March 2017 JD Supra
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US International tax is complicated.  It often overwhelms US Taxpayers. That is why an international tax specialist CPA is the best choice for the work.  Nonetheless, many Taxpayers seek the help of tax return preparers without requisite international tax reporting experience.   Consequently, the RIGHT QUESTIONS regarding foreign accounts are not asked.

Expect these types of questions from an international tax specialist:

  1. What is your total US source income and total foreign source income?   Even if your foreign source income is tax exempt in a foreign country, or it was already taxed, it still has to be reported in your US Tax Return.  This includes capital gains, interest income, dividend income or any other type of income.
  2. Any ownership, joint ownership, or signature authority over a foreign account or group of accounts that  had more than $10,000.00,  in the aggregate,  at any point in time on any day of the year?
  3. Any ownership in any foreign assets even if not a signatory on bank account of those foreign assets?
  4. Any ownership of foreign real estate?
  5. Any ownership or an interest in a foreign corporation or business that in turn own owns real estate?
  6. Any ownership in a business or foreign corporation?
  7. Any ownership in a foreign trust?
  8. Any ownership in foreign corporation?
  9. Any ownership in foreign partnership?
  10. Any ownership in a PFIC (Passive Foreign Investment Company)?
  11. Any ownership in a Foreign Mutual Fund or Foreign Holding Company?
  12. Receipt of a foreign gift from an individual or from a corporation?
  13. Receipt of a foreign trust distribution?
  14. Longevity of Foreign Bank Accounts?
  15. Source of funds for Foreign Bank Accounts?
  16. Have the accounts or the income ever been reported to IRS?
  17. Have any Foreign Accounts been inherited?
  18. Any usage or active management of the funds in the Foreign Accounts?
  19. Title on the accounts?  Nominal owner versus Beneficial Owner?
  20. Has another tax return preparer asked these types of questions?
  21. Is an attorney, CPA or another professional service provider aware of the foreign accounts?

Don’t be a victim of your own making.  Taxpayers with foreign accounts, income and business structures have reporting responsibilities.  IRS is focused on international US Taxpayer non-compliance and has the ability to detect non-compliance via required oficial information exchanges.  Taxpayers need to ensure that they are obtaining the right type of tax advice to help avoid the financial, reputational and family costs on international non-compliance.