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Unreported Foreign Income, Assets, and Financial Accounts

Unreported foreign income, assets, and accounts are subject to substantial penalties that can exceed the value of the assets. Most taxpayers inadvertently violate these rules, which is why the IRS has disclosure programs for such taxpayers to achieve compliance.

Our veteran team of California attorneys at Kugelman Law can guide you through unreported foreign income disclosure to achieve compliance and avoid any potential harsh penalties.

What is a U.S. Taxpayer’s Reporting Obligation for Foreign Income or Assets?

A U.S. taxpayer’s global income is subject to U.S. income tax and must be reported on a tax return. U.S. tax laws require U.S. taxpayers to report - regardless of income generated - foreign bank accounts, certain foreign assets, ownership in foreign businesses, and gifts from a foreign person or trust. Most U.S. taxpayers are completely unaware of these rules or the enormous penalties for failing to report foreign income or assets.

Penalties for Unreported Foreign Income

The penalties for unreported foreign income can be extremely severe. In fact, they can oftentimes exceed the value of the assets. 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.

Reporting Foreign Financial Accounts and Assets

In addition to reporting your entire global income, you are also required to report any foreign financial accounts on an FBAR and sometimes Form 8938. Further, other foreign assets may need to be reported on different foreign information returns. Failure to report accounts, assets, or gifts can lead to substantial penalties.

What to Do if You Have Unreported Foreign Income or Foreign Financial Accounts?

The IRS has developed disclosure programs to encourage taxpayers to disclose unreported foreign items and achieve compliance. Generally, these programs require a taxpayer to file missing or amended returns, explain the reasons for noncompliance, and pay additional tax (and reduced penalty). Taxpayers that are accepted into these disclosure programs typically avoid the most severe penalties associated with unreported foreign income or assets.

The following voluntary disclosure programs are available to help you disclose your foreign income:

  • Streamlined Filing Compliance Procedures
  • Delinquent FBAR Procedures
  • Delinquent Foreign Information Procedures
Kugelman Law Attorneys Can Guide You Through Disclosure to Achieve Compliance and Avoid Harsh Penalties

We have guided our clients through the various foreign disclosure procedures. We take a conservative approach to be certain that all items are reported and the taxpayer participates in the appropriate disclosure program.

By working with Kugelman Law, you will benefit from the tax expertise of our lawyers who have helped clients throughout San Francisco, Irvine, California, and the world just like you.

Our lawyers’ combined decades of experience include serving as an IRS Chief Counsel attorney as well as years spent at the U.S. Tax Court and a U.S. District Court. You have a trusted tax law partner in Kugelman Law. Please contact us today to help resolve your unreported foreign income issue.

Client Reviews
Alexander helped me break down my tax situation and used his expertise to figure out the next actionable steps, make sure that all the bases were covered (that I wasn't aware even existed), and confirm that things were done correctly. If you are confused and stuck in a difficult tax situation, Alexander will guide you forward and help you confidently resolve the issue. Henry Wang
If you are having tax trouble, Alexander is the one to help you. He was very professional, personable, and easy to reach. His explanation of the entire process is helpful for easing the stress that is associated with tax trouble. We never felt intimidated or out of the loop while working with him. The process was handled to our liking and we are satisfied with the results. Even the after care has been phenomenal! Tony W.
If anyone out there is in need of stellar legal tax assistance, look no further and contact Alexander Kugelman. He helped me tremendously with my tax situation and is always there to help when needed. If I can give Alexander more stars, I would because 5 stars is not enough! Thank you for everything, Alex!!! Flo Lauzon
Alexander has been a life saver! I got dragged into some serious IRS issues with a complicated foreign assignment component, which included divorce. Alexander has been working with me to resolve directly with the IRS. Alexander is detail oriented, responsive and I trust him to guide me. I will be using Alexander for all tax related matters from now on! He is stuck with me forever. Eve T.
Alexander helped me understand the IRS audit process and prepared my response. There were certain records that I had lost, but he suggested alternatives that the IRS accepted. Even better, he showed up at the audit for me and I never actually had to talk with the IRS. I didn't have to pay any penalties. I'd definitely recommend hiring Alexander to deal with an IRS issue. L.R.