Taxpayer Wins! Foreign Gift Not Reported: DOJ Concedes he had “Reasonable Cause”

We have had a taxpayer win in the foreign information reporting arena! I provide a summary of the case of Mr. Krzysztof Wrzesinski below. For readers who wish more, the taxpayer’s complaint is here. Background of the Wrzesinski Case Mr. Wrzesinski (“Taxpayer” or “T”) was a native of Poland who immigrated to the United States … Continue reading Taxpayer Wins! Foreign Gift Not Reported: DOJ Concedes he had “Reasonable Cause” →

FATCA Statute of Limitations: IRS’ 2018 Assessment Grabs Tax & Penalties Back to 2003

In Fairbank v. Commissioner, T.C. Memo. 2023-19, Dkt. No. 13400-18 (February 23, 2023) the Internal Revenue Service (IRS) issued a notice of deficiency in April 2018 for taxable years 2003, 2004, 2005, 2006, 2007, 2008, 2009, and 2011. The taxpayers argued the IRS could not go back to these prior years, challenging the assessments on … Continue reading FATCA Statute of Limitations: IRS’ 2018 Assessment Grabs Tax & Penalties Back to 2003 →

Is IRS Finally Seeing the Light on Foreign Information Returns?

Bloomberg Tax - I invite readers to enjoy my recently published article, copied in full below. Reproduced with permission. Published December 3, 2021. The Bureau of National Affairs, Inc. (800-372-1033) http://www.bloombergindustry.com published in Tax Insights and Commentary News, online here. Various options are available to correct the problem of missing information returns for U.S. … Continue reading Is IRS Finally Seeing the Light on Foreign Information Returns? →

Foreign Foundations — What are they for US Tax Purposes? Should I Care? Recent Court Case Lays it Out

Today’s post looks at the case of Rost v United States, No 119-CV-0607-RP 2021 BL 435976 (WD Tex., Austin Div., September 22, 2021). In the Rost case, the Internal Revenue Service ("IRS") assessed close to USD597,000 in civil penalties for a US taxpayer’s failure to file IRS Forms 3520 and 3520-A, information reporting with regard … Continue reading Foreign Foundations — What are they for US Tax Purposes? Should I Care? Recent Court Case Lays it Out →

Double Whammy – US Owner and Beneficiary of Foreign Trust Held Liable for 2 Separate Penalties! Failure to Report as “Owner” and Failure to Report as “Beneficiary”

When a US person has any involvement in any way with a foreign trust, extreme care is required to make sure that all of the strict US tax filing responsibilities are met. Surprisingly, for US tax purposes, a trust can be treated as “foreign” even if it is created in the US under US laws. … Continue reading Double Whammy – US Owner and Beneficiary of Foreign Trust Held Liable for 2 Separate Penalties! Failure to Report as “Owner” and Failure to Report as “Beneficiary” →

IRS Stealth: Delinquent Information Submission Procedure Penalties May Apply Without Considering “Reasonable Cause” Statement

On November 5, the Internal Revenue Service (IRS) made life more difficult for taxpayers who may have missed some foreign information return filings. The IRS quietly revised one of the four options to correct for missing information returns with respect to a US taxpayer’s interest in any offshore/foreign assets and holdings (e.g., Form 8938, Form … Continue reading IRS Stealth: Delinquent Information Submission Procedure Penalties May Apply Without Considering “Reasonable Cause” Statement →

Foreign Trust Forms 3520 and 3520-A Penalties: A Potential Gold Mine for the IRS

The Internal Revenue Service (IRS) is looking for money. As part of the hunt, it has instituted various “campaigns” (full list here) aimed at areas in which there is greater taxpayer noncompliance that may involve significant tax dollars and penalties. One such campaign involves the failure by a US person to file complex information-reporting tax … Continue reading Foreign Trust Forms 3520 and 3520-A Penalties: A Potential Gold Mine for the IRS →

Using a “Foreign Grantor Trust” – I Heard of it, but Hmmmm … I Want to Know More

Most tax practitioners and wealth planning professionals have heard of the “foreign grantor trust” (FGT) but many are unsure of what it is, how it works, or what it can accomplish in US tax planning. My post today provides an overview. The use of a so-called “foreign grantor trust” is a traditional planning technique that … Continue reading Using a “Foreign Grantor Trust” – I Heard of it, but Hmmmm … I Want to Know More →

Extension Granted for Gift Tax Returns and Payments – No Extension for Form 3520

My earlier blog post detailed the extensions for filing and payment of US income taxes on account of the COVID-19 emergency. Further relief was just granted on March 27 by the Internal Revenue Service (IRS) in Notice 2020-20 to all taxpayers who have Federal gift (and generation-skipping transfer) tax returns and payments due on April … Continue reading Extension Granted for Gift Tax Returns and Payments – No Extension for Form 3520 →

US Beneficiary of Foreign Trust: Understanding US Tax Filings

I have written a series of blog posts about foreign (i.e., non-US) trusts and the US tax issues associated with them including the US tax filing and reporting requirements for each of the different players in the foreign trust scenario (creator or "grantor"/"settlor" of the trust), the trustee; and today, the US beneficiary. One of … Continue reading US Beneficiary of Foreign Trust: Understanding US Tax Filings →