Frequently Asked Questions
Yes, if you have a green card or U.S. citizenship, you must file a U.S. tax return every year and report worldwide income and all foreign assets, regardless of your ties to the U.S.
Yes. The IRS currently has several options and amnesty plans for gaining compliance on your taxes. In some cases, it can be done without any penalties.
Yes, the U.S. offers very competitive tax rates compared to other leading economies, is very easy to form businesses and enter the markets, and even has tax incentives for investment to enter the country.
Yes, with a proper holding structure the U.S. estate tax can be avoided.
Most financial institutions, brokers, and other businesses which transfer title are now requiring a Form 706-NA (estate tax return of a foreigner) or a transfer certificate from the IRS to confirm the estate tax has been reported before they will transfer the assets.
No, however, the situation is a bit more complicated and requires detailed planning.
By using a foreign grantor trust (FGT), you can maintain control over your estate and assets but have everything ready to pass to your heirs.
Yes, but you may be subject to an ‘exit tax’ depending on your income and net worth, and depending on time spent in U.S. for green card holders.
Yes, you should consider income tax planning to mitigate gains and income once you are a U.S. person and prepare for the required reporting, and estate tax planning to protect assets from U.S. transfer tax.
The U.S. transfer tax is a tax on the transfer of property through gift or inheritance. For NRAs, this tax generally applies only to U.S. assets. The tax rate can be as high as 40%, with only a $60,000 exemption for NRAs.
Assets considered “U.S. situs” for estate tax purposes include U.S. real estate, tangible personal property located in the U.S., and certain stocks of U.S. corporations. Other asset types, such as U.S. bank deposits and life insurance proceeds, may be exempt.
Unlike U.S. citizens, who have a higher exemption, NRAs generally have an exemption of only $60,000 for U.S.-situs assets.
The gift tax applies to certain transfers made during a person’s lifetime. For NRAs, only gifts of tangible personal property and real estate located in the U.S. are subject to the U.S. gift tax. Gifts of intangible property, such as stocks, are generally exempt from gift tax for NRAs.
Pre-immigration tax planning can be essential for NRAs who anticipate becoming U.S. residents. This process involves structuring assets in a way that minimizes future U.S. tax liabilities on income, gifts, and estates.
Yes, if an NRA’s U.S.-situs assets exceed the exemption limit, or if the NRA makes taxable gifts of U.S.-situs property, filing requirements may apply. In such cases, an estate or gift tax return must be filed with the IRS.
Form 706-NA is the U.S Estate Tax Return for NRAs. This form must be filed by the executor of an NRA’s estate if the NRA owned U.S.-situs assets exceeding the $60,000 exemption. The form reports the U.S.-situs assets and calculates the estate tax due on these assets.
In many cases, financial institutions are now requiring a copy of a filed Form 706-NA or a transfer certificate to confirm proper estate taxes have been reported before changing ownership of financial accounts.
Form 3520 is an informational return used to report certain transactions involving foreign trusts and the receipt of significant gifts or inheritances from foreign individuals, estates, or corporations. A U.S. person may be required to file Form 3520 if they receive gifts totaling over $100,000 from non-U.S. individuals or estates, or if they receive distributions from or engage in specific transactions with foreign trusts.
A Foreign Grantor Trust (FGT) is a trust that qualifies as a “foreign trust” (based on U.S. tax rules) where the grantor retains certain powers or benefits that result in them being treated as the owner of the trust’s assets for U.S. tax purposes.
A FGT can be useful in a variety of circumstances. They are commonly used for estate planning and wealth management purposes by non-U.S. persons with beneficiaries in the United States.
For the grantor: The grantor continues to be treated as the owner of the trust assets.
For U.S. beneficiaries: If distributions are made to U.S. beneficiaries, they may have reporting obligations but generally do not pay income tax unless the trust changes status.
There are many various types of trusts, and the U.S. tax law applies differently. Depending on your current trust structure, you might be able to make changes or simply convert/decant the trust assets into a more advantageous structure like the FGT.
Yes, it is good to have periodic updates of your structure and plan to see if there were any legal changes, or if there are changes in your personal decisions about your family wealth planning or residency plans.
If U.S. and foreign assets are held within the same holding company, it could trigger U.S. estate taxes on the U.S. assets when the grantor passes away. Ideally, U.S. and foreign assets will be held in separate holding companies before the grantor passes away.
Yes, relevant parties should be aware of future tax obligations and be prepared for required actions when the grantor passes away. Some matters can be prepared in advance to ease the administrative burden on beneficiaries when the grantor passes away, such as:
“Checking the box” refers to filing IRS Form 8832 to choose how an entity is classified for U.S. tax purposes, such as a disregarded entity or corporation. This election can be used to achieve a better tax result but requires careful planning to prevent unintended tax consequences.
No. A company’s stock must first qualify as QSBS under section 1202, and the strategy must be carefully tailored to the founder’s circumstances. Factors such as the type of business, ownership structure, holding period, trust design, and timing of any transfers all influence whether QSBS stacking is appropriate. Founders should work with experienced tax counsel to evaluate eligibility and implement the strategy correctly.
The most effective time to evaluate QSBS stacking is well before a liquidity event or letter of intent. Because the strategy relies on completed gifts, properly structured trusts, and genuine transfers made before a sale is imminent, waiting until a transaction is underway may eliminate or significantly limit available planning opportunities.
QSBS stacking is an advanced tax planning strategy that may increase the federal capital gains tax exclusion available under Internal Revenue Code section 1202. By transferring QSBS to properly structured non-grantor trusts before a business sale, multiple taxpayers may each qualify for their own section 1202 exclusion, potentially allowing significantly more gain to be excluded from federal capital gains tax.
Eligible taxpayers may generally exclude up to the greater of $10 million or 10 times their adjusted basis in the stock, depending on the structure of the investment and other qualifying factors.
Qualified Small Business Stock refers to eligible stock issued by certain U.S. C-corporations that may qualify for significant federal capital gains tax exclusions under section 1202 of the Internal Revenue Code if specific requirements are met.
Yes. Founders and investors often face different planning considerations related to stock issuance timing, valuation, basis, equity compensation structures, due diligence, and ownership vehicles.
