Entries by Tax Attorney

What to do if you failed to declare your closed foreign bank account that was open within the last six years?

Even though you may have closed your foreign accounts years ago, the IRS can go back as far as six years to impose penalties and perhaps even criminal prosecution for taxpayers who did not disclose their worldwide income on their U.S. income tax returns nor report their foreign accounts to the U.S. Treasury. IRS has […]

Classification of Taxpayers for U.S. Tax Purposes

U.S. law treats U.S. persons and foreign persons differently for tax purposes. Therefore, it is important to be able to distinguish between these two types of individual taxpayers.  This area of the tax law can be quite confusing. For an individual to be classified as ”United States person” for tax purposes means he or she […]

Disclosing Foreign Bank Accounts Through the OVDI Program

A taxpayer who has not disclosed foreign bank accounts to the IRS and to cure this delinquency and avoid criminal repercussions applies to the Offshore Voluntary Disclosure Initiative (“OVDI”), generally must pay a miscellaneous Title 26 offshore penalty, in lieu of traditional penalties that would apply to foreign assets or entities outside of OVDI.  The […]

Beware the Potential Tax Pitfalls of Investing in Offshore Mutual Funds – “PFIC” Concerns

U.S. persons ought to be aware of the potential tax heartaches associated with investing in mutual funds held by foreign banks or foreign brokerage firms. When making such investments through U.S. firms, any appreciation or depreciation of value of the funds is not recognized as gain or loss until the fund is sold or liquidated.  […]

Avoiding Penalties Through the First Time Abate Policy

Taxpayers who are facing a potentially large IRS penalty for late or unpaid taxes may be eligible for relief through the First Time Abate policy. This provides an opportunity for people who have fallen behind to become current on their tax obligations while eliminating any penalties from a previous tax issue. The First Time Abate […]