Have Foreign Accounts Been Put in Your Name by Elderly Parents?

Have Foreign Accounts Been Put in Your Name by Elderly Parents?

Have Foreign Accounts Been Put in Your Name by Elderly Parents?

It is very common that when parents become elderly, they want to make sure that they have someone they trust associated with their finances. Therefore, many elderly parents will include children and relatives as signatories — or even joint holders — of a bank or other financial account. In fact, sometimes they do not even tell the signatory (because they also want full control of their money). This can become infinitely more complicated and situations in which the elderly person has foreign accounts either as a US person or non-resident but the signatory or new joint holder is a US person. As a result, they may have various international information reporting requirements, such as FBAR (Foreign Bank and Financial Account Reporting aka FinCEN Form 114) and FATCA (Foreign Account Tax Compliance Act, Form 8938). If you have been placed on a foreign account by a parent or other relative in prior years and not previously reported, do not worry – – the Internal Revenue Service has developed various amnesty programs to assist you. Before making any proactive representation to the internal revenue service or other governmental agency, you should speak with a Board-Certified Tax Law Specialist who specializes exclusively in offshore matters so you can get a solid and accurate lay of the land.

FBAR Amnesty Program Options

We will briefly summarize these FBAR Amnesty Programs, and provide you links to research more detailed information on our website.

Voluntary Disclosure Program (VDP or New OVDP)

The Voluntary Disclosure Program of the IRS, aka VDP or “New OVDP” (for offshore matters) is the traditional program that has been available to Taxpayers for many years. The program is generally used by Taxpayers who cannot certify under penalty of perjury that they are non-willful.

The program was recently updated.

Streamlined Offshore Procedure

In 2014, the IRS developed the stand-alone streamlined procedures. These procedures are used to assist Taxpayers residing in the U.S. or abroad, with offshore amnesty. The Streamlined procedures require Taxpayers to certify under penalty of perjury that they are non-willful.

In exchange, Taxpayers pay significantly less penalties – and may even qualify for a penalty waiver.

Streamlined Domestic Program (SDOP)

The Streamlined Domestic Program is reserved for non-willful U.S. residents who filed original tax returns timely. The program reduces the offshore penalties from upwards of 50% annually (to a 100% maximum) all the way down to 5%.

And, certain assets are excluded from the penalty computation, such as RRSP.

Streamlined Foreign Program (SFOP)

The Streamlined Foreign Program is reserved for non-willful foreign residents. Filers do NOT have to had filed timely original tax returns. Moreover, ALL tax and asset/account penalties are completely waived.

Delinquent International Information Return Program

The Delinquent International Information Return Program is an alternative to making Streamlined Disclosure. The process is less formalized (for better or for worse), and penalties are waived.

This procedure is primarily used by non-willful U.S residents who have no unreported income.

Delinquent FBAR Program

When the only issue involves the non-filing of the FBAR, the FBAR Delinquency Procedures may be available.

Like DIIRSP, these procedures are a less formalized alternative to the Streamlined Procedures.

This procedure is also used by non-willful U.S residents who have no unreported income, and penalties are waived.

Reasonable Cause

Reasonable Cause is an alternative to Streamlined Procedures.

It is primarily used by U.S. residents (or foreign residents who do not qualify for Streamlined) who are seeking to avoid the SDOP 5% penalty – but do not squarely meet the requirements for Delinquency Procedures.

We Specialize in Streamlined & Offshore Voluntary Disclosure

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and FBAR Amnesty Programs.

Contact our firm today for assistance.