Inherited Estates with Foreign Assets or Accounts & the IRS

Estates with Foreign Assets or Accounts: The rules for Estates with Foreign Assets or Accounts can be complicated. There are several IRS requirements, and penalties can be tough. When a U.S. person inherits foreign accounts from a deceased individual. There are many components to FBAR Reporting. First, the Estate may be responsible for filing an FBAR for the deceased individuals when the final tax returns is filed. Moreover, if the executor learns the deceased individual did not file one more FBARs in prior years, they may have to submit to FBAR Amnesty to reduce avoid offshore penalties. This is especially true with the increased aggressive enforcement the IRS takes on matters involving Foreign Accounts Compliance. Further, for the beneficiary who inherited foreign accounts, they will now have an ongoing FBAR filing requirement. But, the first issue to tackle is the Estate FBAR Filing rules work.

Let’s explore.

The Basics of Estate FBAR, Form 8938 and Offshore Account Reporting

The IRS reporting rules for Estate with Foreign Assets or Accounts are still being developed. But, there are some general rules to be aware of. Once the U.S. person foreign account holder passes away, the decedent still must file what is referred to as a “final or last  tax return.” The estate files the tax return. And, if the person had foreign accounts, an estate FBAR may be required.

Stated another way, the Estate FBAR requirement is for the Estate to file the FBAR for the deceased person. If the Estate is now named on the account, then the estate has now inherited foreign accounts, and will have an ongoing FBAR filing requirement.

The FBAR is due at the same time the Tax Return is due.

Unreported Prior Year FBAR for Estates with Foreign Assets or Accounts

If the Estate was named as an account holder, then the Estate’s FBAR reporting requirement begins in the year the Estate became the owner of the account. If it turns out the Deceased Individual has unreported accounts for prior years, then the Estate may submit to one of the FBAR Amnesty programs. Two of the most populate programs for estates are the Streamlined Filing Procedures and Delinquency Procedures. If the deceased individual was willful, then the estate’s only option would be post-OVDP voluntary disclosure.

Schedule B for Estates with Foreign Assets or Accounts

The Schedule B is used to report dividends and interest. BUT, the bottom section, part 7 and 8 are also used to report whether a person has an ownership in or signatory authority over a foreign account. If so, the individual must complete that section of Schedule B. The Schedule B does not have any offshore penalties associated with it, but it may lead to FBAR and/or Form 8938 Penalties.

We Specialize in Streamlined & Offshore Voluntary Disclosure

Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about our Firm?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant.

We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

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