With all of the focus on FBARs and Form 8938s these days, it’s sometimes easy to forget about the other IRS international reporting forms. Below is a list of other important international reporting forms that relate to foreign asset reporting along with their penalties.

(1) Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts: Under IRC § 6048, taxpayers must report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust, and receipt of distributions from foreign trusts. This return also reports the receipt of gifts from foreign entities under IRC § 6039F. The penalty for failing to file each one of these information Read More

It has been a rallying cry that is as old as time and that rivals that of the standing ovation that the Rangers receive after scoring a power play goal: “Corporate tax in this country needs to be reformed.” Who is leading the charge? America’s chief executives. What is responsible for catapulting this into the public eye? None other than the nation’s aging tax code, which has been blamed for putting U.S. multinational corporations at a competitive disadvantage in the global marketplace.

As tax reform chatter grows louder, chief executives have become more outspoken. Timothy D. Cook, Apple’s chief executive, told lawmakers, “Apple has recommended to the Obama administration and several members of Congress — and suggests to the subcommittee today — to pass legislation that Read More

Last Tuesday, IRS Commissioner John Koskinen addressed the New York State bar Association Tax Section in New York. His comments provide keen insight into the going-on’s at the IRS. Mr. Koskinen’s most important announcement centered on the agency’s anticipated reduction in the number of rulemaking projects as a result of budgetary constraints.

Although releasing guidance is one of the agency’s core functions, there are simply not enough attorneys in the Office of Chief Counsel to shoulder the burden. Nor are there any plans on the horizon to hire more workers, in light of the agency-wide hiring freeze.

“Our office of chief counsel continues to make every effort to issue guidance in a timely Read More

Bulgaria is the most recent country to ink a deal with the United States to implement FATCA, the Foreign Account Tax Compliance Act. Passed by Congress in 2010, the law is designed to stomp out offshore tax evasion by targeting U.S. taxpayers with unreported offshore accounts.

Under the law, foreign banks and financial institutions must report accounts belonging to U.S. taxpayers to their local taxing authority. The local taxing authority, in turn, must turn this information over to the U.S. upon receipt of a “group request.” However, before this information can be exchanged, the local taxing authority must obtain the consent of those U.S. accountholders who are affected. This is usually accomplished through what’s called a “declaration of consent.” This is the essence of a Model 2 Treaty between the U.S. and Read More

Author Samuel Jaberg sat down to interview Jacques de Watteville, Switzerland’s State Secretary for International Financial Matters. Mr. de Watteville is the man in charge of implementing Switzerland’s new treaty on automatic exchange of information between tax authorities. Before we dive into the interview, some background information about how the automatic exchange of information works is useful.

According to the article,

“… banks will collect data on their clients and transfer it to their national taxation authorities, which then forward it in encrypted form to the authorities in the respective countries. The name, address, account number and balance will be divulged, as well Read More

The threat of U.S. prosecution looms over HSBC Holdings PLC like the sword of Damocles after a groundbreaking report revealed that it helped clients hide cash from various tax authorities. These reports cast HSBC, HSBC’s Holding’s parent bank, in an unsavory light and is the latest round of negative publicity to besmirch the British bank’s reputation. As such, it sent shockwaves through the foundation of HSBC.

The basis for these reports are documents provided by Herve Falciani, a former employee of HSBC.

These documents reveal how mid-level HSBC bankers assisted European clients do an end-run around a European Union tax on bank deposits. Specifically, the clients were Read More

Continued from Part I

The Risks Associated With Making A Quiet Disclosure

What happens if the IRS disagrees with Joan, Tommy, or Trevor’s explanation for filing late FBARs? In other words, what if the IRS believes that their failure to file FBARs was not inadvertent or accidental, but instead willful?

This could result in any one of a number of “parade of horribles,” the most serious of which is a referral to Criminal Investigation. While that is generally the exception and not the rule, taxpayers should be mindful of the fact that, unlike OVDP, a “quiet disclosure” does not guarantee immunity from prosecution. Read More

The environment that taxpayers with unreported offshore bank accounts find themselves in today is downright frightening. Some have likened it to “McCarthyism,” the term that has its origins in the period of U.S. history known as the “Second Red Scare.” Beginning in 1950 and lasting until 1956, “McCarthyism” was characterized by heightened political repression against communists, as well as a campaign spreading fear of their influence on American institutions and of espionage by Soviet agents.

Originally coined to criticize the anti-communist pursuits of Republican U.S. Senator Joseph McCarthy (Wisconsin), “McCarthyism” soon took on a broader meaning. The term is now used more generally to describe reckless, unsubstantiated accusations, as well as demonized attacks on the character or patriotism of political adversaries. Read More

Last weekend, media reports cast an unflattering light on HSBC’s continued defiance to “straighten up and fly right” when it comes to assisting its foreign clients hide their accounts from taxing authorities in their home countries. The list of clients includes some you would least expect: global politicians, rock stars, arms dealers, and potential terrorists. Not surprisingly, this did not sit too well with the IRS.

According to a report from the International Consortium of Investigative Journalists, HSBC’s Swiss private banking division was complicit in assisting its foreign clients to “dodge” tax authorities in their home countries. Specifically, they were all too willing to gave them tips on how to evade paying European Union taxes on their bank accounts. Read More

The IRS is an agency of the Treasury Department and is charged with the administration of the tax laws. It is the largest government agency in the world. Headed by the Commissioner of Internal Revenue, its structure is as follows:

(1) There are four civil compliance divisions responsible for serving specific groups of taxpayers with similar needs. They are:

a. Wage and Investment Division: This division services 88 million individual taxpayers who have only wage and investment income, almost all of which is reported to the IRS by third-party payors.

b. Small Business Self-employed Division: This division is responsible for taxpayers who Read More

The IRS has stepped up its efforts to curb non-disclosure of offshore assets and underreported income by U.S. taxpayers. Tax compliance has risen to the top of the IRS agenda, and with widely publicized alerts from the IRS, claims of ignorance of the law aren’t likely to go very far.

Contrary to popular belief, not all foreign assets owned by U.S. taxpayers must be disclosed. This blog provides guidance to U.S. taxpayers who store gold and currency cash notes abroad in private vaults – a popular investment these days considering the uncertain global economy and the sharp declined in currency values.

Let’s begin with some basics. A U.S. person must file an FBAR if that person has Read More

This article was co-authored by Randall Brody, EA of Tax Samaritan. I wish to acknowledge his keen insight and invaluable contributions to this article.

Picture this. You receive a notice of determination from the IRS informing you that you owe more tax than you reported on your tax return. As is usually the case, the IRS issues a 30-day letter, advising you that you have 30 days to request Appeals consideration of the case.

But a new interim guidance issued by the IRS might make waiting for such a letter the equivalent of “waiting for Godot.” Why? This new guidance severely restricts the rights of certain taxpayers from seeking redress of their disputed tax determinations in Appeals, by Read More