently and the number kept growing and growing and growing and the department justice said that doesn't follow them the Greece exception of Greece payments even those 20 dollars you're getting a pattern and if you assess in a mass at all it really does have an impact so if you look globally really Greece payments you have to be very very careful with that because even though you may get a free passing us if it does truly fall within the Greece payment allowance that is not a free pass overseas so if you are also subject to an other jurisdiction requirements that you wouldn't you wouldn't get that free pass great question though see somebody's reading at least the fine pointed slides excellent so some other other US law considerations obviously accurate recording and reporting is is critical the you know the interesting thing this is not too much in in the nonprofit world but because we just talked about the anti-bribery provisions but there are also complimentary books and accounting provisions that are enforced by the SEC and ironically under that provision if you had written down bribe to Afghani Minister of Health in your books and records you would have an accurate reflection of what you did now of course no one is going to do that so but nonetheless you want to make sure that you don't have two sets of books that that the other area we see some you know areas of potential risk or the slush funds they said well we just have you know kind of this small account for folks in country so they can just get their job done you know it's very challenging to have money currency exchange and there are all these restrictions so we're just going to set aside a chunk of change over and a slush fund for them beware of the slush fund beware of the slush fund another is the anti money laundering concerns and considerations there and really the key is know know your customer know your the folks with whom you're working whether it's with the the various agencies that you're involved with for your mission whether it's you're dealing with different operators conference coordinators really anyone that you're dealing with overseas make sure you know who they are that they're not wearing multiple hats that's often a problem someone overseas can be you know the Minister of Health and the president of an organization and at the same time so you have to be mindful of that in what capacity are you dealing with with those folks there's also anti-boycott reporting requirements and people say well that's that's bizarre we're not you know we're not in the biz moving commercial goods but they can you can find those in provisions such as banks there are a lot of banks that are on restricted list by the US government so don't use X Bank specifically and the request not to use a particular bank is a reportable action even if indeed you don't use Bank X so a u.s. organization there's an obligation to report that to the Department of Commerce then finally you know as we all know who have crossed borders when you come back to through US Customs you need to fill out the form or stand at the little kiosk these days and tell whether or not you're bringing in more than ten thousand dollars and and educate your folks as well this is another example where we sought in action there were payment difficulties for a team of folks at a non-profit that were coming back to the United States and they were like well we're both flying the same plane you know we'll just we'll get the payment in cash and then we'll properly distribute it once we get back here let's see it's 16 K so you take aid I'll take eight we're good to go not so good and that's a good because again there was the whole thought pattern of well we'll just be easier I'll fly in through you know Dulles I just want to get home and see my kids but actually you have to be very mindful of that and the US government does track and custom service there is the ability to report that record it make it consider it as a false statement if in fact the organization is coming back and the folks are bringing more than ten thousand so be careful of some of those and these are the ones you know it's not taxed and they're not necessarily ones that come to mind immediately but there's certainly all all risks for even more fun let's talk about the oh fak sanctions flipped into DC speak so that represents the Office of Foreign Assets Control I know it's very unsettling it's I hear you they are a very stealth organization here in town it's the part of the Department of Treasury and oh fak is responsible for tracking transactions commercial non-commercial so certainly nonprofit activities activities a person that restrict our dealings with people entities organizations overseas so you can have like as I said before you can have a restricted bank you certainly have that here people you know historically people knew that there was the thou shalt not write thou shalt not deal with Cuba thou shalt not deal with Iran well the sanctions these days have gotten much more targeted and much more specific I think historically you you could compare the OFAC sanctions laws as a sledgehammer it would just be about shall not I was very easy you knew you couldn't deal with these folks now it's much more precise and the sanctions are really crafted with a surgeon's knife and you know there are particular individuals in a particular place that you also you know now can't deal with so it's much more complicated to kind of follow follow the rules and understand who you can and can't do do business with in a transactional sense and then finally there are the export control sanctions that that are often kind of the akin to the OFAC sanctions usually one goes with the other there can be some restrictions for for most nonprofit organizations that doesn't tend to be an issue unless for example let's say you're in a health mission