Foreign Accounts or Investments You Haven't Reported?
Foreign bank accounts, investments, mutual funds, pensions and other overseas assets can create U.S. tax and reporting requirements that are easy to miss. ESBS helps identify potentially missed filings, reconstruct prior-year reporting and determine the appropriate path toward compliance.
Not sure which form applies? That's okay. Tell us what happened and we'll start with the facts.
International reporting problems rarely involve just one form. We look at the complete reporting picture.
Never-reported FBAR accounts
Foreign brokerage or investment accounts
Foreign mutual funds or ETFs
NRE, NRO or demat accounts
Foreign pension or retirement accounts
Omitted foreign interest, dividends or investment income
Form 8938 may never have been filed
Possible PFIC or Form 8621 reporting
Interest in a foreign corporation or partnership
Significant foreign gift or inheritance
Foreign trust
Previous preparer never asked about foreign assets
Recently learned about U.S. reporting for assets outside the country
If one or more of these situations applies, the first step is determining what actually should have been filed—not assuming that every missed foreign account requires the same solution.
Request an International Tax ReviewUnderstand the people, years, countries, accounts, assets and prior filings involved.
Build a year-by-year inventory of accounts, balances, holdings, ownership and available records.
Evaluate FBAR, Forms 8938, 8621, 5471, 3520 and other potentially applicable international forms.
Reconstruct omitted interest, dividends, gains, pension income and other relevant tax items.
Prepare original or amended federal returns and the related international information returns in scope.
Prepare delinquent or corrected FBARs from the reconstructed foreign-account history.
Evaluate the IRS Streamlined Filing Compliance Procedures when potentially applicable.
Organize a consistent filing package and retain support for the positions and values reported.
Create an annual process for foreign accounts, investments, income and entity reporting.
These are separate IRS procedures with different residence requirements and submission details. A procedure may be potentially applicable only after review of the taxpayer’s circumstances.
For qualifying U.S. taxpayers residing in the United States. A typical submission involves three years of amended federal returns and applicable international information returns, six years of delinquent or corrected FBARs, Form 14654, and calculation of the applicable miscellaneous offshore penalty.
Learn About SDOPFor qualifying U.S. taxpayers meeting the IRS non-residency requirements. A typical submission involves three years of returns or amended returns, applicable international information returns, six years of FBARs, and Form 14653. Qualifying SFOP taxpayers are generally not subject to the 5% miscellaneous offshore penalty applicable under SDOP.
Learn About SFOPDomestic streamlined compliance and related returns, international forms, FBARs and penalty schedules.
Explore serviceForeign streamlined compliance for taxpayers who may meet the IRS non-residency requirements.
Explore serviceCurrent, delinquent and corrected FinCEN Form 114 preparation with account reconstruction.
Explore serviceSpecified foreign financial asset analysis and reporting coordinated with the federal return.
Explore serviceForeign fund identification, reporting-history review and specialized tax calculations.
Explore serviceForm 5471 and related reporting analysis for interests in foreign corporations.
Form 3520 and 3520-A considerations for foreign trusts, gifts and inheritances.
Interest, dividends, brokerage activity, pensions and other foreign-source income.
Multi-year reconstruction when several reporting requirements may have been missed.
Annual tax preparation and foreign-asset reporting after historical issues are addressed.
Foreign mutual funds can be very different from U.S. mutual funds for tax purposes. Certain foreign investment funds may be classified as PFICs, creating Form 8621 reporting and specialized U.S. tax calculations. Examples may include mutual funds or pooled investments held in India, Canada, the United Kingdom and other jurisdictions.
Not every foreign fund automatically receives identical treatment. The investment, ownership history, transactions, prior reporting and available information must be reviewed.
Learn About PFIC & Form 8621Someone who moved to the United States may still have ordinary financial assets in a home country—bank accounts, brokerage accounts, mutual funds, pensions, retirement accounts or property.
An Indian-American taxpayer, for example, might retain NRE or NRO accounts, demat accounts, Indian mutual funds, fixed deposits, pension or retirement assets, property or other investments. Being routine in another country does not by itself determine U.S. tax or reporting treatment. ESBS helps identify the U.S. reporting requirements that may apply.
For qualifying domestic streamlined cases there is generally a 5% Title 26 miscellaneous offshore penalty. The calculation is not simply 5% of today's account balance. Applicable foreign financial assets must be analyzed for the covered years, and the penalty is generally based on the highest aggregate year-end value of assets subject to the penalty during the applicable period. Multiple accounts, currencies, investments and filing requirements can require detailed reconstruction.
Learn How the SDOP Penalty Is CalculatedThe streamlined procedures require taxpayers to certify that the reporting failure resulted from non-willful conduct. If facts involve prior knowledge, deliberate concealment, prior professional advice about the obligation, IRS or Department of Justice contact, or other significant legal issues, ESBS may recommend consultation with experienced international tax counsel before an approach is selected.
Where appropriate, ESBS can assist with accounting reconstruction and tax preparation while counsel addresses legal or privilege-sensitive matters.
After remediation, ESBS can continue handling annual Form 1040, FBAR, Form 8938, Form 8621, foreign tax credits, foreign income reporting and applicable foreign-entity reporting. The goal is not simply to correct historical filings. It is to create an annual reporting process so the same problem does not happen again.
Not sure which form applies? That's okay. Tell us what happened and we'll start with the facts.
The information on this page is general educational information, not individualized tax, accounting, legal or financial advice. ESBS is not an offshore tax law firm and does not provide legal representation, penalty defense or attorney-client privilege. International reporting and compliance procedures depend on the taxpayer’s particular facts and current law.
