Creating Tax Compliant Overseas Trusts and Corporations

Many people who already created corporations or trusts in the past consult with lawyers and tax professionals to learn how to improve their reporting and avoid fines. Others simply wish to get started off on the right foot before they create asset protection structures.

For many reasons, U.S. investors often create foreign limited liability corporations, trusts and other structures to hold their assets. In some cases, this practice helps them legally manage their tax obligations, but they cannot eliminate it entirely.

Investors who want to stay tax compliant take time to plan their new structures prior to enacting them.

Making a Fresh Start

Different kinds of overseas entities are appropriate for different ventures, and consulting with an experienced trust attorney may make it easier to figure out which to create.

Investors should consider a number of questions, including whether or not they have foreign accounts already and what they'll be doing with any foreign entities they create. These details are critical in determining whether flexible, low-tax offshore trusts or corporations are more suited to the needs of the investors in question.

In addition, it's well-worth considering the fact that different geographic regions have different tax rates and protections for certain assets. Working with an attorney or investment counselor who has experience with setting up International Business Companies (IBCs) in different areas may make it easier to protect a larger percentage of your assets.

Correcting Past Issues

These considerations are just as important for those who haven't exactly maintained proper tax compliance in the past. IRS reporting requirements are becoming stricter, and back penalties and interest can be severe. Experienced accountants and legal counselors can examine past structures in order to help their owners become tax compliant via IRS Amnesty Programs or learn how to report things properly in the future.

Some of the things that investors learn while consulting with tax professionals seem trivial, but they make big differences.
For instance, separate forms that ask for the same duplicated asset information may have different filing due dates and reporting requirements. Assets such as international trusts may be required for reporting in some places but not others.
The IRS looks closely at tax-preparers and attorneys to ensure that they remain compliant; taxpayers who follow their lead before creating corporations or trusts may have an easier time staying on the right side of the law.

Nagel Law & Associates is a respected law firm that focuses on developing asset protection strategies for clients with various levels of wealth. Call the office at 412-200-5115 to find out how we can help you with your financial plans.