and you want to provide certain medical equipment by way of an example or a sample for your organization overseas or for let's say the Minister of Health so that they can understand the mission and what you're trying to achieve and you need to send over those those items then you would need to be mindful of some of the the export control restrictions Lindsay we have a question from from the webinar it says are you seeing nonprofits having trouble getting international wire transfers completed due to concerns related to anti-terror financing and if so how are they coping using money transmitters carrying cash and don't laugh we actually have had that issue very recently with client of ours that's operating in doing a lot of relief work in Syria and you don't just wire money to a bank in Syria because they pretty much don't exist anymore and so that you do have to carry cash and it's well I'll let you speak speak to this yes there are a lot of difficulties and the piece about the sanctions and if you think the heatmap as well there are certain Geographic zones worth frankly challenging and these issues can change day to day so you can have just a couple years back it was fine to doing business with Syria now suddenly the sanctions come in one day and people are in the middle of activity they've got personnel there they need to you know get money to them to support their activities yes we are seeing a lot of challenges because frankly the world is connected these days the government's have the ability to trace the money a little bit more cleanly but at the same time there are certain concerns over money laundering and terrorist groups that you want to make sure you know who is actually receiving the money so you it goes back to the the know your know your customers sort of the global term it really means know the folks with whom you're dealing whether it's the bank you want to get in country due diligence you want to understand who are you actually dealing with and look for guidance from folks lawyers and the like in that particular country we work regularly with local council around the globe to help that because it's a tricky world Lindsay someone else is asking is there an ease relatively easy to use procedure or website or other to kind of look up individuals companies entities that are on the o-fag sanctions list or otherwise prohibited from doing business with yeah great question so the sanctions list is actually just one of about eight lists that the various government agencies have fortunately several years ago the government big G consolidated so there is a consolidated list that you can review I don't have it in this slide work but we can certainly put it as as part of the follow up package that might be the easiest way to do that so you do want to screen there's an entity list there are all sorts of lists but the government has now consolidated down to a consolidated list accessible on the website it changes daily because the various agencies are adding and subtracting folks so it is smart again for your first line of defense to start there and we'll include that in there and the materials that go out tomorrow yes question on that site when you type in someone's name there's a slider for the map the percentage match to the name and you recommend anything other than 100 it's a 100 minor sounds exactly spelled as you have it you slide it back and it could give you variance yeah if they use the as far as I understand the software program uses fuzzy analytics so it does come up with some false positives so you know I think you have to use your judgment and if there if you have additional data beyond just the name that you can corroborate that it is in fact the same individual again it's a level of risk how much risk are you willing to take can you find other sources that can either support your decision or or raise the risk level even more where you want to you know back away because it's not worth it yes so the question was if you get a response back this is no result what do you recommend to a PDF and say that yes I certainly would keep a copy of that because you want to have you know your basis for for moving forward and that does make sense but make sure it's spelled right and make sure you know you're you're careful with put in as much information or have as much information as possible so that you can again either try and collaborate whether it's a match or not okay so other obviously foreign law considerations and restrictions you want to consider so are there foreign controls on currency flow coming from that particular country many countries will require a license before you can transmit money others have prohibitions on remittances of hard currency that was true certainly in China for many many years you couldn't you could you could bring the money in but you get it out had to be you know locally reinvested so you have to be mindful not only of the restrictions from the US perspective but also from your local country restrictions as well so are there any practical challenges in either collecting revenue or dues or repatriating the funds that you have acquired from your activities there again it's it's often more challenging even than you know the u.s. restrictions additionally you want to give some consideration to foreign investment so when you're thinking about what we talked about before the sliding scale of activity and involvement think about that it's easy to jump in and oftentimes it's hard to extract yourself which is why many people take kind of a measured and stepwise approach on that point so as Linda said it's easy to get in a country but then it's hard to get out so what we often see that non-for-profits go into a country and they may set up a branch or they might set up a an organization and then they realize for whatever reasons things are changing and then they want