Potentially, but cross-border ownership structures, residency status, tax treaties, and international reporting obligations can create additional complexity. International founders and investors should evaluate QSBS planning alongside broader international tax considerations.
An international tax lawyer helps individuals, families, investors, and businesses navigate cross-border tax issues, including foreign asset reporting, international tax compliance, offshore disclosures, international business taxation, and global tax planning.
You may need an international tax attorney if you own foreign bank accounts, foreign businesses, offshore investments, international real estate, foreign trusts, or earn income in multiple countries. International tax counsel is also important when dealing with IRS compliance issues involving foreign assets.
Generally, yes. U.S. citizens and many U.S. residents are required to report worldwide income and may have additional reporting obligations for foreign bank accounts, foreign financial assets, foreign corporations, and other offshore holdings.
Yes. International tax attorneys regularly assist clients with FBAR filings, FATCA reporting, foreign asset disclosures, offshore compliance matters, and correcting prior reporting failures.
International tax planning may involve foreign tax credits, tax treaty analysis, entity structuring, and other strategies designed to reduce the risk of paying tax on the same income in multiple countries.
Yes. U.S. owners of foreign corporations, partnerships, and international business interests often face complex tax rules and reporting requirements, including NCTI (formerly GILTI), Subpart F, Form 5471, and other international compliance obligations.
Hone Maxwell LLP advises clients on international tax compliance, FBAR and FATCA reporting, offshore disclosures, foreign business ownership, international estate planning, expatriation, cross-border tax planning, international tax controversies, and global wealth structuring.
U.S. international tax compliance refers to meeting IRS reporting requirements for foreign income, foreign bank accounts, offshore investments, foreign businesses, foreign trusts, and other international assets owned by U.S. taxpayers.
U.S. citizens, green card holders, and certain U.S. residents may be required to report foreign bank accounts through an FBAR if the aggregate value of their foreign accounts exceeds $10,000 at any point during the year.
FATCA reporting is when foreign financial institutions report U.S. account holders to the IRS. Generally, all banks and financial institutions worldwide participate in this reporting. Unless they are running a fund or setting up a financial business, most taxpayers do not have to do this reporting. However, this is the mechanism the IRS can use to discover noncompliance of U.S. taxpayers.
Failure to report foreign income, foreign accounts, or international assets can result in significant penalties. However, the IRS offers certain compliance programs and disclosure options that may help taxpayers correct past reporting issues.
Depending on your situation, you may need to file forms such as the FBAR, Form 8938, Form 5471, Form 8621, Form 8865, Form 3520, Form 3520-A, or other international information returns related to foreign entities and assets.
Yes. Many taxpayers discover international reporting requirements years after they become applicable. An international tax attorney can evaluate available compliance options and help determine the most appropriate path for becoming compliant.
International tax compliance rules are highly complex and penalties can be severe. An international tax attorney can evaluate reporting obligations, identify compliance risks, develop a corrective strategy, and represent you in communications with the IRS when necessary.
An FBAR, or Foreign Bank Account Report (FinCEN Form 114), is a reporting requirement for U.S. persons with foreign financial accounts. The FBAR helps the U.S. government track offshore accounts held outside the U.S.
U.S. citizens, green card holders, expats, dual citizens, and certain entities may be required to file an FBAR if the aggregate value of their foreign financial accounts exceeds $10,000 at any point during the calendar year.
Reportable accounts may include foreign bank accounts, savings accounts, investment accounts, securities accounts, certain foreign pension accounts, and other financial accounts held outside the U.S.
FBAR penalties can be substantial. Non-willful violations may result in monetary penalties, while willful violations can lead to significantly higher penalties up to 100% of the account balance and, in some cases, criminal exposure.
Yes. Depending on the circumstances, taxpayers may have options to correct prior FBAR filing failures and become compliant. The appropriate approach depends on the facts and filing history.
No. The FBAR is an informational reporting requirement. Filing an FBAR does not automatically create additional tax liability, although foreign income associated with those accounts may still need to be reported.
Because FBAR penalties can be severe and compliance options vary significantly based on individual circumstances, many taxpayers consult an international tax attorney before addressing missed FBAR filings or offshore account disclosures.
NCTI, or Net CFC Tested Income, formerly known as Global Intangible Low-Taxed Income or GILTI, is a U.S. international tax regime that requires certain U.S. shareholders of foreign corporations to report and potentially pay tax on foreign earnings, even if those profits are not distributed.
NCTI generally applies to U.S. shareholders who own interests in Controlled Foreign Corporations (CFCs). The rules often affect business owners, entrepreneurs, and investors with foreign companies.
Yes. One of the primary features of NCTI is that certain foreign earnings may be taxable to U.S. owners even when profits remain in the foreign company and are not distributed.
NCTI calculations involve multiple factors, including ownership percentages, corporate earnings, foreign taxes paid, and certain interest expense and income. Under the new NCTI regime, fixed asset base or Qualified Business Asset Investment (QBAI), is no longer relevant as it was with GILTI. The calculations can be highly complex and often require careful planning.
In some situations, foreign tax credits may help reduce or eliminate NCTI-related tax liability. The availability and effectiveness of credits depend on the structure of the foreign business and the taxes paid abroad.
Potential planning opportunities may include restructuring ownership, modifying entity classifications, evaluating elections, and coordinating international tax strategies. Every situation requires a case-specific analysis.
The NCTI rules are among the most complex areas of international tax law. An international tax attorney can evaluate compliance obligations, identify planning opportunities, and help avoid costly reporting mistakes.
Yes. U.S. citizens are generally required to file U.S. tax returns and report worldwide income regardless of where they live or whether they hold citizenship in another country.
Yes,dual citizens are required to file an FBAR and other international information returns if they own foreign financial accounts or assets that exceed applicable reporting thresholds.
Yes. Dual citizens often face tax obligations in multiple countries. Foreign tax credits, tax treaties, and international tax planning strategies may help reduce double taxation.
Many dual citizens are unaware of their U.S. tax obligations. Depending on the circumstances, compliance programs may be available to help correct prior filing issues and become compliant.
Yes. U.S. citizens generally must report worldwide income, including employment income, business income, rental income, investment income, and other earnings generated outside the U.S.
Some dual citizens choose to renounce U.S. citizenship, but doing so can trigger significant tax consequences, including potential exit tax obligations. Careful planning is essential before pursuing expatriation.
