Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

The expats: ‘No bills, no everyday dramas’ – until the unthinkable happens

The Independent March 10, 2012

Western workers are the civilian mercenaries of Africa. They are easy to spot in the continent’s airports. Generally white and casually dressed, they travel in groups of three or four. They often seem to speak with Scottish accents and have little or no hand luggage, except possibly an iPad. And they are such seasoned travellers that they are generally the last to leave the bar when the flight is called.

“You do it for the money and only for a few years,” said a Scottish welder I met recently at Luanda airport in Angola. All he knew of the country was the international airport and a hotel nearby where he had stayed while waiting for his helicopter transfer to the rig.

He works a 30/30 schedule: non-stop, 12 hours a day for 30 days, followed by a month off for £40,000 per year. That is the favoured work rhythm of employed oil workers who are a long way from home. Others work short stints for different companies as freelance contractors.

The untrained, entry-level staff, with no qualifications can expect to earn about £100 a day, but skilled staff can expect much more: senior construction project managers can pocket as much as £150,000 a year for their work, often much more than they could earn at home. In Nigeria, a project manager can take home £65,000 for helping to build hotels, according to one careers website yesterday.

The welder, a single man, said the best and worst aspect of his work was the monotony: jobs are narrowly defined for safety reasons but there also few surprises: “No bills to pay, no everyday dramas to deal with. They are waiting for me back home,” he said. He was travelling back to Britain with a pipe fitter, a mechanic and a scaffolder, all working the same shift pattern.

Sites housing hundreds of expat specialists have everything: internet, swimming pool, gym and satellite television. Accommodation is five-star and is kept functioning by an army of housekeepers, plumbers and galley hands.

The downside is that the work takes place in remote and often dangerous regions where they risk being kidnapped or worse, as this week’s events showed.

The companies involved are expected to provide security for their workers, but as message boards suggested yesterday, some areas of Africa, particularly Nigeria, remain highly dangerous for expat workers.

“I spent three months in Somalia two years ago and if u [sic] think Iraq is dangerous Somalia is much worse… The Niger Delta isn’t much better. Having worked a lot in Africa I would advise u [sic] to think very carefully about going there at all,” said one blogger.

Please see the original and read more here

March 9, 2012 Posted by | Africa, Civilian Contractors, Contractors Kidnapped, Safety and Security Issues | , , , , | Leave a comment

IRS Targets US ExPats

Updates to our ExPat Tax Page

For years companies like Blackwater and Ronco Consulting  have Misrepresented their employees as Consultants or Independent Contractors to the IRS to escape having to pay Social Security and Medicare payroll taxes.

Thank you Blackwater and Ronco Consulting

At the same time these same companies represented these same consultants and Independent Contractors to be employees for the purpose of purchasing the mandated Defense Base Act Worker’s Comp Insurance.  Even going so far as to have contractors sign new backdated employment contracts AFTER they were injured.

Fraudulent activity of this nature has garnered the full attention of the IRS to the Contract Employee much more so than it has the Contract Company.  Blackwater even continued to do this after the IRS busted them.

Bob Powers of Power Tax sends us this and asks that we warn all ExPats to be prepared.

Pursuant to an IRS internal memo Memorandum Number: AM2009-0003

This link IRS  has an important note regarding the definition of a foreign tax home (which is necessary to claim the Sec 911 benefit).

The IRS has been using this in somewhat of a distorted way to deny the FEIE to contractors working in Iraq and Afghanistan,, not only those who have families in the U.S., but also single people who left home, joined the military and then were hired as contractors.

If they did not plan in advance and take all the steps necessary to show that their abode was in a foreign country and not in the U.S. they are disallowing the exclusion.

Many have had inexperienced tax preparers or did their own tax return and the case dragged on so long that they lost their administrative appeals rights and facing a substantial tax bill plus penalties cannot afford a good tax attorney to take it to Tax Court.

As a result, the IRS is using their muscle to claim that these workers were living on a base and had no contact with the local community and therefore their “abode-which is not clearly defined anywhere) was in the U.S.

This is the quote from the IRS page:

Tax Home
Your tax home is the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home.
Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual. Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.

If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live. If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant and your tax home is wherever you work.

You are not considered to have a tax home in a foreign country for any period in which your abode is in the United States . However, your abode is not necessarily in the States while you are temporarily in the United States .

Your abode is also not necessarily in the United States merely because you maintain a dwelling in the United
States , whether or not your spouse or dependents use the dwelling.

“Abode” has been variously defined as one’s home, habitation, residence, domicile, or place of dwelling. It does not mean your principal place of business. “Abode” has a domestic rather than a vocational meaning and does not mean the same as “tax home.”
The location of your abode often will depend on where you maintain your economic,
family, and personal ties.

Example 1.
You are employed on an offshore oil rig in the territorial waters of a foreign country and work a 28-day on/28-day off schedule. You return to your family residence in the United States during your off periods. You are considered to have an abode in the United States and do not satisfy the tax home test in the foreign country. You cannot claim
either of the exclusions or the housing deduction.

Example 2.
For several years, you were a marketing executive with a producer of machine tools in Toledo , Ohio . In November of last year, your employer transferred you to London , England , for a minimum of 18 months to set up a sales operation for Europe . Before you left, you distributed business cards showing your business and home addresses in London .

You kept ownership of your home in Toledo but rented it to another family. You placed your car in storage. In November of last year, you moved your spouse, children, furniture, and family pets to a home your employer rented for you in London .

Shortly after moving, you leased a car and you and your spouse got British driving licenses. Your entire family got library cards for the local public library. You and your spouse opened bank accounts with a London bank and secured consumer credit. You joined a local business league and both you and your spouse became active in the
neighborhood civic association and worked with a local charity.

Your abode is in London for the time you live there. You satisfy the tax home test in the foreign country.

Note that the IRS agents examining these returns are not seasoned international agents and their internal directive is to disallow the exclusion regardless of the taxpayer’s defenses and force it to go to Tax Court.

We recommend you check out Power Taxes pages before you deploy.

U.S. Expatriate Tax & Business Solutions

January 12, 2012 Posted by | Blackwater, Civilian Contractors, Defense Base Act, ExPats, Follow the Money, Legal Jurisdictions, Ronco, Ronco Consulting Corporation, Taxes, Uncategorized, War Hazards Act | , , , , , , , , , , , | 2 Comments