to get out and so in many jurisdictions for example China in order to liquidate an entity it's going to take up to two or three years the best-case scenario is in the UK you can do this over maybe 90 days if you are in Priscilla you're looking at a multi-year process before you can come and really leave the jurisdiction so it's easy to get in but be mindful that once you're in you pretty much info for awhile and so that and depending on the nature of your activity sometimes it may make sense to stagger a series of payments that you make rather than paying everything upfront if it is going to be difficult to get money out of a jurisdiction depending on what it is that you're doing you may want to schedule those payments to retain some flexibility and then just other issues to think about is your activity in that country within for example a national public policy priority such that it'll be supported or are you going to be running into headwinds is it you know does it run contrary to the activity because that's that's sort of a you know substantive but challenging issue often times to delineate you want to make sure that your activity will be supported there are enough restrictions out there anyway just to undertake your activity but you want to think about you know have there been certain actions by the local governments that would run afoul or be challenging extra challenging to what you're trying to achieve there we have seen for example in India there's been a lot of crackdown and scrutiny by the government on not-for-profit organizations there you know just by way of example and then there are other countries where they want to support if it's a green initiative for example they're more willing to provide flexibility to support your activities so just something to think about okay compliance considerations we're just going to zip through these I think you want to be mindful of your arrangements with folks and certainly putting things in writing is advisable and I've listed I don't know five or six seven eight on the bottom there where we tend to see the most sticky issues and provisions so everything from dispute resolution to ensuring compliance and getting the partner on the other side agreeing and acknowledging as to compliance issues anti-corruption sanctions etc remember in governing law suits to the extent that you can include the excluding conflicts of law provisions in some jurisdictions you're required to apply local law but certainly if you can get home cooking you want home cooking remember agency versus independent contractor again agency being an extension of your activity independent contractor you've attempted to have an arm's length activity and separation so those are some of the things that we have seen and in addition to following the money to support your activities you just want to be mindful of those and one additional point on that so there are various jurisdictions where you actually have to write these agreements in local language so you can actually do it in English so for example in Russia many of those agreements have to be basically in English and in in Russian and Russian controls right that's true and so make sure that the translation is is bang-on as we say and then I guess just I didn't touch upon the bullet point of the top so we always look at it in two ways you have you have regulatory or legal restrictions and then you have contractual restrictions as well and so with any issue that comes up you want to be mindful that you may have restrictions from the regulatory side of it in other words the government imposed whether it's local government US government and then you have contractual restrictions where you may be in compliance from a regulatory standpoint but you may run afoul of your contractual obligations and then just a couple of the examples that we have seen we've seen requests to either over invoice okay what we're sending you these materials and we'd like you to invoice double for what what you normally charge or we like a second set of invoices one with the you know quote unquote real amount and one with the other and you know obviously that's that's issues in red flag threads the flag should be clearly up at the top of the pole for wooden requests like that come in and then you said well it helps us with the local processing it just it's easier here you know just say no in the words of Nancy Reagan because really what they're effectively trying to do is either evade local tax obligations avoid restrictions on currency restrictions and and you can be brought in under an aiding and abetting violation as well we also have seen requests to pay outside of the foreign country of the particular organization where they say yeah thanks very much but if you wouldn't mind just deposit that into our account and caimans that would be much more convenient for us again just say no potential risks see above and then finally avoid the cache mule which is which is one of the ones that I that I talked about before make sure that your team feels empowered to come back to you and say this is what's being requested of me what should I do rather than just come up with some program themselves where you know they think it's a good fix so with that I am going to turn it over to Freedom so after lens's exploration on what you have to consider when you want to move or do business overseas or be activities overseas you guys really want to talk about tax issue because it's going to get even worse so but I will try to keep that relatively light as much as I can okay so going back to the general theme about funds flowing outside the US or inside the US or cross-border payments certain payments of money will be subject to tax withholding in the United States and so it's very important to consider if you make a payment of $100 whether or not the IRS wants to get its piece for