By June 2013 foreign financial institutions must enter into agreements with the IRS to disclose information about accounts held by U.S. taxpayers, under the Foreign Account Tax Compliance Act.
U.S. recipients of gifts from foreigners or distributions from foreign trusts should make sure they comply with relevant IRS reporting requirements, said Suzanne Shier, tax strategist for Chicago-based Northern Trust Corp. U.S. taxpayers generally are required to disclose to the IRS any offshore bank or brokerage accounts if the total in those accounts is more than $10,000. They also must generally disclose any gifts from foreign persons or foreign estates of more than $100,000.
The IRS in January said it had collected more than $4.4 billion in the two voluntary disclosure programs it had offered U.S. taxpayers hiding assets offshore to become current on their taxes, and said it would reopen the program for an indefinite period, according to a statement. Participants generally pay a penalty of 27.5 percent of the highest balance they held offshore in the previous eight tax years.
The most important step is for wealthy foreign families to consider tax consequences before they step on U.S. shores, Whitaker said.
"The biggest mistake is they come here with their money and six months later they ask me, 'What can I do?'" he said.
One client was who was moving from Switzerland to the U.S. was able to lower his tax exposure by stopping in Ireland before he entered the U.S., in order to establish a higher cost basis on certain investments and to place some assets into trusts, Treyz said.
Families relocating to the U.S. for a limited period of time, such as for a five-year work assignment, could benefit by placing assets into private-placement life insurance, which is a way of holding mutual funds and alternative assets such as hedge funds within a tax-deferred life-insurance wrapper, Rothschild said. The assets may grow tax-deferred while the family resides in the U.S. and the policy may be terminated after they leave and are no longer subject to the U.S. income taxes, he said.