Dual citizenship can create complex cross-border tax and reporting issues. An international tax attorney can help navigate compliance requirements, minimize tax exposure, and develop an effective international tax strategy.
You should consult an international tax attorney before filing amended returns or submitting late forms. The IRS offers several compliance and disclosure options, and choosing the wrong approach can increase your risk of penalties.
Yes. Many taxpayers discover years later that they were required to report foreign income, offshore accounts, foreign corporations, or other international assets. Various IRS compliance programs may help eligible taxpayers become compliant.
The IRS offers several options for addressing offshore reporting issues, including Streamlined Filing Compliance Procedures, delinquent international information return submissions, reasonable cause disclosures, and other corrective filing strategies depending on the facts of the case.
Failure to address international tax noncompliance can lead to significant penalties, interest, audits, and enforcement actions. With FATCA and international information-sharing agreements, foreign financial accounts are increasingly visible to the IRS.
In some situations, taxpayers may qualify for reduced penalties or penalty relief. Eligibility depends on factors such as intent, filing history, compliance efforts, and the specific reporting failures involved.
The Streamlined Filing Compliance Procedures program allows certain taxpayers who failed to report foreign income or foreign assets non-willfully to correct past filings and potentially reduce penalties while becoming compliant with U.S. tax laws.
The best compliance option depends on your specific facts, reporting history, foreign assets, and potential exposure. An international tax attorney can evaluate available disclosure options, identify risks, and develop a strategy designed to achieve compliance while minimizing penalties.
A foreign tax law firm helps individuals, families, and businesses navigate international tax laws, foreign asset reporting requirements, cross-border investments, foreign business ownership, and global tax planning strategies.
You should consult a foreign tax attorney before acquiring foreign assets, opening offshore accounts, investing internationally, forming a foreign business, receiving a foreign inheritance, or addressing international tax compliance issues.
Yes. International tax planning often involves foreign tax credits, tax treaty analysis, entity structuring, and other strategies designed to reduce the risk of paying tax on the same income in multiple countries.
Possibly. U.S. taxpayers may have reporting obligations for foreign financial accounts, foreign investments, foreign corporations, foreign trusts, and other offshore assets through FBAR, FATCA, and related international tax forms.
Yes. U.S. owners of foreign corporations, partnerships, trusts, and other international business structures may face complex tax and reporting requirements. Proper planning can help manage compliance obligations and reduce unnecessary tax exposure.
International tax attorneys assist with foreign inheritances, cross-border wealth transfers, international trusts, and international estate planning strategies designed to protect assets and minimize tax consequences across multiple jurisdictions.
International tax matters often involve complex reporting requirements, foreign asset disclosures, tax treaties, and cross-border legal issues. An international tax attorney can provide legal advice, attorney-client privilege, and representation for sensitive international tax matters. Additionally, an international tax attorney will likely have the contacts in other countries to assist with matters outside the U.S.
International estate planning helps individuals and families manage the transfer of assets across multiple countries while minimizing estate taxes, inheritance taxes, probate complications, and cross-border legal issues.
Yes. Owning foreign real estate, foreign bank accounts, international investments, or foreign business interests can create unique tax and succession issues that may not be addressed by a traditional estate plan.
Potentially. Depending on the countries involved, heirs may face estate tax, inheritance tax, or other transfer taxes in more than one jurisdiction. Proper international estate planning can help reduce the risk of double taxation.
U.S. citizens and domiciliaries are generally subject to U.S. estate tax on their worldwide assets. Non-U.S. persons may also have U.S. estate tax exposure if they own certain U.S.-situated assets, such as real estate or business interests.
In some situations, separate wills may be beneficial to address local laws, probate requirements, and asset administration in multiple jurisdictions. The appropriate strategy depends on the countries involved and the types of assets owned.
Yes. International estate planning often incorporates trusts, business succession planning, ownership structures, and tax strategies designed to preserve wealth and facilitate efficient transfers to future generations.
An international estate planning attorney can coordinate estate, tax, trust, and succession planning across multiple jurisdictions, helping ensure that your wishes are carried out while minimizing tax exposure and administrative burdens for your heirs.
Tax controversy law involves resolving disputes between taxpayers and taxing authorities such as the IRS or state tax agencies. Common matters include audits, tax assessments, penalties, appeals, collections, tax liens, levies, and tax litigation.
You should contact a tax controversy attorney as soon as you receive an IRS notice, audit letter, proposed assessment, levy notice, or other tax enforcement action. Early intervention often provides more options for resolving the matter.
Yes. A tax controversy attorney can communicate directly with the IRS, respond to information requests, develop legal arguments, and help protect your interests throughout the audit process.
A Notice of Deficiency is a formal notice that gives you the opportunity to challenge a proposed tax assessment. Because strict deadlines apply, you should consult a tax controversy attorney immediately to evaluate your options.
In many cases, penalty relief may be available through reasonable cause arguments, administrative appeals, or other IRS procedures. The best approach depends on the facts and circumstances of the case.
The IRS offers several collection alternatives, including installment agreements, offers in compromise, and other resolution programs. A tax controversy attorney can help determine which option is most appropriate for your situation.
Yes. Tax controversy attorneys regularly assist clients with IRS collection actions, including tax liens, bank levies, wage garnishments, and other enforcement measures. Acting quickly can help prevent additional financial consequences.
You should review the notice carefully and consult an IRS audit attorney before responding. The IRS may be requesting documents, explanations, or additional tax information, and your response can significantly impact the outcome of the audit.
Yes. An IRS audit attorney can communicate directly with the IRS, respond to audit inquiries, prepare supporting documentation, and represent your interests throughout the examination process.
IRS audits can be triggered by income discrepancies, unreported income, unusual deductions, business losses, foreign account reporting issues, cryptocurrency transactions, or other items that attract IRS scrutiny. Some audits are also selected randomly.
The length of an IRS audit depends on the complexity of the issues involved, the amount of documentation requested, and how quickly information is provided. Some audits conclude in a few months, while others can take significantly longer.
Yes. If you disagree with the IRS findings, you may have options to appeal the audit results or challenge the proposed assessment through administrative or judicial procedures.