that another general rule which is really important is that every payment that a non-for-profit makes outside of the u.s. is subject to an IRS documentation requirement it sometimes requires to obtain certain forms from the recipient it sometimes requires filings with your annual returns but you have to be aware of it and the way how we get involved or I get involved a lot is you have a non-for-profit for example having directors who are not from the US but they are in Canada or they are in the UK and they come to the u.s. they have board meeting and then there is a payment paid either for compensation or for reimbursement and you know these payments may be made but nobody thinks about the reporting obligations and that's going to come back once actually you have to file your tax returns so my recommendation is always literally if you make a payment outside of the u.s. sync tax because there will be a paper or something to be collected so types of payments what what do we what are we actually talking about so there typical types of payment on an interest dividends rents royalties under licensing etc those are called in tax language portfolio income and and they are all subject to withholding tax unless you get an exemption we'll get to that later other payment is payment that it's kind of like connected to some US activities and that type of income is often subject to withholding because the recipient should actually be paying us tax on that receipt so again let's go back to the board meeting that was held in in DC which with a Canadian resident well that income if he gets compensated for those services is actually subject to US tax well the IRS says primarily the liability will if the person who is making the payment to a non-us person or a person that is generally not subject to US tax and therefore the non-for-profits should either collect the form from that board member or before the appropriate amount another area where you have a withholding tax payment is is when you have a real estate transaction when when non-for-profit sells it sells a real estate there could be a withholding tax imposed as well and then as I mentioned the compensation for personal and professional services and gifts and cranes is a reporting obligation and actually before you move on and should have said this and we do also have a question in the back in addition to everything all of the considerations that Lindsay talked about and that freedom in is is starting to and is about to talk about for those of you I know there are many of you in the room and on the webinar today that are a federal grant and cooperative agreement and contract recipients parties to federal grants contracts and cooperative agreements there are a whole nother level of requirements as you all well know that come into play there too we're not talking about those today we do many programs focused on those issues as many of you know but many of you are dealing with all of those compliance considerations as well including regarding the movement of money and paying sub-grantees and sub-recipients and subcontractors overseas and whatnot and so keep all of those considerations in mind as well it is complicated and difficult and confusing to deal with all of this but you really if you can kind of think of it in those three buckets and the freedom and Buck of the Lyndsey bucket and kind of the federal grant and contract buckets you really have to take all of those considerations into account whenever you're moving money overseas our back thanks our question in the back yeah just a question we have a couple clients and they have people who they pay stipends to for travel to conferences either in the US or in another country are those also subject to withholding tax or not payment for services but they are akin to scholarship payments a very very good question so so the stipend itself it not so relevant the relevancy is who is receiving the stipends if the stipend is paid for a person who is outside of the US then they are reporting obligations if the person is made to to ace the payment is made to a person that is inside the US you still should get w9 to verify that person is actually a u.s. person but you don't have to kind of like have a defaulting obligation so moving on on the comic what what are the subject or what are the comic the withholding tax obligations on cross-border payments I listed the comic a few countries here and the relevancy of this is if you make a payment that is a portfolio meaning interest royalty dividends there's always a 30 percent 30 percent withholding tax rate applicable in the u.s. unless you can find the tax treaty with the US and under those tax freeze that withholding tax might be reduced and so I'm listing again this is China the US has over 80 tax fees with various jurisdictions but come back just to give you flavor on on what I'm talking about you basically can can take China if you make a payment into China and the Chinese recipient would qualify for three benefits then you have a live then it's a reduced withholding tax rate to down to 10% similar if you have it they have a treaty at usf a treaty with Germany and then the German US tax treaty you can get a reduction in in default in tax rate this is all premise on the notion that you actually have to comply or collect the proper forms so this is another issue for the for folks who don't pay attention just because the person is located in a jurisdiction where they could get three benefits that doesn't mean that they necessarily qualify for those treaty benefits so we have been advising a non-for-profit organization that has a number of folks who are providing services in Canada and Canada in the u.s. they have a tax treaty in place and we basically set to the recipient you know you need to comply with these withholding tax rules and we need to get some of the forms that