Press Room: Article
Troubled Waters: International Reporting Obligations for U.S. Individual Taxpayers With Offshore Connections
Navigating the complexity and breadth of IRS reporting requirements for U.S. individuals with foreign financial investments requires a holistic understanding of the scope of possible penalties, as well as the current state of related IRS enforcement.
Overview of IRS International Penalties and Administration
The failure to file any of the numerous foreign informational forms with complete and accurate information can subject a taxpayer to monetary penalties, many of which can be significant. For example, if a U.S. taxpayer fails to timely and accurately report the receipt of a $2 million distribution from a foreign trust, the penalty can be up to 35% of the distribution or $700,000. Failure to report ownership of a foreign trust could incur a penalty of 5% of the taxpayer’s portion of the trust’s assets.