Experience with Complex Foreign Assets
A&C is experienced and qualified in preparing a number of different information returns for international tax filings, which if not done correctly and filed timely can result in significant penalties to the taxpayer. Examples are:
- Reporting Foreign Gifts. Gifts in excess of $100,000 must be reported to the IRS.
- Reporting Foreign Trusts. Beneficiaries must report distributions they receive from foreign trusts to the IRS.
- Reporting Transfers to Foreign Corporations. Transferors must report the transfer of money and property (physical and financial) to the IRS.
- Reporting the Activities of Foreign Corporations. The shareholders of foreign corporations must report the activities of their foreign corporation to the IRS.
- Statement of Specified Foreign Financial Asset. Individuals that have an interest in specified foreign financial assets and the value of those assets is more than the applicable reporting threshold must report to the IRS.
Foreign Bank and Financial Account Reporting (FBAR)
You may be required to file a Form FinCEN 114 (previously known as TD F Form 90-22.1/ FBAR) if:
- You are a U.S. citizen who owns bank and/or brokerage accounts outside of the United States; or
- You are NOT a U.S. citizen, but you live in the United States and own bank accounts and/or brokerage accounts located outside the United States; or
- You have signature authority over a bank account or brokerage account located outside the United States.
Streamlined Filing Compliance Procedures and 2014 Offshore Voluntary Disclosure Initiative
Do you have foreign bank accounts, income, or assets that have not been reported the Internal Revenue Service? Several countries have signed the Foreign Account Tax Compliance Act (FATCA) with the United States and will be sharing bank account information of U.S. residents with the IRS. Anyone affected by the Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer Taxpayers and the Offshore Voluntary Disclosure Program should have their individual situation reviewed to determine the most advantageous route in light of these new rules. A&C can assist in determining the IRS filing needs as well as any other international financial planning for the short- and long-term.
- Streamlined Filing Compliance Procedures
This program is for U.S. citizens or permanent residents who have physically lived outside the U.S. and for U.S. citizens or permanent residents who reside in the U.S.? Non-resident taxpayers will qualify for 0% penalty or resident taxpayers will qualify for 5% as long as the failures to properly report income on the tax returns, or foreign accounts on the FBARs, resulted from non-willful conduct resulted from non-willful conduct. A&C experts can assist you to evaluate if you qualify for this program and help you participate in the Streamlined Compliance Procedures for an expedient and accurate resolution of your compliance issues.
- 2014 Offshore Voluntary Disclosure Program (OVDP)
Taxpayers who do not qualify for one of the new Streamlined Procedures can still qualify for the 2014 OVDP. These taxpayers face a one-time 27.5 percent offshore penalty based on the highest balance year. In addition, according to the IRS, effective Aug. 4, 2014, the 27.5 percent offshore penalty will increase to 50 percent if either a foreign financial institution at which the taxpayer has or had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation. Taxpayers in the OVDP must file 8 years of income tax returns (or amended returns) and 8 years of FBARs.
Failure to disclose foreign accounts and foreign financial assets can lead to:
- Civil fraud monetary penalties,
- Monetary penalties for failure to file information returns,
- Monetary penalties for willful failure to file the FBAR, and
- Criminal prosecution.
A&C can help by:
- Obtaining pre-clearance for a taxpayer’s inclusion into the OVDP;
- Preparing original and amended United States income tax returns that can withstand an IRS audit;
- Preparing original and amended FBARs that can withstand an IRS audit;
- Obtaining sensitive information from foreign banks and brokerage companies;
- Working with IRS agents once an IRS auditor is assigned;
- Assisting in accounting for transactions in foreign currencies; and
- Arranging an installment payment agreement if the taxpayer is unable to pay the entire balance immediately.
The experts at A&C have assisted several clients in completing successful offshore voluntary disclosures. A&C has the experience and qualifications to guide you through this complex process and possibly save you penalties. Contact www.ahujaclark.com for further information regarding your OVDP.