Tag Archive for foreign assets

U.S. Court Deems A Foundation A Foreign Trust – Greenlighting Penalties

Court Deems A Foundation A Foreign Trust - Greenlighting Penalties

Foreign assets are always tricky for U.S. tax reporting. A recent court decision also shows that differentiating a foundation from a trust is pivotal.

The levying of tax penalties stood in a recent federal appeals court decision on whether a private foundation was a foreign trust subject to such penalties.

In the Rost v. U.S., the U.S. Court of Appeals for the Fifth Circuit upheld tax penalties against U.S. citizen John Rebold, who failed to report his personal-use Liechtenstein “Stiftung” (a non-charitable private foundation) as a foreign trust.

The decedent Rebold formed the Enelre Foundation in 2005 for the general support and education of him and his children. He transferred $2 million to the foundation in 2005 and $1 million in 2007 and did not disclose the transactions to the IRS.

Rebold later learned that the IRS would consider his foundation a foreign trust with the associated reporting requirements. He filed the reports belatedly, in 2013, and the IRS assessed penalties.

Read More

Written by | Posted in Estate Planning • Foreign Assets • IRC Sec. 6048

Here Is What You Need To Know If You Are Filing Form 8938

Form 8938 - Olivier Wagner

In the USA, there have been so many intricacies involved with respect to your income tax return filing and compliance with the federal tax laws. Recently, there have been a number of administrative requirements for disclosing local and foreign financial assets. One such requirement is filing of FATCA-form 8938 for disclosing foreign-held assets, interests, partnerships, bank accounts, mutual funds or stockholdings, etc. It is very similar to the FBAR but the FBAR gets recorded with the US treasury and form 8938 goes to the IRS.

Who are the persons that come under the radar of FATCA compliance?

The law states that you need to file form 8938 if you are either a specified person or a specified domestic entity and you have rights or interests in a specified foreign financial asset. Now, every citizen of the USA who is earning more than $10,000 per annum or hold a specific amount of foreign financial assets come under the definition of specified persons for the purpose of FBAR reporting or filing form 8938.

What is FBAR?

FBAR is the report of foreign bank and financial accounts. It is separate from your tax return and is not filed with your tax return. It is filed directly with the Treasury. It has to be electronically filed. There is also no tax based on the FBAR, instead, it is simply an informational reporting form, through which you are essentially just conveying information to the Treasury.
Read More

Written by | Posted in Form 8938

IRS Reminds Those With Foreign Assets About U.S. Tax Obligations

WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, to check if they have a U.S. tax liability and a filing requirement. At the same time, the agency advised anyone with a foreign bank or financial account to remember the upcoming deadline that applies to reports for these accounts, often referred to as FBARs.

Here is a rundown of key points to keep in mind:

Deadline For Reporting Foreign Accounts Read More

Written by | Posted in FBAR • IRS • OVDP • TaxConnections

IRS Reminds Those With Foreign Assets About U.S. Tax Obligations

WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, to check if they have a U.S. tax liability and a filing requirement. At the same time, the agency advised anyone with a foreign bank or financial account to remember the upcoming deadline that applies to reports for these accounts, often referred to as FBARs.

Here is a rundown of key points to keep in mind:

Deadline For Reporting Foreign Accounts Read More

Written by | Posted in Foreign Assets • IRS

A Brief Overview of the Judicial Reasoning That Has Thwarted Foreign Asset Protection Trusts

Hale Stewart, Tax Advisor

As I have documented previously, there are several cases where courts have ruled against the grantors of a foreign asset protection trust, thereby nullifying the asset protection benefit. In this post, I want to briefly sum up the judicial reasoning used by the courts to thwart these trusts.

Read More

Written by | Posted in Foreign Income • Tax Law

FATCA 2015 Roundup: It’s All Serious Business!

TaxConnections Member Manasa Nadig

A lot has been written about the Foreign Account Tax Compliance Act {FATCA} in the past year. As this year comes to a close and I write up this post, I wanted to give you all, my dear readers a synopsis at your finger-tips, a round-up, if you will of some major FATCA events for 2015:

1. FBAR Deadlines Changed:

On July 31, 2015 President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 into law, which modified the due date of several key forms for Americans with foreign income and Americans living abroad. That includes the Report of Foreign Bank and Financial Accounts, or Form 114, colloquially known as the FBAR.

