05 December 2022 - Article
Originally published by Bloomberg BNA/Tax Management Estates, Gifts, and Trusts Journal.
This is the third and final installment in a series of articles providing a primer on international planning for domestic estate planners and tax practitioners. This series is intended to assist domestic advisors in identifying pitfalls that may arise unexpectedly in the course of a representation and in recognizing opportunities that can be leveraged to the benefit of the internationally connected client. Our first installment addressed the international income and transfer tax paradigm generally as it applies to individuals and to trusts established by or for the benefit of U.S. persons. Our second installment addressed U.S. expatriates and the various specialized tax regimes that apply to cross-border transactions, including those applicable to U.S.-controlled foreign corporations, passive foreign investment companies, and foreign investment in U.S. real estate. This final installment will focus on the ever-expanding class of information reporting regimes imposed on taxpayers with ties to the United States.
We live in an era that necessitates an unprecedented level of disclosure of personal and financial information to both governments and private institutions. In this age of financial transparency and global information exchange, internationally connected clients, many of whom have spent decades seeking enhanced privacy protections, must now accept that compliance with tax reporting requirements demands a level of transparency that may feel uncomfortable, offensive, or even dangerous. These requirements are complex and require clients to seek the counsel of knowledgeable advisors who can help them establish structures that accomplish their economic goals while controlling their reporting obligations to the greatest extent possible. After vetting the available international options, clients and advisors alike may be surprised to reach the conclusion that, for some structures, the United States is now the ‘‘offshore’’ jurisdiction of choice for tax, reporting, and regulatory reasons.