US taxpayers must be aware of the complications of offshore investment accounts as they relate to tax liability and the ramifications of FATCA and compliance with IRS FBAR reporting. The greatest risk to US taxpayers with offshore investment accounts may be the complex accounting and legal distinctions regarding foreign investments and corporate interests. One must be cautious that your activities are not reclassified by the IRS as a Passive Foreign Investment Company or PFIC, as this could expose you to the maximum income tax bracket as well as penalties and interest for reporting violations and omissions.
For example, a foreign mutual fund or investment that has more than one US shareholder will be classified as a PFIC. Allen Barron’s seasoned tax attorneys can help foreign investors and those with offshore corporate holdings to reduce their exposure and avoid classification of offshore holdings as PFICs. We work with our clients to ensure full FBAR preparation, filing and compliance while extending the protections of the attorney-client privilege. We share open and candid discussions and exchanges of information that are protected by a solid legal barrier from the subpoena powers of the IRS. This protection is not available through a CPA, tax preparer or other financial advisor.
Offshore investment accounts continue to be a focus for IRS audits and those with more than $10,000 aggregate at any point in the calendar year must be in full compliance with the IRS or face draconian penalties, interest, fines and even criminal tax charges and the genuine likelihood of prison time. The IRS has provided the OVDP and streamlined options for US taxpayers, and Allen Barron is uniquely positioned to advise you from a legal, tax and accounting perspective.
Combine the value of several important disciplines into a single source vendor at Allen Barron. If you have offshore investment accounts we invite you to call for a complimentary consultation at 866-631-3470.