Form TD F 90-22.1 - Part III - Foreign Accounts and Trusts

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patience101

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Our close friend did not fill in this section of his returns as his total funds in his native foreign country were never more than US$ 5,000/=. He has been legally working here in US since 1999 and became permanent resident in Nov. 2008. In April 2010 his father passed away and leaving him substantial inheritance. In order to take care of the inheritance he went to his native country and as the substantial funds received were by check in local currency he deposited the check in his bank local native bank on December 15, 2010.

While filing his returns in 2011, he mentioned this event to his tax consultant and reportedly, the tax consultant filled up Part III section 7a as "Yes" and section 7b with the name of the native country.

On August 18, he received a letter from his bank in native country about his rights of enrolling in Voluntary Discloser Scheme closing on August 31, 2011. Accordingly, he went to his Tax Consultant who advised him to procure all bank statements for the last 10 years from his native bank. By the time he received his bank statements, the deadline date had passed. Hence, he took all his statements and met his tax consultant. The tax consultant says that he will have to pay a hefty penalty of 25% on his inherited funds. As he is not so well financially, this penalty will virtually destroy him. What legal recourse does he have in this regard. Please advice.
 
patience101 said:
Our close friend did not fill in this section of his returns as his total funds in his native foreign country were never more than US$ 5,000/=. He has been legally working here in US since 1999 and became permanent resident in Nov. 2008. In April 2010 his father passed away and leaving him substantial inheritance. In order to take care of the inheritance he went to his native country and as the substantial funds received were by check in local currency he deposited the check in his bank local native bank on December 15, 2010.

While filing his returns in 2011, he mentioned this event to his tax consultant and reportedly, the tax consultant filled up Part III section 7a as "Yes" and section 7b with the name of the native country.

On August 18, he received a letter from his bank in native country about his rights of enrolling in Voluntary Discloser Scheme closing on August 31, 2011. Accordingly, he went to his Tax Consultant who advised him to procure all bank statements for the last 10 years from his native bank. By the time he received his bank statements, the deadline date had passed. Hence, he took all his statements and met his tax consultant. The tax consultant says that he will have to pay a hefty penalty of 25% on his inherited funds. As he is not so well financially, this penalty will virtually destroy him. What legal recourse does he have in this regard. Please advice.
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Why would he pay penalty? Is it because of the TD F 90 rules, or because he didn't pay taxes on the inheritance?

Best suggestion would be to get a second opinion from another accountant, preferably one who is competent and can back his statements by the relevant government rules' references.
 
FormTDF 90-22 Foreign Accounts and Trusts

This friend is a very law abiding citizen and pays taxes inIndia too for income earned. He has also paid tax in India on the Inheritance amount. I think the tax consultant is misguiding him. He has all the papers to show that he is paying taxes in India. He will be going for a second opinion. My only concern is, Is there anything as double taxation, which should not be, because he did not earn anything through unfair ways but something left by his father. Any advise on this.
 
patience101 said:
This friend is a very law abiding citizen and pays taxes inIndia too for income earned. He has also paid tax in India on the Inheritance amount. I think the tax consultant is misguiding him. He has all the papers to show that he is paying taxes in India. He will be going for a second opinion. My only concern is, Is there anything as double taxation, which should not be, because he did not earn anything through unfair ways but something left by his father. Any advise on this.
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Double taxation is possible, depends on the legal treaties between India and the US. A professional should know these things. I know that the US has a treaty with my country of origin to avoid double taxation, I don't know if there's such a treaty with India (I expect there to be though).
 
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