Deceased Parent Undisclosed Overseas Bank Account Filing with IRS

Deceased Parent Undisclosed Overseas Bank Account

Deceased Parent Undisclosed Overseas Bank Account

Deceased Parent Undisclosed Overseas Bank Account Filing with IRS: It is very common for US Taxpayers who have either resided overseas — or at some point during their lifetime invested overseas — to still have money sitting in foreign bank accounts abroad which have been sitting untouched, dormant — or forgotten. In a very typical situation, an elderly person may have had overseas accounts that either they forgot about — or have not been accessed for several years — and they were completely unaware the overseas accounts were ever required to be disclosed to the Internal Revenue Service. Sometimes either before the parent passes away or after an adult child takes an active role in the elderly person’s financial life — they discover that the parent had foreign accounts that were not reported to the Internal Revenue Service or FinCEN — but should have been filed. They now want to take care of the issue as to avoid any unnecessary post-death tax complications, for either the final tax return of the decedent — or any potential estate tax returns. Let’s go through the basics of reporting previously undisclosed foreign accounts for elderly parents.

Deceased Parent Undisclosed Overseas Foreign Account/Asset Reporting

The US government requires US Persons with foreign banks and financial accounts to report this information to the IRS and FinCEN each year when certain threshold requirements are met. The threshold requirements for reporting foreign accounts vary based on the type of accounts and assets — and the value of the accounts and assets.  There are also various different international information reporting forms that the taxpayer may have to file for each account or asset abroad.

Missed Foreign Account & Asset Reporting

Many general Tax practitioners and Attorneys do not have experience handling offshore tax matters, and therefore are not able to properly inform their clients as to what is supposed to be required to be filed. It may be several years before the elderly person just happens to learn that they are out of foreign accounts compliance. Offshore noncompliance can oftentimes readily be fixed through one of the various different safe IRS Offshore Amnesty Programs that the US government makes available to taxpayers worldwide.

Offshore Amnesty for Deceased Parent Undisclosed Overseas Accounts

The Offshore Tax Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.

Some of the more common programs, include:

• Voluntary Disclosure Program (VDP or “New” OVDP)
• Streamlined Domestic Offshore Procedures
• Streamlined Foreign Offshore Procedures
• Delinquency Procedures
• Reasonable Cause

Can I Just Start Filing FBAR This Year Instead?

No, unless the current year is the first-year you had an FBAR Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as an FBAR Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.

Our International Tax Lawyers Represent Clients Worldwide

The Golding & Golding international tax and law team specializes exclusively in international tax, and specifically IRS offshore disclosure.

Contact our firm for assistance.