Our Harrisburg international tax lawyers are here to help you with your overseas tax matter. The shady and secret accounts of offshore banks are excellent material for fictional novels and dramas worthy of binge watching, but in fact, there are plenty of legitimate reasons why the U.S. UU. Some of these reasons include diversification, better interest rates, and the fact that some of the world's best money managers are located outside the United States.
Other reasons include the comfort of traveling or living abroad, maintaining inherited assets in a foreign country, and having family members in another country that they support. U.S. business interests have also grown around the world, and both multinational companies and individuals maintain accounts abroad to finance their various business operations or their living expenses. Citizens, resident aliens, and certain non-resident aliens must declare global income from all sources, including foreign bank and financial accounts, to the IRS under the Foreign Account Tax Compliance Act (FATCA).
In addition, under FATCA, taxpayers must certify their status as foreigners or non-foreigners by submitting forms W-8BEN or W-9, respectively. Taxpayers are required to pay taxes on the income from these accounts at their individual tax rates. These foreign income is reported on a disclosure form, the Foreign Bank Accounts Report (FBAR), and certain taxpayers must submit them with respect to financial accounts held abroad. While this tends to concern the millions of expatriates who live and work in foreign countries, the FBAR applies to an even broader demographic of taxpayers.
Remember the acronym FBAR; we'll refer to it a lot. Taxpayers who use offshore accounts, including banks, security accounts and foreign trusts, to avoid paying taxes are committing fraud. The Departments of Justice and the Treasury have joined forces to crack down on the lack of reporting of accounts and income abroad. They are using the Internal Revenue Service, the Financial Crimes Enforcement Network (FinCEN) and the Office of the United States Attorney General in a collaborative effort to attack individuals, banks, foreign financial institutions, and countries that do not comply with FATCA and the U.S.
This is where the services of an experienced tax lawyer are advantageous. While your CPA may excel at preparing your tax returns, international tax laws are very complex. Recent changes have been made to reporting requirements and deadlines, and two voluntary IRS disclosure programs have been canceled. This tightening of “escape hatches” has made taxpayers with assets abroad more vulnerable to scrutiny, and that's where our firm, Brotman Law, can help.
We have helped many clients resolve issues related to FACTA and complete the many disclosure forms. That's why we created this free book, “The Ultimate Guide to International Taxation”. Whether you're actively looking for information on this topic or you've stumbled upon it and realize that you need help, you're in the right place. Our firm has helped many clients with their FBAR requests or voluntary compliance plans.
Whether or not you hire us to represent you in your international tax transactions, we want this information to be available. The Foreign Account Tax Compliance Act (FATCA) requires that the U.S. Taxpayers, including those living outside the United States, declare their financial accounts held outside the U.S. It also requires foreign financial institutions to submit information to the IRS about their U.S.
Given the successful shutdown of the Swiss offshore banking industry for the U.S. Taxpayers, it is believed that the Treasury and Justice will launch their next attack on Israel and the Caribbean. Read on to learn more about FACTA and FBAR, filing requirements, how to complete forms, penalties, and appeals. Below is an overview and summary of each of the different chapters of the “Complete Guide to Taxes on International Taxes”.
The book will begin with a discussion of which people qualify as American people for tax purposes. In addition, we will delve into the specific rules relating to people who are considered “double tax filers,” a designation given to people who change their state of residence during the tax year. Determining which category of declarant you belong to will serve as the basis for determining your reporting requirements. This chapter analyzes what the FBAR is and explains exactly who should apply and what types of inventory are exempt.
We'll also look at the specific language used by the IRS in the law so that you clearly understand what it's referring to and don't get carried away by terminology. Next, we will delve into how foreign assets are valued, which we think can often be a starting point for an audit. We'll also talk about submission deadlines and deferrals, something that's especially important to consider during the COVID-19 pandemic. Finally, we'll describe the IRS statute of limitations and why you should pay attention to it.
