The IRS Challenges Gifts to and from Foreign Persons: Analyzing Two Recent Victories for Taxpayers


 

Gifting can be rewarding, but it can also generate problems with the IRS. The applicable tax and information-reporting rules are complicated when foreign persons are involved. The IRS has attempted to capitalize on this reality in two recent cases, asserting large penalties against a U.S. individual receiving a gift from a foreign relative, and seeking significant gift taxes and penalties from another U.S. individual making a gift to a foreign relative. Although the IRS lost in both instances, these types of challenges serve as a warning to taxpayers to better understand international tax compliance matters, as well as potential downsides associated with participating in IRS disclosure programs.

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About Hale E. Sheppard
HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a partner in the Tax Controversy Section of Chamberlain Hrdlicka.  He defends clients in tax audits, tax appeals, and Tax Court litigation, covering both domestic and international issues.

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