IRS Foreign Gift Disclosure Requirements
A U.S. taxpayer may be required to report gifts or bequests from foreign sources even though no U.S. tax may be owed.
If you fail to disclose a foreign gift to the IRS, then you could be subject to a penalty of 25% of the gift’s value. Partner with the tax lawyers at Kugelman Law today to resolve such disclosures and prevent penalties.
Such gifts must be reported on Form 3520, which is an information return, not a tax return, because foreign gifts are not subject to income tax.
In general, according to the IRS, “a foreign gift is money or other property received by a U.S. person from a foreign person that the recipient treats as a gift or bequest and excludes from gross income.”
Kugelman Law’s foreign tax attorneys can help a taxpayer seek abatement, or removal, of the Foreign Gift Penalty.
Options include:
- Streamlined Offshore Filing Procedures
- Delinquent FBAR Procedures
- Delinquent Foreign Information Procedures
IRS Foreign Gift Penalties
The IRS takes this requirement seriously and will impose a 25% penalty if a taxpayer does not timely report the gift by failing to file Form 3520 when it is required.
Part of the reason why penalties for unreported foreign income are so steep is because the IRS wishes to discourage people from thinking they can get away with not paying taxes on foreign income by hiding it.
These laws often ensnare normal expats that are unaware of the filing requirements for foreign gifts. The IRS has established formal disclosure programs that require amending returns, additional filings, and paying a penalty.
You may be penalized if you do not file your Form 3520 on time or if it is incomplete or inaccurate for failure to report foreign gifts, and/or for undisclosed foreign financial asset understatements. This form must be filed separately from your income tax form. The due date for a U.S. person to file a Form 3520 follows the same income tax filing deadline of April 15, but you can seek an extension of the due date to October 15.
Foreign Gift Tax Attorneys
Let Kugelman Law’s foreign gift compliance lawyers guide you through Foreign Gift Penalty Abatement in order to help prevent having to pay enormous penalties for violations.
By working with Kugelman Law, you will benefit from the tax expertise of our attorneys who have helped clients throughout the world just like you to successfully abate foreign gift penalties.