In this chapter, we'll look at the well-known 1040 form, with special emphasis on some of the questions that you might want to pay close attention to from an international tax perspective. In this chapter, we'll discuss the filing requirements for Forms 3520 and 3520A. In other words, the chapter explains the types of trust and gift transactions that involve the filing requirement, as well as the process for filing these forms. The chapter also provides information applicable to those who have inherited foreign trusts or assets.
In addition, in this chapter, you can learn about the sanctions that may be imposed in case of non-compliance. In this chapter, we'll discuss Form 8938, a form that requires “specific persons” and “specific entities” to declare certain assets if they exceed the thresholds established by law. Along with the definitions of “specific persons” and “specific entities”, we will provide information on the types of assets that may trigger the filing requirements of Form 8938. Because the rules surrounding this form are complex and difficult to summarize, we'll provide you with a high-level overview of some of the key information, along with links to the IRS resources listed on the form.
This chapter will also discuss the filing process and the possible penalties you could face if you don't comply with the rules. In this chapter, we will provide an overview of the five categories of individuals and entities that must submit this form so that you can get a general idea of the applicability of the form to your specific situation. We will discuss the filing requirements and the penalties imposed for filing Form 5471 in arrears, and we will provide appropriate links to IRS resources if you want to dive deeper into any of the topics discussed in connection with this form. Completing the FBAR and all the attached files deserves a full chapter in and of itself.
This is where you can learn the nuances of each form, focusing on specific questions and items that, if filled in incorrectly, could trigger an audit. We also link to pages on the IRS website that have more detailed instructions and examples. This will save you hours of having to browse the IRS site. In this chapter, we'll also talk about the various penalties that can be imposed if you don't submit these information forms, submit them late, or submit them by mistake.
This chapter will discuss the penalties that the IRS may apply for deliberate violations, as well as other criminal penalties that taxpayers may face for violations not related to the FBAR. The chapter will analyze the types of events that may lead to the conclusion that it was committed intentionally and will analyze the financial repercussions and criminal remedies of such actions, which could involve spending time behind bars. This is another good reason why you need an experienced tax lawyer on your side if you violate IRS regulations regarding your international accounts. This chapter will look at the types of evidence that the IRS can use to determine that the lack of filing or underpayment were not intentional.
In addition to describing the penalties that may be imposed, this chapter will discuss how having excuses for not filing the return that constitute “reasonable cause” can save you from paying fines. In addition, this chapter will introduce the topic of simplified programs that are available to taxpayers who committed unintentional violations. This process of using international legal means to minimize your tax liability is called tax evasion. Klasing has extensive experience in international tax planning, international tax compliance, including transfer pricing, offshore tax disputes, and offshore account compliance.
For international tax planning, FBAR compliance, and IRS and foreign tax audits, work with an attorney who specializes in strategic taxes. Tax planning for expatriates typically includes ensuring that previous tax filing and payment obligations have been met, minimizing double taxation, and evaluating FBAR, FATCA, or other reporting requirements. My international tax law team in Los Angeles and I understand the tax treaties that the United States has with several other countries. The attached income tax treaties, tax information exchange agreements (TIEA), the attached technical explanations of the Department of the Treasury tax treaties, and documents related to FATCA are available here.
The vast majority of expatriates are able to comply with their tax returns and returns in the U.S. UU. with the help of a CPA firm specializing in expatriate taxes, rather than a lawyer. With this in mind, now is the time for legal experts to consult your international tax filing history to return to compliance in a way that minimizes taxes, penalties and additional interest and successfully avoids criminal tax prosecution.
If you or your company are facing complex tax situations involving international assets that generate revenues, offshore businesses, or other profits abroad, contact the Tax Law Offices of David W. We can reconcile your international tax obligations to avoid the imposition of an IRS audit or a foreign tax audit. On the other hand, most expatriates, including expatriates who are behind on their tax returns in the U.S. In the U.S., they won't benefit from hiring an expatriate tax lawyer instead of a public accountant specializing in expatriate taxes when they file their U.S.
taxes from abroad, however complex their finances may be. .