The following is a list of questions that should lead to the discovery of offshore assets, whether properly reported or not. If you answer yes to any of these questions, then you may have filing obligations and should seek advice of competent professionals.
The word YOU as used in this list mean you individually or your spouse, or in the case of a fiduciary, such as a Conservator, Executor or Trustee, the Conservatee or Decedent.
Do you now or at any time in the past 6 years have control, direct or indirect, over an offshore financial account(s) which held individually or in the aggregate $10,000 or more in a calendar year?
If so, did you file a Report of Foreign Bank Account (FBAR) for by June 30 for each year?
This goes to FBAR penalties under the Bank Secrecy Act
Do you have signature authority over funds offshore that are the property of someone else, (like a parent or sibling)?
If so, describe the source of funds?
If so, was an FBAR filed that disclosed the actual account owner?
Penalties: The penalties for failure to timely file an FBAR can be the greater of $100,000 or 50% of the highest account balance for up to six years.
FORM 8938 ISSUES
Did you have more than $50,000 in the aggregate in any calendar year after 2010,meaning 2011-2013?
If so did you file a Form 8938 Statement of Specified Foreign Financial Assets?
Penalties: The penalties for failure to timely file a Form 8938 can be $10,000 per year.
FOREIGN GIFT/TRUST ISSUES
Did you received a gift(s) or inheritance worth $100,000, or more either individually or in the aggregate from any non-U.S. citizen or permanent resident at any time in the last 10 years?
If so, was a Form 3520 Report of Foreign Gift Devise Bequest or Interest in a Foreign Trust filed?
If so, describe the assets received.
Penalties: The penalties for failure to timely file a Form 3520 can be as high as 35% of the fair market value of the inheritance or 25% of the gift.
Did you transfer assets or receive a distribution from a foreign trust at any time in the last ten years?
If so, was a Form 3520-A filed?
This is the Annual Return required of a foreign trust beneficiary under the Internal Revenue code
Penalties: The penalties for failure to timely file a Form 3520-A can be $10,000 per year.
CONTROLLED FOREIGN CORPORATION OR PARTNERSHIP ISSUES
Do you have an ownership interest in a foreign corporation or foreign partnership?
If so, describe how title is held, your percentage interest in the company?
If so, was a Form 5471 Return of a Controlled Foreign Corporation was filed?
Penalties: The penalties for failure to timely file a Form 5471 can be $10,000 per year per return.
The Offshore Voluntary Disclosure Program. (OVDP) may be an appropriate vehicle to limit penalty exposure in the case of unfiled FBARS or other required returns. The OVDP is particularly important for taxpayers who have exposure to penalties for unfiled FBARs and unreported foreign gifts. Other strategies may also be applicable, depending on the fact and circumstances.