One of the recurring situations that I see in my practice is the one where Mom and Dad have an account, and they gave their kids signature power or power of attorney or something like that.
What do they do? Are the kids at risk of a 20 percent penalty? What should the kids do? Should they file for the amnesty program?
We have the beginnings of a decent answer in the new FAQs that came out from the IRS. The short answer seems to be that in very clear cases where it’s just signature power, but it’s not the kids’ money, and the kid never took any money out, there will be no penalties imposed on that child.
Of course, there are exceptions to every IRS rule, and exceptions to the exceptions, and this is no different. I’m not telling you that this is clean sailing, but I’m telling you that it may not be as bad as it seems. If you’re in this situation, either as the kid or the parent, first things first: take care of the problem, both for the sake of the account owner and for the people who are on as signatories or who have power of attorney.
If I can help you with your offshore situation, or anything else international tax-related, please give me a call. My phone number is 626‑689‑0060. My cell number is 626‑437‑2500. I’m in the Pacific time zone west coast of the United States so take that into account when you call just to make sure I’m awake.
-Phil
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