Reporting & Compliance

It is perfectly legal to have a foreign bank account or other foreign financial interests. However, the U.S. government has stringent reporting requirements with extraordinarily high penalties even for unintentional violations. Failure to comply with these reporting obligations may result in serious criminal and civil penalties. For example, if you don’t file an FBAR, the government can charge you as much as half of the high balance of your foreign account for each year that you did not file or a $100,000 per year per account for six years (whichever is higher), as well as 10 years in a federal tax penitentiary.

Our goal at Moskowitz, LLP is to get you into compliance with your international tax reporting without your having to pay disproportionate penalties. After we learn the details of your particular situation, we will tailor a compliance program that works best for you.

Foreign reporting requirements

U.S. taxpayers with foreign assets and financial interests outside the country are subject to an expanding reach of reporting requirements, including but not limited to:

  • FinCen 114 (FBAR) to report your interest in or signature authority over foreign financial accounts with an aggregate value of $10,000 or more.
  • Form 926 for S. citizens and residents, and domestic corporations, estates and trusts to report certain transfers of property to foreign corporations.
  • Form 5471 for S. citizens and resident officers, directors, and shareholders in certain foreign corporations.
  • Form 8865 to report information regarding, transfers to, acquisitions and dispositions of, and changes in interest concerning certain controlled foreign partnerships.
  • Form 8621 if you are a direct or indirect shareholder of passive foreign investment companies (PFICs) to report receipt of certain distributions, a Qualified Electing Fund or mark-to-market election, or gain on PFIC stock.
  • Form 8621-A for shareholders of former PFICs to make an election to end treatment as a PFIC.
  • Form 8858 if you own a foreign disregarded entity.
  • Form 8938 if the total value of all your specified foreign financial assets is more than the reporting threshold.
  • Form 3520 for U.S. persons and executors of the estates of U.S. decedents to report ownership in or particular transactions with foreign trusts, or receipt of certain gifts or bequests from foreign persons.
  • Form 3520-A to provide information about a foreign trust, its U.S. beneficiaries, and U.S. owners of any portion of the trust.

Anti-money laundering laws, international conventions and tax treaties are making it easier for the U.S. to identify offshore bank accounts and other overseas financial interests. We can defend your interests and find the best method of getting you into compliance with the least cost to you.

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