Yes. The IRS frequently audits matters involving foreign bank accounts, FBAR filings, offshore assets, foreign income, foreign corporations, and other international tax compliance issues.
An IRS audit attorney can identify legal issues, develop effective strategies, protect privileged communications, and help prevent mistakes that could increase tax liability, penalties, or future enforcement actions.
Generally, no. Hiring an attorney is a prudent decision, and many times the IRS prefers to work with an attorney because it will make their job easier working with a tax professional who understands the process and what is needed.
You should address the issue as soon as possible. Ignoring tax debt can result in penalties, interest, tax liens, bank levies, wage garnishments, and other IRS collection actions. A tax debt attorney can help evaluate available resolution options.
Depending on your circumstances, you may qualify for programs such as an Offer in Compromise, penalty relief, installment agreement, or other collection alternatives that can help resolve your tax liability.
An installment agreement is a payment plan that allows taxpayers to pay their tax debt over time. The IRS offers several types of payment plans depending on the amount owed and the taxpayer’s financial situation.
Yes. The IRS may issue a bank levy if tax liabilities remain unresolved. Acting quickly after receiving collection notices can help prevent or remove enforcement actions.
A tax lien is a legal claim against your property due to unpaid taxes, while a tax levy is the actual seizure of assets such as bank accounts, wages, or other property to satisfy a tax debt.
Some taxpayers may qualify for an Offer in Compromise, which allows eligible individuals to settle tax debt for less than the full amount owed. Qualification depends on income, assets, expenses, and overall ability to pay.
A tax debt attorney can negotiate directly with the IRS, evaluate collection alternatives, respond to enforcement actions, and develop a strategy to resolve tax debt while protecting your assets and financial interests.
The first step is to determine exactly what the IRS claims you owe and why. Tax problems can involve audits, unpaid taxes, penalties, liens, levies, or unfiled returns, and the best solution depends on the specific circumstances.
Yes. A tax attorney can evaluate your situation, communicate with the IRS on your behalf, identify available resolution options, and work to reduce the financial impact of tax disputes and collection actions.
Ignoring IRS notices can result in escalating enforcement actions, including additional penalties, tax liens, bank levies, wage garnishments, and other collection measures. Addressing the issue early often provides more resolution options.
Yes. Many taxpayers fall behind on filing requirements. A tax attorney can help determine which returns must be filed, address potential penalties, and develop a strategy to bring you back into compliance.
Depending on the circumstances, collection actions may be stopped or delayed through payment plans, appeals, hardship requests, offers in compromise, or other IRS resolution programs.
Common tax problems include unpaid tax debt, unfiled returns, audit disputes, payroll tax issues, penalty assessments, tax liens, bank levies, wage garnishments, and notices of deficiency.
You should seek legal guidance as soon as you receive an IRS notice, discover unfiled tax returns, face collection activity, or become aware of a tax issue that could result in penalties or enforcement actions.
You should contact a criminal tax attorney immediately if you believe you may be under criminal tax investigation, have received a summons or subpoena, are being questioned by IRS Criminal Investigation (IRS-CI), or have concerns about potential tax fraud allegations.
Civil tax cases generally involve disputes over tax liability, penalties, or compliance. Criminal tax cases involve allegations that a taxpayer intentionally violated tax laws through actions such as tax evasion, filing false returns, or concealing income.
Common allegations include tax evasion, tax fraud, filing false tax returns, failure to report income, payroll tax violations, offshore account concealment, and other willful violations of federal tax laws.
In some cases, yes. If the IRS discovers evidence suggesting intentional misconduct or fraud during a civil audit, the matter may be referred to IRS Criminal Investigation for further review.
You should avoid making statements or providing documents before consulting a criminal tax attorney. Early legal representation can be critical in protecting your rights and developing an effective defense strategy.
Yes. Criminal tax attorneys represent clients during investigations, negotiations with federal authorities, grand jury proceedings, and criminal tax litigation when necessary.
Yes. Communications with a criminal tax attorney are generally protected by attorney-client privilege, allowing you to discuss sensitive tax matters confidentially while evaluating your legal options.
You should review the notice carefully and respond promptly. California tax notices often involve proposed assessments, residency disputes, unpaid taxes, or requests for additional information that may require legal analysis.
Yes. A California tax attorney can represent taxpayers before the Franchise Tax Board (FTB), challenge assessments, negotiate resolutions, and pursue available appeal rights when appropriate.
Common California tax issues include residency audits, state income tax assessments, unpaid tax liabilities, business tax disputes, payroll tax matters, and collection actions by state tax agencies.
A residency audit occurs when the FTB questions whether an individual properly claimed nonresident status. These audits often involve detailed reviews of travel records, property ownership, business activities, and personal connections to California.
Yes. The FTB may pursue collection actions, including tax liens, bank levies, wage garnishments, and other enforcement measures against taxpayers with unresolved liabilities.
Yes. Taxpayers generally have the right to challenge proposed assessments and pursue administrative appeals. Strict deadlines often apply, making timely action important.
California tax laws and procedures can differ significantly from federal tax rules. A California tax attorney can help protect your rights, navigate disputes with state tax agencies, and develop strategies to resolve tax liabilities efficiently.
A corporate and transactional attorney helps businesses with entity formation, corporate governance, contract negotiation, mergers and acquisitions, business transactions, and legal strategies designed to support growth while managing risk.
You should consult a corporate attorney when starting a business, bringing on investors, negotiating significant contracts, restructuring ownership, buying or selling a company, or entering into complex commercial transactions.
Yes. Corporate attorneys assist with mergers and acquisitions (M&A), due diligence, purchase agreements, transaction structuring, negotiations, and closing procedures to help protect your interests throughout the deal.
Businesses should evaluate contract terms, liability exposure, regulatory requirements, tax implications, ownership structure, financing arrangements, and potential risks before completing a transaction.
A transactional attorney identifies legal risks before they become disputes by reviewing agreements, negotiating favorable terms, ensuring regulatory compliance, and structuring transactions appropriately.
Yes. Corporate attorneys regularly draft and negotiate shareholder agreements, operating agreements, partnership agreements, buy-sell agreements, and other governance documents that define ownership rights and responsibilities.
Business transactions often involve significant financial and legal consequences. A corporate attorney provides guidance throughout the transaction process to help protect assets, reduce risk, and support long-term business objectives.