Any U.S. person with a financial interest in, or signatory authority over, foreign financial accounts must file the FBAR, if at any time, the aggregate value of their relevant foreign account or accounts exceeds $10,000. An account over Read More

Written by | Posted in FATCA • FBAR • Federal • Income Tax • Individual • International • OECD • OVDP • Tax Planning

Foreign Trust Protection for Foreign Assets: A Myth Busted!

It is not uncommon anymore that a US Citizen has parents and elders living in foreign countries who may have set up trusts in those countries under (obviously) its laws. There are also US Citizens who have expatriated to/ now live in foreign countries and set up trusts for their children there.

Today’s post was prompted by questions from several clients about an urban legend that seems to be perpetuating itself out there: “You do not have any US tax reporting requirements if you are a US citizen/ permanent resident and your foreign assets and/ investments are in a foreign trust.”

If you have believed this to be true and set up a trust in a foreign country or are thinking of taking this step or are just Read More

Written by | Posted in Estate Planning Tax

This Just In! Final Regulations On Reporting of Foreign Specified Assets On Form 8938!

Form 8938, is the Statement of Specified Foreign Financial Assets. This form is required to be filed to remain in compliance with IRC § 6308D. You may not have known that the Internal Revenue Service hadn’t yet made the 2011 rules and regulations under this code final, comments and concerns were still being gathered.

The Internal Revenue Service on December 11th, 2014 has issued final regs that provide guidance on the requirement under Code § 6038D, for Form 8938 filers. This provides more information and clarifications on certain filers, types of assets to be reported, valuation etc.

The final regs apply for tax years ending after Dec. 19, 2011, but taxpayers may apply them Read More

Written by | Posted in FBAR • Individual • IRS • OVDP

FAT(CA) – No One Is Getting “FAT” Except The IRS

President Obama in 2010, signed P.L. 111-147, the Hiring Incentives to Restore Employment Act. The purpose of the law is in its eponymous title, but the Internal Revenue Service got into the act with the Foreign Account Tax Compliance Act (FATCA) provisions.

FATCA is an attempt by the IRS to “improve reporting compliance” — translation: “widen the net” — to tax United States citizens who stash assets abroad.

The new FATCA reporting rules are broad and will impact U.S. corporations and high-income individuals with offshore financial holdings. The IRS issued its final regulations in January 2013 and put its Treasury Department “tax ambassadors” to work.

The result was a series of intergovernmental agreements with more than 50 other countries. Read More

Written by | Posted in FATCA • Individual • Tax Provision/Tax Reporting

IRS Reminds Those with Foreign Assets of U.S. Tax Obligations

Nonresident aliens who received income from United States sources in 2013 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be April 15 or June 16 depending on sources of income. See Taxation of Nonresident Aliens on IRS.gov.

Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to fill out and attach Schedule B to their tax return. Certain taxpayers may also have to fill out and attach to their return Form 8938, Statement of Foreign Financial Assets. Read More

Written by | Posted in FBAR • IRS

Beware, US Citizens Using their Other Passport to Open Foreign Bank Accounts

FATCA requires foreign banks to conduct due diligence to see if there are US persons with foreign bank accounts. The fact you did not give a foreign bank your US passport still does not mean they might not report your foreign bank, financial and other accounts to the US and IRS.

FATCA was enacted to expose those US citizens and green card holders who are trying various tricks such as dual passports, etc. to avoid reporting and paying taxes on their foreign financial accounts.

Under the FATCA law in order to stay in good graces of the IRS, the foreign banks must put into place procedures to weed out account holders who are Americans and US green card holders even though the passport they opened the account with said otherwise. These are the questions you need to ask yourself before you take the HUGH risk of not reporting those accounts on form TDF 90-22.1 (FBAR form).

Are there any US address associates with your account?
Are there any US phone numbers with your account?
Is your birthplace listed as somewhere in the US?
Have you made more than one wire in or out form the US?
Any other item that may make the bank suspicious you are a US person. Read More

Written by | Posted in Africa • Caribbean • FATCA • International • United States