you identify yourself as a Canadian citizen or cut Canadian tax resident and you need to show us that you actually qualify for treaty benefits and the person sends us an email said yes yes yes yes and we reply and like well that's fine except you need to actually complete these forms and sign under the penalty of perjury that you actually you know qualify and so it turns out in this specific instance this person was living in in Canada but actually their tax residence he was in the Cayman Islands so that one is kind of enter once we became aware even if you would get the form under the penalty of perjury signed if you have facts that are contradictory to what you received in the forms you still have an obligation to a vault that's sort of like the role I'm from Missouri the show-me-state so see the documents yes and it's maybe even more complicated because we we run into this all the time where we we basically have a certification by the recipient and and we have to continue thinking to get more facts to actually getting comfortable that there is no withholding tax obligation these are kind like the limitations I'm listening here that you need to qualify for free benefits and there is there's a limitation of benefits clause for folks who are doing 3d shopping so that's that's a very used to be very common a little bit less common because of the OECD has come like put in new rules in place but basically what we teach our Peng is is because the US has tax treaties there's a lots of jurisdictions some of those treaties are more favorable some of those are less favorable then recipients have often colleagues said well let me look around wherever I can find the best tax reading that's the one I'm going to use so that obviously doesn't matter the last point is is relevant for really the recipient again come back Tax Credit consideration so when folks are getting renumeration from from non-for-profits for board services personal services etc they are still subject to tax in their local country and so even if there's a withholding tax that might be okay because that will usually generate a foreign tax credit for those folks and so that means they are paying you utilize those tax credits against their own tax liability in the country Freedman we have a couple questions from folks and maybe it's a good lead-in to this slide asking you know where can they go you know and on the IRS website or otherwise to try to find out any there's our list of all these various requirements withholding requirements forms to use obviously anyone is always welcome to call you and hire available to assist but if if someone wanted to do it on their own and the IRS is we all want at least as Josi and I and you well know it's website is not always the most user-friendly in some areas or in other areas it actually can be tell us about the team no it's just an excellent question and I I wish I would have the perfect answer except call me to the IRS website despite its reputation it's actually pretty good it's not the most user-friendly website but once you guys go through the first level you will find actually very useful information so for example all of the tax treaties that the u.s. entered into are listed on the IRS website all of the forms that I'm listing here and I will spare you that I'm going to go through all of those forms but all of those forms are actually relevant with respect to cross-border payments they're all on the IRS website the the person who I would I mean the question about can you do it yourself I let me put it this way the instructions to these various forms the IRS have met has made an effort to draft them in plain English so that would be my recommendation to start there with those with those kinda like explanations to the forms and they usually give you a very good scope and explanation why that form might be necessary moreover it often explains to you that you are the wrong form but actually points is the right form so that's kind of like the way why I would approach it we have a I have a several non-for-profit clients what they do they come like prepare the forms and then they send us send them to us just to review it so that they make sure they actually get it right so a couple high points on that slide so everything that it's a W - eight those are forms that are basically having two main purposes one purposes it's the identification of that person being a non-us person a w-9 which I didn't list here is that you're a u.s. person and you need to obtain that period so whenever you make a payment to a non-us person I highly recommend you to obtain that form the other reason why that form is often utilized is in order to claim 3d benefits so it's a dual purpose so many times people tell me oh I'm not claiming treaty benefits therefore I don't need to give you that form but the form really gives you certainty that the payment you're making is to a person that is knowledge of the US person the other forms and I'm going to going to pick one of those is it's a 1040 - this goes back to my previous story about the board meeting held in the US and one of the board members being a a Canadian citizen you have to file a 1040 - with your tax return when you make those payments or you have to without withhold payments okay that's a question wait wait for the Mike or if you're doing a transfer to an organisation you're collecting donations here and your transfer and that donation is for an entity in another country European country is the organization to which you're transferring the money considered a person thank you for the question and that is actually fantastic yes so when I and I probably should have clarified that before whenever tax lawyers speak person includes individuals organizations corporations branches other ships you name it so so the application is not just two individuals it's basically any payment