Yes, if you have a green card or U.S. citizenship, you must file a U.S. tax return every year and report worldwide income and all foreign assets, regardless of your ties to the U.S.
Yes. The IRS currently has several options and amnesty plans for gaining compliance on your taxes. In some cases, it can be done without any penalties.
Yes, the U.S. offers very competitive tax rates compared to other leading economies, is very easy to form businesses and enter the markets, and even has tax incentives for investment to enter the country.
Yes, with a proper holding structure the U.S. estate tax can be avoided.
Most financial institutions, brokers, and other businesses which transfer title are now requiring a Form 706-NA (estate tax return of a foreigner) or a transfer certificate from the IRS to confirm the estate tax has been reported before they will transfer the assets.
No, however, the situation is a bit more complicated and requires detailed planning.
By using a foreign grantor trust (FGT), you can maintain control over your estate and assets but have everything ready to pass to your heirs.
Yes, but you may be subject to an ‘exit tax’ depending on your income and net worth, and depending on time spent in U.S. for green card holders.
Yes, you should consider income tax planning to mitigate gains and income once you are a U.S. person and prepare for the required reporting, and estate tax planning to protect assets from U.S. transfer tax.
The U.S. transfer tax is a tax on the transfer of property through gift or inheritance. For NRAs, this tax generally applies only to U.S. assets. The tax rate can be as high as 40%, with only a $60,000 exemption for NRAs.
Assets considered “U.S. situs” for estate tax purposes include U.S. real estate, tangible personal property located in the U.S., and certain stocks of U.S. corporations. Other asset types, such as U.S. bank deposits and life insurance proceeds, may be exempt.
Unlike U.S. citizens, who have a higher exemption, NRAs generally have an exemption of only $60,000 for U.S.-situs assets.
The gift tax applies to certain transfers made during a person’s lifetime. For NRAs, only gifts of tangible personal property and real estate located in the U.S. are subject to the U.S. gift tax. Gifts of intangible property, such as stocks, are generally exempt from gift tax for NRAs.
Pre-immigration tax planning can be essential for NRAs who anticipate becoming U.S. residents. This process involves structuring assets in a way that minimizes future U.S. tax liabilities on income, gifts, and estates.
Yes, if an NRA’s U.S.-situs assets exceed the exemption limit, or if the NRA makes taxable gifts of U.S.-situs property, filing requirements may apply. In such cases, an estate or gift tax return must be filed with the IRS.
Form 706-NA is the U.S Estate Tax Return for NRAs. This form must be filed by the executor of an NRA’s estate if the NRA owned U.S.-situs assets exceeding the $60,000 exemption. The form reports the U.S.-situs assets and calculates the estate tax due on these assets.
In many cases, financial institutions are now requiring a copy of a filed Form 706-NA or a transfer certificate to confirm proper estate taxes have been reported before changing ownership of financial accounts.
Form 3520 is an informational return used to report certain transactions involving foreign trusts and the receipt of significant gifts or inheritances from foreign individuals, estates, or corporations. A U.S. person may be required to file Form 3520 if they receive gifts totaling over $100,000 from non-U.S. individuals or estates, or if they receive distributions from or engage in specific transactions with foreign trusts.
A Foreign Grantor Trust (FGT) is a trust that qualifies as a “foreign trust” (based on U.S. tax rules) where the grantor retains certain powers or benefits that result in them being treated as the owner of the trust’s assets for U.S. tax purposes.
A FGT can be useful in a variety of circumstances. They are commonly used for estate planning and wealth management purposes by non-U.S. persons with beneficiaries in the United States.
For the grantor: The grantor continues to be treated as the owner of the trust assets.
For U.S. beneficiaries: If distributions are made to U.S. beneficiaries, they may have reporting obligations but generally do not pay income tax unless the trust changes status.
There are many various types of trusts, and the U.S. tax law applies differently. Depending on your current trust structure, you might be able to make changes or simply convert/decant the trust assets into a more advantageous structure like the FGT.
Yes, it is good to have periodic updates of your structure and plan to see if there were any legal changes, or if there are changes in your personal decisions about your family wealth planning or residency plans.
If U.S. and foreign assets are held within the same holding company, it could trigger U.S. estate taxes on the U.S. assets when the grantor passes away. Ideally, U.S. and foreign assets will be held in separate holding companies before the grantor passes away.
Yes, relevant parties should be aware of future tax obligations and be prepared for required actions when the grantor passes away. Some matters can be prepared in advance to ease the administrative burden on beneficiaries when the grantor passes away, such as:
“Checking the box” refers to filing IRS Form 8832 to choose how an entity is classified for U.S. tax purposes, such as a disregarded entity or corporation. This election can be used to achieve a better tax result but requires careful planning to prevent unintended tax consequences.
No. A company’s stock must first qualify as QSBS under section 1202, and the strategy must be carefully tailored to the founder’s circumstances. Factors such as the type of business, ownership structure, holding period, trust design, and timing of any transfers all influence whether QSBS stacking is appropriate. Founders should work with experienced tax counsel to evaluate eligibility and implement the strategy correctly.
The most effective time to evaluate QSBS stacking is well before a liquidity event or letter of intent. Because the strategy relies on completed gifts, properly structured trusts, and genuine transfers made before a sale is imminent, waiting until a transaction is underway may eliminate or significantly limit available planning opportunities.
QSBS stacking is an advanced tax planning strategy that may increase the federal capital gains tax exclusion available under Internal Revenue Code section 1202. By transferring QSBS to properly structured non-grantor trusts before a business sale, multiple taxpayers may each qualify for their own section 1202 exclusion, potentially allowing significantly more gain to be excluded from federal capital gains tax.
Eligible taxpayers may generally exclude up to the greater of $10 million or 10 times their adjusted basis in the stock, depending on the structure of the investment and other qualifying factors.
Qualified Small Business Stock refers to eligible stock issued by certain U.S. C-corporations that may qualify for significant federal capital gains tax exclusions under section 1202 of the Internal Revenue Code if specific requirements are met.
Yes. Founders and investors often face different planning considerations related to stock issuance timing, valuation, basis, equity compensation structures, due diligence, and ownership vehicles.
