Its no secret that the Internal Revenue Service has been especially vigilant in the past couple of years about tracking down hidden foreign sources of income.
Thats been particularly true in the case of UBS, where the IRS has been poring through the names it has received so far from the bank and the Swiss government, as well as from its own voluntary disclosure program. One of the main ways that the IRS has been encouraging voluntary disclosure is through the filing of the Report of Foreign Bank and Financial Accounts, or FBAR, forms. When the IRS doesnt receive an FBAR, but finds out a taxpayer nevertheless has a foreign bank account, it could spell trouble.
Maury Cantine, partner-in-charge of the alternative investment group in Marcum LLPs tax department, gave an update on the FBAR filing requirements at the New York State Society of CPAs Investment Companies Conference on Wednesday.
He also advised attendees to file foreign tax returns when investing in offshore funds and foreign-issued securities where the gain may be taxable, as in countries like Brazil and India.
The smart thing to do is to plan ahead, he said. Clients may do business where they havent done business before.
One year they may be doing business in Brazil and the next year in Spain, he noted. It pays to do business abroad, but that doesnt mean the IRS and foreign tax authorities dont want to collect their share of your clients gains.