Request A Case Evaluation Or Tax Resolution Development Plan

Deceased Mother’s Undisclosed Foreign Bank Accounts- What to Do?

Question: My mother just passed away and I inherited $5 million that she kept in offshore bank accounts. The problem is that while she was alive, she did not report the existence of these accounts on the FBAR nor did she report the interest income made on these accounts on her tax returns. What are my reporting obligations, if any? I do not want to get in trouble with the IRS. What should I do?

Answer: It is highly recommended that you come forward and disclose these overseas assets and income to the IRS. The IRS has set up a program called the Offshore Voluntary Disclosure Initiative (OVDI) to allow taxpayers with previously unreported offshore assets and income to come forward and disclose these assets. By voluntarily disclosing these assets, the taxpayer can avoid higher civil penalties that would be imposed if the taxpayer didn’t participate in the program. The taxpayer can also avoid possible criminal prosecution.

The same reporting requirements apply to taxpayers who have inherited previously undisclosed foreign assets. The IRS specifically states that entities such as trusts are eligible to participate in OVDI. (FAQ 13, OVDI 2012).

Not disclosing these inherited assets can lead a taxpayer to suffer the same fate as Henry Seggerman and other members of the Seggerman family. In August 2013, Henry Seggerman pled guilty to charges of tax fraud and evasion for not disclosing over $12 million he and his siblings had inherited from their father who died in 2001. The money was secretly held in Swiss bank accounts. Henry was required to pay $600,000 in restitution and faced up to 11 years in prison. His three siblings had also pled quilty to similar charges and awaited similar fates.

The bright side is that taxpayers who inherit previously undisclosed assets may qualify for a special reduced offshore penalty of 5% if they meet certain conditions. (The standard penalty rate is 27.5%). To qualify for the 5% penalty, the taxpayer must meet all of the following 4 conditions:

(a) he did not open or cause the account to be opened (unless the bank required that a new account be opened, rather than allowing a change in ownership of an existing account, upon the death of the owner of the account); (b) he must have exercised minimal, infrequent contact with the account, for example, to request the account balance, or update accountholder information such as a change in address, contact person, or email address; (c) he must have, except for a withdrawal closing the account and transferring the funds to an account in the United States, not withdrawn more than $1,000 from the account in any year for which the taxpayer was non-compliant; and (d) can establish that all applicable U.S. taxes have been paid on funds deposited to the account (only account earnings have escaped U.S. taxation). (FAQ 52, OVDI 2012).

If you have never reported your foreign investments on your U.S. Tax Returns or you have inherited previously unreported foreign assets, you should seriously consider participating in the IRS’s Offshore Voluntary Disclosure Initiative (OVDI) which allows taxpayers to come forward to avoid criminal prosecution and not have to bear the full amount of penalties normally imposed by IRS. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.

Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties.

    Request A Case Evaluation Or Tax Resolution Development Plan

    Get a Tax Resolution Development Plan from us first before you attempt to deal with the IRS. There are several options for you to meet or connect with Board Certified Tax Attorney Jeffrey B. Kahn. Jeff will review your situation and go over your options and best strategy to resolve your tax problems. This is more than a mere consultation. You will get the strategy or plan to move forward to resolve your tax problems! Jeff’s office can set up a date and time that is convenient for you. By the end of your Tax Resolution Development Plan Session, if you desire to hire us to implement the strategy or plan, Jeff would quote you our fees and apply in full the session fee paid for the Tax Resolution Development Plan Session.

    Types Of Initial Sessions:

    Most Popular GoToMeeting Virtual Tax Development Resolution Plan Session
    Maximum Duration: 60 minutes - Session
    Fee: $375.00 (Credited if hired*)
    Requires a computer, laptop, tablet or mobile device compatible with GoToMeeting. Please allow up to a 10-minute window following the appointment time for us to start the meeting. How secure is GoToMeeting? Your sessions are completely private and secure. All of GoToMeetings solutions feature end-to-end Secure Sockets Layer (SSL) and 128-bit Advanced Encryption Standard (AES) encryption. No unencrypted information is ever stored on our system.

    Face Time or Standard Telephone Tax Development Resolution Plan Session
    Maximum Duration: 60 minutes - Session
    Fee: $350.00 (Credited if hired*)
    Face Time requires an Apple device. Please allow up to a 10-minute window following the appointment time for us to get in contact with you. If you are located outside the U.S. please call us at the appointed time.

    Standard Fee Face-To-Face Tax Development Resolution Plan Session
    Maximum Duration: 60 minutes - Session
    Fee: $600.00 (Credited if hired*)
    Session is held at any of our offices or any other location you designate such as your financial adviser’s office or your accountant’s office, your place of business or your residence.

    Jeff’s office can take your credit card information to charge the session fee which secures your session.

    * The session fee is non-refundable and any allotted duration of time unused is not refunded; however, the full session fee will be applied as a credit toward future service if you choose to engage our firm.