Q: What happens if a person fails to disclose ownership of a foreign corporation that doesn't have any business activities?
What would the implications be for a U.S. tax individual who, unaware of the requirements to report ownership of foreign businesses, fails to disclose their ownership interest in a foreign company? Suppose this company isn't active and was believed to have been seized by a foreign government for political reasons, and the owner is now a political asylee in the U.S. I understand this is a complex scenario, but even a general response would be very helpful to provide this individual with some direction on how to proceed.
A:
U.S. taxpayers, regardless of where they reside, are generally required to report their worldwide income and disclose foreign financial interests. Failure to report foreign financial accounts and ownership interests can result in significant penalties under the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR) requirements. Even if the foreign corporation is inactive, U.S. tax obligations might still apply.
Your status as a political asylee might be relevant in explaining the oversight, but it doesn't automatically exempt you from the reporting requirements. If you believe you have a reporting obligation, consider filing amended returns and related forms to disclose the foreign corporation. The IRS has certain programs, like the Streamlined Filing Compliance Procedures, that might help reduce penalties for non-willful failures to report. Seeking guidance from a tax attorney or CPA experienced in international tax matters is crucial. They can assist in assessing potential liabilities and recommending the best way to become compliant.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