Potentially, but cross-border ownership structures, residency status, tax treaties, and international reporting obligations can create additional complexity. International founders and investors should evaluate QSBS planning alongside broader international tax considerations.
An international tax lawyer helps individuals, families, investors, and businesses navigate cross-border tax issues, including foreign asset reporting, international tax compliance, offshore disclosures, international business taxation, and global tax planning.
You may need an international tax attorney if you own foreign bank accounts, foreign businesses, offshore investments, international real estate, foreign trusts, or earn income in multiple countries. International tax counsel is also important when dealing with IRS compliance issues involving foreign assets.
Generally, yes. U.S. citizens and many U.S. residents are required to report worldwide income and may have additional reporting obligations for foreign bank accounts, foreign financial assets, foreign corporations, and other offshore holdings.
Yes. International tax attorneys regularly assist clients with FBAR filings, FATCA reporting, foreign asset disclosures, offshore compliance matters, and correcting prior reporting failures.
International tax planning may involve foreign tax credits, tax treaty analysis, entity structuring, and other strategies designed to reduce the risk of paying tax on the same income in multiple countries.
Yes. U.S. owners of foreign corporations, partnerships, and international business interests often face complex tax rules and reporting requirements, including NCTI (formerly GILTI), Subpart F, Form 5471, and other international compliance obligations.
Hone Maxwell LLP advises clients on international tax compliance, FBAR and FATCA reporting, offshore disclosures, foreign business ownership, international estate planning, expatriation, cross-border tax planning, international tax controversies, and global wealth structuring.
U.S. international tax compliance refers to meeting IRS reporting requirements for foreign income, foreign bank accounts, offshore investments, foreign businesses, foreign trusts, and other international assets owned by U.S. taxpayers.
U.S. citizens, green card holders, and certain U.S. residents may be required to report foreign bank accounts through an FBAR if the aggregate value of their foreign accounts exceeds $10,000 at any point during the year.
FATCA reporting is when foreign financial institutions report U.S. account holders to the IRS. Generally, all banks and financial institutions worldwide participate in this reporting. Unless they are running a fund or setting up a financial business, most taxpayers do not have to do this reporting. However, this is the mechanism the IRS can use to discover noncompliance of U.S. taxpayers.
Failure to report foreign income, foreign accounts, or international assets can result in significant penalties. However, the IRS offers certain compliance programs and disclosure options that may help taxpayers correct past reporting issues.
Depending on your situation, you may need to file forms such as the FBAR, Form 8938, Form 5471, Form 8621, Form 8865, Form 3520, Form 3520-A, or other international information returns related to foreign entities and assets.
Yes. Many taxpayers discover international reporting requirements years after they become applicable. An international tax attorney can evaluate available compliance options and help determine the most appropriate path for becoming compliant.
International tax compliance rules are highly complex and penalties can be severe. An international tax attorney can evaluate reporting obligations, identify compliance risks, develop a corrective strategy, and represent you in communications with the IRS when necessary.
An FBAR, or Foreign Bank Account Report (FinCEN Form 114), is a reporting requirement for U.S. persons with foreign financial accounts. The FBAR helps the U.S. government track offshore accounts held outside the U.S.
U.S. citizens, green card holders, expats, dual citizens, and certain entities may be required to file an FBAR if the aggregate value of their foreign financial accounts exceeds $10,000 at any point during the calendar year.
Reportable accounts may include foreign bank accounts, savings accounts, investment accounts, securities accounts, certain foreign pension accounts, and other financial accounts held outside the U.S.
FBAR penalties can be substantial. Non-willful violations may result in monetary penalties, while willful violations can lead to significantly higher penalties up to 100% of the account balance and, in some cases, criminal exposure.
Yes. Depending on the circumstances, taxpayers may have options to correct prior FBAR filing failures and become compliant. The appropriate approach depends on the facts and filing history.
No. The FBAR is an informational reporting requirement. Filing an FBAR does not automatically create additional tax liability, although foreign income associated with those accounts may still need to be reported.
Because FBAR penalties can be severe and compliance options vary significantly based on individual circumstances, many taxpayers consult an international tax attorney before addressing missed FBAR filings or offshore account disclosures.
NCTI, or Net CFC Tested Income, formerly known as Global Intangible Low-Taxed Income or GILTI, is a U.S. international tax regime that requires certain U.S. shareholders of foreign corporations to report and potentially pay tax on foreign earnings, even if those profits are not distributed.
NCTI generally applies to U.S. shareholders who own interests in Controlled Foreign Corporations (CFCs). The rules often affect business owners, entrepreneurs, and investors with foreign companies.
Yes. One of the primary features of NCTI is that certain foreign earnings may be taxable to U.S. owners even when profits remain in the foreign company and are not distributed.
NCTI calculations involve multiple factors, including ownership percentages, corporate earnings, foreign taxes paid, and certain interest expense and income. Under the new NCTI regime, fixed asset base or Qualified Business Asset Investment (QBAI), is no longer relevant as it was with GILTI. The calculations can be highly complex and often require careful planning.
In some situations, foreign tax credits may help reduce or eliminate NCTI-related tax liability. The availability and effectiveness of credits depend on the structure of the foreign business and the taxes paid abroad.
Potential planning opportunities may include restructuring ownership, modifying entity classifications, evaluating elections, and coordinating international tax strategies. Every situation requires a case-specific analysis.
The NCTI rules are among the most complex areas of international tax law. An international tax attorney can evaluate compliance obligations, identify planning opportunities, and help avoid costly reporting mistakes.
Yes. U.S. citizens are generally required to file U.S. tax returns and report worldwide income regardless of where they live or whether they hold citizenship in another country.
Yes,dual citizens are required to file an FBAR and other international information returns if they own foreign financial accounts or assets that exceed applicable reporting thresholds.
Yes. Dual citizens often face tax obligations in multiple countries. Foreign tax credits, tax treaties, and international tax planning strategies may help reduce double taxation.
Many dual citizens are unaware of their U.S. tax obligations. Depending on the circumstances, compliance programs may be available to help correct prior filing issues and become compliant.
Yes. U.S. citizens generally must report worldwide income, including employment income, business income, rental income, investment income, and other earnings generated outside the U.S.
Some dual citizens choose to renounce U.S. citizenship, but doing so can trigger significant tax consequences, including potential exit tax obligations. Careful planning is essential before pursuing expatriation.