you make to a organization outside of the US in whatever form it is okay switching gears slightly bank accounts so obviously folks like to set up bank account sites or the outside of the US Lindsay also already comic spoke speaks spoke about the anti money laundering regulations I'm not going to repeat that she also mentioned a kyc but the one thing I do want to emphasis on the KYC requirements and know your customer requirements those requirements have become incredibly onerous over the last few years and so I can tell you a lot of horror stories about us helping non-for-profits organization to set up their branches or to set up their organizations outside of the US and they wanted to open a bank account in that local jurisdiction the verification process is often much much more onerous than in the u.s. so in the u.s. you can get something certified they're relatively easy in many jurisdictions it's a process called upper seal and that implies that you have to go to an embassy you have to you have to show a proof of residency including utility bills including proof of residency that you actually listen that apartment or that you own it so the the process of actually going through the KYC requirement is more and more onerous and and what's important when you when you start kind of like thinking about opening a bank account it takes time so my experience it often takes 2 to 3 to 4 months time till you have a bank account open dinner in a non-us jurisdiction so one other item and I want to be cognizant of time so I'm not monopolizing everything here CRS so common reporting standards this is actually a new a relatively new initiative again developed by the OECD and it really goes to a transparency initiative that it's a kind to what we have here in the US on facta where you really want to kind of like have a trace of the money and the reason why I mentioned this is because the CRS standards our role are now being rolled out I mean they're really effective as of January 1 2017 in many of those two restriction including to you and even China has signed up on for that and that's beginning of 2018 and what that is what that means really is that banks whenever they are accepting a deposit of cash they have an obligation to have an automatic exchange of information with the whoever owns own set bank accounts and in order to comply with that the banks themselves are required to have a understanding of where the source of funds comes from so they're really really tracing that that that a cash which again is an additional obligation atomic burden on on non-for-profit what is OECD stamp of England explain to everyone so middle button the organization of Economic Cooperation development so basically needed to be a test and it was a test but if I said where I use the acronym and we all know that remember but the point about the OECD is it's really a global organization that is really trying to create a level playing field on tax compliance that's really one of their their primary focuses we probably could have a very length discussion about the sense of sensibility of this initiative but I will leave that up to a different different time okay I have two more slides and I want to kind of like use those more as a case study so one thing that I run into all the time is the following fact patterns you have a u.s. non-for-profit organization who says we are hiring an in-country manner sure who is being sent to Brazil but they like to keep their us benefits insurance health insurance usually 401k these are kinda like the mainly the driver that they like to keep well if you send a person to Priscilla and let that person be employed by your local organization in Brazil they will lose their own 401k meaning they are not qualifying for a 401k and they also will not have accessibility to their u.s. insurance if you send the employee to Brazil and you let them employed by the by your non-for-profit US company you are creating a so-called taxable presence and Brazil and with that will comes a lots of compliance burdens and potentially tax exposure of your non-for-profits in the u.s. in Brazil so a way to accommodate both of these kind of to solve the tension between the compliance and tax exposure that your non-for-profit would have in Persil and to satisfy the person we would like to keep their benefits in the u.s. we often kind like put in in place so-called circumvent arrangements and so what the see content arrangement basically is you're you're letting the employee be on your payroll as an employee in the US but you're actually forming them out so to speak to your priscilly and whatever organization you have there and so and then there is an arrangement between your US company and or yours non-for-profit and your facility and entity whereas basically the u.s. non-for-profit says i'm going to pay the salary to you and that you employ them and so what what you do by doing that what you really accomplish you kinda like basically isolate the legal and the tax liability and you keep the secondi or the person who is spending time in Brazil on your 401k as well as on as well as under health insurance in the US so that's that's one technique we employ another technique and it goes back to what Lyndsey mentioned at the very beginning of the presentation and it was out what I mentioned a couple times as well there's a real compliance costs with doing business outside of the US or doing a having activities outside of the US and just coming as a range our experience is having you know an organization outside of the u.s. doing all of the compliance work whether it's it's finding tax returns whether it's complying with with local law in our experience to low-cost countries which are really comma Canada the UK Commonwealth countries usually runs anywhere between five and take 10k annually so there's a real cost in running those or