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Archive for Foreign Investments

Foreign Trusts: IRS Penalty Notices For Late Forms 3520-A Traumatize Many Innocent Taxpayers!

It was early on a Monday morning, and I dragged myself in after a long weekend of reg. buzzing and Code section perusing. I was not looking forward to the day. I played a message on my answering machine that made me want to return home and crawl back into bed. It was left in the middle of the previous night by a crazed and panicked client living in Norway. She had just gotten a CP15 Notice from the IRS that said she had been charged a penalty in the amount of $10,000 under Section 6677 of the Internal Revenue Code (IRC) for failure to file Form 3520-A, under the requirements of IRC Section 6048(b).

The client was the owner of a foreign trust, and I knew we had properly filed Form 3520, “Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.” Foreign trusts with U.S. owners have the responsibility to file Form 3520-A, “Annual Information Return of Foreign Trust With a U.S. Owner,” which few of them do. So since IRC Section 6048(b) requires the owner of a foreign trust to ensure that this happens, we attached “substitute” Form 3520-A to Form 3520, in accordance with the instructions to Form 3520. Form 3520 and the attached substitute Form 3520-A were filed in August, but we had filed an automatic extension for the client’s tax return, which, according to the instructions to Form 3520, also extended the filing date for Form 3520.

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Foreign Investment Into The U.S. Part II: Who Is A U.S. Person?

The U.S. income tax and estate tax both function under a system with only two possibilities, a taxpayer is either a U.S. person/domiciliary or not a U.S. person, referred to as a non-resident alien (“NRA”). There is no middle ground, it is an all or nothing system. Since U.S. tax law is based on this distinction, the first step in any analysis is determining the correct category.

The U.S. laws do not define who is an NRA, rather, they define who is a U.S. person, or for estate taxes a U.S. domiciliary. Therefore, NRAs will be anyone who does not meet the definition of a U.S. person or domiciliary. Due to these rules, before we can decide how a foreigner will be taxed in the U.S., we must first make sure they are in fact a foreigner under the laws.

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Foreign Investment Into The U.S. Part I: Overview Of Taxes

With the strength and stability of the U.S. economy, strong rule of law, and new favorable tax laws, foreign investment into the U.S. is continuing to grow. Although the tax law changes have been favorable for inbound investment, U.S. tax law remains aggressive and sometimes harsh. The good news is that with very detailed laws the outcomes are predictable making tax planning possible.

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Foreign Investors In United States Real Estate

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Green Card Holder Pleads Guilty of Failing to File FBAR and Report UBS Account, Will Pay More than Half the Assets in FBAR and Tax Penalties

A Greenwich, Connecticut man pleaded guilty October 26, 2017, to failing to report funds he maintained in foreign bank accounts to the Department of Treasury, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, and Chief Don Fort, IRS Criminal Investigation.

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Forms Required By #Americansabroad 101 – The Explanation

John Richardson BNN

The following is a response to comments made about an article written by Rachel Heller on medium.com titled, “Why I renounced my US citizenship (Hint: it’s not because I’m avoiding taxes!).” The article was well written, interesting and attracted responses from Homeland Americans. (It was reproduced here and attracted even more comments.) The comments from U.S. residents demonstrated again that they do NOT understand the problems experienced by Americans abroad.

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Definition of Financial Institutions As It Applies To Foreign Investments

Maurice Glazer

As we are working on tax returns for many U.S. clients with international investments, we find that there is a false sense of security based on the information from the people who sell them the foreign investment. There are two issues that are of concern. For the tax payer, who is filing their return, if we fail to do the correct thing there is a minimum civil penalty of $10,000 or a penalty of 50%  of the value of the asset. Another important issue Read more