Dual citizenship can create complex cross-border tax and reporting issues. An international tax attorney can help navigate compliance requirements, minimize tax exposure, and develop an effective international tax strategy.
You should consult an international tax attorney before filing amended returns or submitting late forms. The IRS offers several compliance and disclosure options, and choosing the wrong approach can increase your risk of penalties.
Yes. Many taxpayers discover years later that they were required to report foreign income, offshore accounts, foreign corporations, or other international assets. Various IRS compliance programs may help eligible taxpayers become compliant.
The IRS offers several options for addressing offshore reporting issues, including Streamlined Filing Compliance Procedures, delinquent international information return submissions, reasonable cause disclosures, and other corrective filing strategies depending on the facts of the case.
Failure to address international tax noncompliance can lead to significant penalties, interest, audits, and enforcement actions. With FATCA and international information-sharing agreements, foreign financial accounts are increasingly visible to the IRS.
In some situations, taxpayers may qualify for reduced penalties or penalty relief. Eligibility depends on factors such as intent, filing history, compliance efforts, and the specific reporting failures involved.
The Streamlined Filing Compliance Procedures program allows certain taxpayers who failed to report foreign income or foreign assets non-willfully to correct past filings and potentially reduce penalties while becoming compliant with U.S. tax laws.
The best compliance option depends on your specific facts, reporting history, foreign assets, and potential exposure. An international tax attorney can evaluate available disclosure options, identify risks, and develop a strategy designed to achieve compliance while minimizing penalties.
A foreign tax law firm helps individuals, families, and businesses navigate international tax laws, foreign asset reporting requirements, cross-border investments, foreign business ownership, and global tax planning strategies.
You should consult a foreign tax attorney before acquiring foreign assets, opening offshore accounts, investing internationally, forming a foreign business, receiving a foreign inheritance, or addressing international tax compliance issues.
Yes. International tax planning often involves foreign tax credits, tax treaty analysis, entity structuring, and other strategies designed to reduce the risk of paying tax on the same income in multiple countries.
Possibly. U.S. taxpayers may have reporting obligations for foreign financial accounts, foreign investments, foreign corporations, foreign trusts, and other offshore assets through FBAR, FATCA, and related international tax forms.
Yes. U.S. owners of foreign corporations, partnerships, trusts, and other international business structures may face complex tax and reporting requirements. Proper planning can help manage compliance obligations and reduce unnecessary tax exposure.
International tax attorneys assist with foreign inheritances, cross-border wealth transfers, international trusts, and international estate planning strategies designed to protect assets and minimize tax consequences across multiple jurisdictions.
International tax matters often involve complex reporting requirements, foreign asset disclosures, tax treaties, and cross-border legal issues. An international tax attorney can provide legal advice, attorney-client privilege, and representation for sensitive international tax matters. Additionally, an international tax attorney will likely have the contacts in other countries to assist with matters outside the U.S.
International estate planning helps individuals and families manage the transfer of assets across multiple countries while minimizing estate taxes, inheritance taxes, probate complications, and cross-border legal issues.
Yes. Owning foreign real estate, foreign bank accounts, international investments, or foreign business interests can create unique tax and succession issues that may not be addressed by a traditional estate plan.
Potentially. Depending on the countries involved, heirs may face estate tax, inheritance tax, or other transfer taxes in more than one jurisdiction. Proper international estate planning can help reduce the risk of double taxation.
U.S. citizens and domiciliaries are generally subject to U.S. estate tax on their worldwide assets. Non-U.S. persons may also have U.S. estate tax exposure if they own certain U.S.-situated assets, such as real estate or business interests.
In some situations, separate wills may be beneficial to address local laws, probate requirements, and asset administration in multiple jurisdictions. The appropriate strategy depends on the countries involved and the types of assets owned.
Yes. International estate planning often incorporates trusts, business succession planning, ownership structures, and tax strategies designed to preserve wealth and facilitate efficient transfers to future generations.
An international estate planning attorney can coordinate estate, tax, trust, and succession planning across multiple jurisdictions, helping ensure that your wishes are carried out while minimizing tax exposure and administrative burdens for your heirs.
Tax controversy law involves resolving disputes between taxpayers and taxing authorities such as the IRS or state tax agencies. Common matters include audits, tax assessments, penalties, appeals, collections, tax liens, levies, and tax litigation.
You should contact a tax controversy attorney as soon as you receive an IRS notice, audit letter, proposed assessment, levy notice, or other tax enforcement action. Early intervention often provides more options for resolving the matter.
Yes. A tax controversy attorney can communicate directly with the IRS, respond to information requests, develop legal arguments, and help protect your interests throughout the audit process.
A Notice of Deficiency is a formal notice that gives you the opportunity to challenge a proposed tax assessment. Because strict deadlines apply, you should consult a tax controversy attorney immediately to evaluate your options.
In many cases, penalty relief may be available through reasonable cause arguments, administrative appeals, or other IRS procedures. The best approach depends on the facts and circumstances of the case.
The IRS offers several collection alternatives, including installment agreements, offers in compromise, and other resolution programs. A tax controversy attorney can help determine which option is most appropriate for your situation.
Yes. Tax controversy attorneys regularly assist clients with IRS collection actions, including tax liens, bank levies, wage garnishments, and other enforcement measures. Acting quickly can help prevent additional financial consequences.
You should review the notice carefully and consult an IRS audit attorney before responding. The IRS may be requesting documents, explanations, or additional tax information, and your response can significantly impact the outcome of the audit.
Yes. An IRS audit attorney can communicate directly with the IRS, respond to audit inquiries, prepare supporting documentation, and represent your interests throughout the examination process.
IRS audits can be triggered by income discrepancies, unreported income, unusual deductions, business losses, foreign account reporting issues, cryptocurrency transactions, or other items that attract IRS scrutiny. Some audits are also selected randomly.
The length of an IRS audit depends on the complexity of the issues involved, the amount of documentation requested, and how quickly information is provided. Some audits conclude in a few months, while others can take significantly longer.
Yes. If you disagree with the IRS findings, you may have options to appeal the audit results or challenge the proposed assessment through administrative or judicial procedures.
Yes. The IRS frequently audits matters involving foreign bank accounts, FBAR filings, offshore assets, foreign income, foreign corporations, and other international tax compliance issues.
