The Taxation of 'Digital Nomads' and the '3 W's': Between Tax Challenges and Heavenly Beaches

Work mobility is not something new, but it certainly received an important boost with the COVID-19 pandemic as many people began working remotely which reflected on their lifestyle. In this context, the objective of the present study is to analyse the challenges imposed by what is known as 'digital nomads' from the exclusive perspective of individual taxation. The first part aims to understand the first 'W', i.e., who the 'digital nomads' are and the factors that favour the choice for this type of work. Subsequently, it examines the impacts caused by the 'digital nomadism' in determining the tax residence (second 'W' – where) and presents the measures, albeit incipient and indistinguishable, adopted by some countries in relation to this phenomenon. The third section delves into the taxation of income obtained by 'digital nomads' through either an employment relationship or the provision of services (third 'W' – what). Based on the analysis of examples and the presentation of some alternatives, this study seeks to demonstrate the need to adapt the tax residence rules at both of the levels of domestic law and double tax treaties (tiebreaker rules). The rules on the taxation of income from employment and the provision of independent services also demand modifications that detach them from the strict need for a physical presence.

What CPAs Need to Know about Employee Retention Credit Fraud: Certified Public Accountant

According to the IRS, many of these solicitations are offering credits that are "too good to be true"- in some cases, they are downright fraudulent. Eligible employers can still claim the credit currently by filing an amended payroll tax return (Form 941-X) for each quarter during which they paid qualifying wages. Because amended payroll returns may be filed up to three years alfer the deadline for the original returns, employers will be able to claim ERC credits into 2025. [...]during the midst of the pandemic, the IRS undertook efforts to publicize the credit, affirmatively "urg[ing] employers to take advantage of the newly-extended employee retention credit." According to the IRS, promoters also are failing to advise taxpayers that they cannot deduct wages covered by ERC credits on the business's income tax returns or that they cannot claim the credit for wages that formed the basis of a PPP loan application that was granted (IR-2022-183, Oct. 19, 2022, https://bit.ly/40XkCMc).

How Do Firms Respond to Reduced Labor Costs? Evidence from the 2007 Swedish Payroll Tax Reform

One way for policymakers to reduce labor costs and stimulate the recruitment of marginalized groups of labor in a highly unionized economy is to lower payroll taxes. However, the efficiency of this policy instrument has been questioned, and previous evaluations have mostly found small employment effects for such reforms. We investigate the effects of a payroll tax cut in Sweden that decreased firms’ labor costs in relation to the number of young employees that they had employed when the reform was implemented in 2007. We find that most firms received small labor cost savings as a result of the reform, but those that received larger cost savings increased their number of employees significantly more than firms that received no, or minor, labor cost savings. Our findings also suggest that the payroll tax cut increased the total wages paid to incumbent workers, but the wage effect was too small to offset the positive extensive-margin employment effect of the reform. In total, we find that the Swedish payroll tax reform created 18,100 jobs over the period 2006–2008;most of these jobs were within the targeted group of young employees.

How well-targeted are payroll tax cuts as a response to COVID-19? evidence from China.

Numerous countries cut payroll taxes in response to COVID-19, including China, which reduced employer contributions by up to 21 percentage points. We use administrative data on more than 800,000 Chinese firms to evaluate payroll tax cuts as a business relief measure. We estimate that the tax cuts cover 31.5% of the decline in business cash flow, but labor informality causes 53% of registered firms-24% of aggregate economic activity-to receive no benefits at all. We quantify the targeting of the policy in terms of how much benefits flow to small firms less able to access external finance and to sectors worse hit by COVID-19. We find that (1) small firms and vulnerable industries are comparatively more labor intensive, which leads to desirable targeting; (2) labor informality worsens, but does not eliminate, targeting by firm size; and (3) labor informality is uncorrelated with the COVID-19 shock, and therefore does not affect targeting by sector. Supplementary Information: The online version contains supplementary material available at 10.1007/s10797-022-09746-w.

Employment Taxes in Crisis: In Practice, Enforcement, and Insolvency

When President Trump permitted the Service to defer employees' Social Security taxes in 2020 as a result of COVID-19, he claimed it was a "modest, targeted action." The call was not unprecedented. Congress had already deferred the employer portion of Social Security taxes through the end of 2020. Nevertheless, tax holidays for U.S. employment taxes are rare, despite relatively frequent legislative change to payroll taxes. More than 75 statutory changes have been made to payroll taxes since they were first enacted in 1935, with almost all changes increasing rates, the taxes' reach, or the government's enforcement power. By examining legislative developments and their portrayal in the New York Times and Wall Street Journal, this Article documents the changes themselves, how they were presented by the government, and how the public reacted to the change. Exploring the historical development of payroll taxes focuses on the impact of changes to payroll taxes and, through its exploration, also forecasts the likelihood of future changes to the payrolltax system and Social Security funding.

The costs and consequences of 'small business fetishism'

It is widely asserted-and believed-across the Australian political spectrum that small business is the 'engine room' or 'backbone' of the economy. This belief is, however, without any evidentiary foundation whatsoever. In aggregate, Australian small businesses have not created a single job since before the Global Financial Crisis. Small businesses have, on average, been consistently less innovative than medium-sized and large businesses. Small businesses pay lower wages, on average, than medium-sized and large businesses, and they have significantly lower labour productivity. It would be a mistake to perpetuate the preferential treatment of small businesses simply because they are small, and for no other reason, once the pandemic is over. If preferential tax treatment and other forms of assistance are to be afforded to any businesses, it should be to new businesses, rather than small ones.