Failure to File a Tax Return Penalty
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The Accuracy-related Penalty
Under Section 6662(a), the accuracy-related penalty is “20% of the underpayment.”[i] It applies both inside and outside of the OVDP regime. The penalty applies whenever any one of five conditions is present. The two most common are: (1) “negligent or intentional disregard of tax rules” and (2) “substantial understatement of income tax.”[ii] Has the statute […]
A Primer on The Foreign Earned Income Exclusion
Ordinarily, the United States taxes U.S. citizens and resident aliens on their worldwide income, even when they live and work abroad for an extended period of time. To provide some relief, a U.S. citizen or resident who meets certain requirements can elect to exclude from U.S. taxation a limited amount of foreign earned income plus […]
Proven Strategies For Eliminating Excess Credits
There are three proven strategies for eliminating excess credits: 1. Foreign tax reduction planning, 2. Increasing the limitation, and 3. Cross-crediting. Part I of this blog will cover the first two. Part II will cover the third, Cross-crediting. A. Foreign Tax Reduction Planning For U.S. persons in excess limitation positions, foreign tax reduction planning has […]
Beyond the FBAR: Other IRS International Reporting Forms And Their Related Penalties Lying In Wait for the Taxpayer With Foreign Assets
With all of the focus on FBARs and Form 8938 these days, it’s sometimes easy to forget about the other IRS international reporting forms. Below is a discussion of all of the other IRS international reporting forms and their corresponding penalties. (1) Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain […]
U.S. Taxation of Entities, Associations, and Partnerships: What’s Your “Situs” Roger?
In the U.S. tax system, there is no characteristic of associations or entities (partnerships, corporations, and trusts) that corresponds exactly to the “nationality” or “residence” of individuals. For most organizations, however, there is a place – or at least a distinct legal environment – that establishes their existence and identity. This place, sometimes referred to […]
Understanding the Source of Income Rules – Part I
This blog is a primer on the source of interest rules. It is a four-part series. Let’s begin with some basics. The U.S. taxes U.S. persons on their worldwide income. Why are the source of interest rules important? Because sourcing can have a significant effect on the computation of a U.S. person’s foreign tax credit […]
Examining The Section 911(d)(3) “Foreign” Tax Home Requirement
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How to Apply to the Offshore Voluntary Disclosure Program
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Offshore Voluntary Disclosure Program: The Survivor’s Manual
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