Foreign Pension Accounts: Dangers of Improper Tax Treatment | US International Tax Lawyer
Hello and welcome to Sherayzen Law Office video blog. My name is Eugene Sherayzen and I’m an International tax attorney and owner of Sherayzen Law Office, Ltd.
Today, we are continuing our series of blogs from Santa Monica, California. In the previous blog, I mentioned that foreign pension accounts could be very dangerous for your US tax compliance and I’ve explained the main reasons for that. In this blog, I’d like to discuss an additional point about foreign pension accounts and that is the danger that stems from how they are being handled by US tax accountants when they file your US tax returns.
There are two types of potential problems:
- Your US tax accountant may have no idea how to handle US tax reporting requirements concerning foreign pensions. That is actually a very likely scenario. The issue of US tax requirements concerning foreign pensions is incredibly complex and for this reason, it is important to understand that your tax accountants may simply not know what they’re doing.
- Is the opposite of that, where tax accountants take the liberty of taking what they believe is the safest passage. For example, they may automatically treat a foreign pension account as a foreign trust and file Form 3520, potentially Form 3520-A. There is no harm in over-compliance. The problem arises when this advice was given in error and a client later-on fails to properly file these forms and these are not simple forms to file, so in that situation, basically he ends up with IRS penalties concerning foreign trust compliance even though he never had a foreign trust. I’ve had many cases where this was precisely what happened.
If you would like to learn more about your foreign pension compliance, you can call me at (952) 500-8159 or email me: [email protected]
Thank you for watching, until the next time.
