New Law Expands U.S. Government’s Discovery of Americans’ Foreign Accounts

The United States taxes its citizens and residents (“U.S. persons”) on their worldwide income.  U.S. persons commonly used foreign financial accounts to evade U.S. income tax.  Unlike U.S. financial institutions, foreign financial institutions do not report to the U.S. Internal Revenue Service income paid or credited on accounts.  Some U.S. persons interposed shell companies to…

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Americans’ Interests in Foreign Accounts Reportable on Form 8938

The United States taxes its citizens and residents on their worldwide income.  Accordingly, the U.S. Internal Revenue Code requires U.S. taxpayers whose interests in foreign financial accounts exceed certain thresholds to report those interests in foreign financial assets on Form 8938, Report of Specified Foreign Financial Assets, filed with their annual U.S. income tax return. …

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The FBAR Filing Requirement

The United States taxes its citizens and residents on their worldwide income.  To evade U.S. income tax, U.S. taxpayers were transferring their funds to foreign financial institutions, which are not required to report income generated by the funds to the U.S. Internal Revenue Servivce.  Congress responded by enacting the Bank Secrecy Act and its FBAR…

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Foreign Accounts Compliance Update

The first thing a taxpayer should do who is out of compliance with United States laws concerning foreign financial accounts is immediately file delinquent FinCEN Forms 114, Report of Foreign Bank and Financial Accounts, (“FBARs”), or amended FBARs for the preceding six years. The statute of limitations on assessment of penalties for failure to file…

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VDP—IRS’ Updated Voluntary Disclosure Practice

The Internal Revenue Service ended its Offshore Voluntary Disclosure Program (“OVDP”) effective September 28, 2018. Since then the IRS has made its Voluntary Disclosure Practice (“VDP”) available to willfully-noncompliant taxpayers. VDP offers such taxpayers the prospect of avoiding criminal prosecution, and of mitigating civil penalties. VDP does not apply to the great majority taxpayers whose…

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Offshore Accounts Remain IRS Enforcement Priority

At the American Bar Association Taxation Section’s annual meeting in Washington, D.C., in May, 2019, IRS representatives said the IRS continues examining evidence of Americans’ foreign financial accounts, and seeking additional such evidence. The import of this cryptic message is clear: Americans should comply with U.S. laws concerning foreign financial accounts as soon as possible,…

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Streamlined Procedures for Foreign Accounts Compliance

Posted on: January 9, 2019 | By: Dunn Counsel |  Bank Secrecy Act, Paths to Compliance, Streamlined Procedures, The FBAR Filing Requirement, Uncategorized Many Americans become compliant with U.S. laws concerning foreign financial accounts by means of the Streamlined Filing Compliance Procedures (the “Streamlined Procedures”). To qualify for the Streamlined Procedures, an individual must have underreported tax on a U.S. income…

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International Information Returns

The United States taxes its citizens and residents on their worldwide income.  The Internal Revenue Service requires U.S. taxpayers to file information returns concerning foreign assets, accounts, and transactions.  I have recently posted articles on several of them, as follows: The FBAR Filing Requirement Form 5471 and Closely-Held Foreign Corporations U.S. Taxpayers’ Interests in Foreign…

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Americans’ Interests in Foreign Partnerships Reportable on Form 8865

A U.S. taxpayer whose interest in a foreign partnership meets a specified threshold must file with his U.S. income tax return Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships.  Significant penalties lie for failure to file Form 8865.  More importantly, the assessment statute of limitations as to a tax return—the entire…

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Forms 3520 and 3520-A and the Grantor Trust Rules

The United States taxes its citizens and residents on their worldwide income.  To ascertain U.S. taxpayers’ foreign income, the Internal Revenue Service requires the filing of a series of  international information returns.  Those international information returns include Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, and Form…

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