become a company outside of the US on the high end if you look at countries like like Brazil or Russia or India or to China that those costs could be a multiple of what I mentioned before so non-for-profits often have a question to me is that freedom and we don't want to incur those costs given that we don't have and yet know whether we're going to stay there so one of the solutions that we have come up with is the following so if you employ these folks in the US and you send them outside of the US and in some jurisdictions like China you can't do it but for example in Europe you can do that what you do by by doing that you basically expose your non-for-profit company in the u.s. to all of the regulatory and tax obligations in these countries and that could mean that whatever you have in the US could be suddenly subject to tax in the UK which could have devastating impacts in order to mitigate that what you what what what a non-for-profit can do you can set up basically in an employment company and it's a very simple thing you basically set up an LLC underneath your nan for your non-for-profit and that entity is is literally it's just a shell company and that entity will become the employer of record for the folks you're sending outside of the US why is that powerful it's powerful because if there is a claim by a taxing authority from from the UK the Inland Revenue or any name it they will look at that first here or the employment LLC to have a claim against it but the employment LLC doesn't really have any anything other than the employees and as no really nothing to to claim against and so you basically isolate or you isolate your risk to one entity and you don't you don't you don't suddenly have a problem that that HMAC could could look after all of your your your parent company wait a minute would this be a single-member disregarded LLC for federal tax purposes so Jeff good good question yes so it would be able to be a wholly owned single-member LLC so from from a tax perspective you haven't actually changed anything but from a legal perspective you have isolated your liability to that entity and then we use single member LLC's quite a bit in the nonprofit world for various reasons including here most notably for liability protection but for tax purposes it's as if it doesn't exist so the federal taxes and status for instance of your nonprofit will extend to that LLC the will no there will not be any separate federal tax reporting required for the LLC at all to get rolled up into your parent non-profit yeah and so in that sense it come back from a from a u.s. perspective you haven't actually changed anything but from a non-us perspective you have changed anything and just isolated the risk because that's a nifty way to to kind of mitigate that risk so an employment tax standpoint as a treat as a separate entity so from unemployment tax you have to get a separate iin and and but you can roll it back into your your your company so all what you need to do is really get an EIN okay so my last slide some other considerations and I will be very brief these are kind of like whenever you do business with with organizations outside of the US you have to have documentation in place and that's really important so if you set up an organization in Brazil and it's you you wholly owned it you need to have some have in the company arrangement so that you can justify your payments back and forth always keep in mind kind of like the legal in the regular regulatory restrictions so for example out of Priscilla RAF China you have foreign currency issues and so you often have to either apply to the central bank of Brazil to make it money transfer outside of into outside of Brazil in in China you have just the RMB regular foreign key foreign currency exchange control issues so now like just keep those in mind and then lastly people always ask me well it's cash movement equal to legal movement and the short answer is in in in Europe cash movement has actually very little to do with legal movement but then in South in South America many times the legal movement in the cash movement actually have to go hand in hand so that's another kind of like a planning restriction or planning planning thing you have to keep in mind and when you when you conduct your your operations outside of the US in question yes is Brazil in China the only two countries where the sir limit or certain cash so I think there are several African jurisdiction tonight also foreign currency control issues and I know that Russia also has some some some foreign currency control issues alright now it's time for our final speaker you'll see zipper to talk about international grant making by nonprofits so they do a follow how would I find out what the African countries are I yeah let me I need to get back to you on that one yeah just follow up with freedom and separately contact information will be on the last slide right yes II okay so at this point if you've considered and addressed all of the important issues that Lindsay mentioned in Freeman mentioned you might have thought that you are home free but wait there's more because on top of all the international issues and the tax compliance matters it's important to also not lose sight of the fact that fundamentally we're dealing with nonprofit organizations and so there's a mission related aspect to how you should look at all of your international activities specifically as a nonprofit organization enjoys a privileged status as a tax-exempt entity but that's based on ensuring that your activities are undertaken in furtherance of those exempt purposes so what we're going to focus on last part of today's program is procedures and steps that nonprofits can take in order to ensure their international activities particularly grant making is undertaken in a manner that's consistent with the overall programmatic