An IRS audit attorney can identify legal issues, develop effective strategies, protect privileged communications, and help prevent mistakes that could increase tax liability, penalties, or future enforcement actions.
Generally, no. Hiring an attorney is a prudent decision, and many times the IRS prefers to work with an attorney because it will make their job easier working with a tax professional who understands the process and what is needed.
You should address the issue as soon as possible. Ignoring tax debt can result in penalties, interest, tax liens, bank levies, wage garnishments, and other IRS collection actions. A tax debt attorney can help evaluate available resolution options.
Depending on your circumstances, you may qualify for programs such as an Offer in Compromise, penalty relief, installment agreement, or other collection alternatives that can help resolve your tax liability.
An installment agreement is a payment plan that allows taxpayers to pay their tax debt over time. The IRS offers several types of payment plans depending on the amount owed and the taxpayer’s financial situation.
Yes. The IRS may issue a bank levy if tax liabilities remain unresolved. Acting quickly after receiving collection notices can help prevent or remove enforcement actions.
A tax lien is a legal claim against your property due to unpaid taxes, while a tax levy is the actual seizure of assets such as bank accounts, wages, or other property to satisfy a tax debt.
Some taxpayers may qualify for an Offer in Compromise, which allows eligible individuals to settle tax debt for less than the full amount owed. Qualification depends on income, assets, expenses, and overall ability to pay.
A tax debt attorney can negotiate directly with the IRS, evaluate collection alternatives, respond to enforcement actions, and develop a strategy to resolve tax debt while protecting your assets and financial interests.
The first step is to determine exactly what the IRS claims you owe and why. Tax problems can involve audits, unpaid taxes, penalties, liens, levies, or unfiled returns, and the best solution depends on the specific circumstances.
Yes. A tax attorney can evaluate your situation, communicate with the IRS on your behalf, identify available resolution options, and work to reduce the financial impact of tax disputes and collection actions.
Ignoring IRS notices can result in escalating enforcement actions, including additional penalties, tax liens, bank levies, wage garnishments, and other collection measures. Addressing the issue early often provides more resolution options.
Yes. Many taxpayers fall behind on filing requirements. A tax attorney can help determine which returns must be filed, address potential penalties, and develop a strategy to bring you back into compliance.
Depending on the circumstances, collection actions may be stopped or delayed through payment plans, appeals, hardship requests, offers in compromise, or other IRS resolution programs.
Common tax problems include unpaid tax debt, unfiled returns, audit disputes, payroll tax issues, penalty assessments, tax liens, bank levies, wage garnishments, and notices of deficiency.
You should seek legal guidance as soon as you receive an IRS notice, discover unfiled tax returns, face collection activity, or become aware of a tax issue that could result in penalties or enforcement actions.
You should contact a criminal tax attorney immediately if you believe you may be under criminal tax investigation, have received a summons or subpoena, are being questioned by IRS Criminal Investigation (IRS-CI), or have concerns about potential tax fraud allegations.
Civil tax cases generally involve disputes over tax liability, penalties, or compliance. Criminal tax cases involve allegations that a taxpayer intentionally violated tax laws through actions such as tax evasion, filing false returns, or concealing income.
Common allegations include tax evasion, tax fraud, filing false tax returns, failure to report income, payroll tax violations, offshore account concealment, and other willful violations of federal tax laws.
In some cases, yes. If the IRS discovers evidence suggesting intentional misconduct or fraud during a civil audit, the matter may be referred to IRS Criminal Investigation for further review.
You should avoid making statements or providing documents before consulting a criminal tax attorney. Early legal representation can be critical in protecting your rights and developing an effective defense strategy.
Yes. Criminal tax attorneys represent clients during investigations, negotiations with federal authorities, grand jury proceedings, and criminal tax litigation when necessary.
Yes. Communications with a criminal tax attorney are generally protected by attorney-client privilege, allowing you to discuss sensitive tax matters confidentially while evaluating your legal options.
You should review the notice carefully and respond promptly. California tax notices often involve proposed assessments, residency disputes, unpaid taxes, or requests for additional information that may require legal analysis.
Yes. A California tax attorney can represent taxpayers before the Franchise Tax Board (FTB), challenge assessments, negotiate resolutions, and pursue available appeal rights when appropriate.
Common California tax issues include residency audits, state income tax assessments, unpaid tax liabilities, business tax disputes, payroll tax matters, and collection actions by state tax agencies.
A residency audit occurs when the FTB questions whether an individual properly claimed nonresident status. These audits often involve detailed reviews of travel records, property ownership, business activities, and personal connections to California.
Yes. The FTB may pursue collection actions, including tax liens, bank levies, wage garnishments, and other enforcement measures against taxpayers with unresolved liabilities.
Yes. Taxpayers generally have the right to challenge proposed assessments and pursue administrative appeals. Strict deadlines often apply, making timely action important.
California tax laws and procedures can differ significantly from federal tax rules. A California tax attorney can help protect your rights, navigate disputes with state tax agencies, and develop strategies to resolve tax liabilities efficiently.
A corporate and transactional attorney helps businesses with entity formation, corporate governance, contract negotiation, mergers and acquisitions, business transactions, and legal strategies designed to support growth while managing risk.
You should consult a corporate attorney when starting a business, bringing on investors, negotiating significant contracts, restructuring ownership, buying or selling a company, or entering into complex commercial transactions.
Yes. Corporate attorneys assist with mergers and acquisitions (M&A), due diligence, purchase agreements, transaction structuring, negotiations, and closing procedures to help protect your interests throughout the deal.
Businesses should evaluate contract terms, liability exposure, regulatory requirements, tax implications, ownership structure, financing arrangements, and potential risks before completing a transaction.
A transactional attorney identifies legal risks before they become disputes by reviewing agreements, negotiating favorable terms, ensuring regulatory compliance, and structuring transactions appropriately.
Yes. Corporate attorneys regularly draft and negotiate shareholder agreements, operating agreements, partnership agreements, buy-sell agreements, and other governance documents that define ownership rights and responsibilities.
Business transactions often involve significant financial and legal consequences. A corporate attorney provides guidance throughout the transaction process to help protect assets, reduce risk, and support long-term business objectives.