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Am I legally obligated to report someone to the IRS, etc who has inherited $250,000 USD and not paid taxes?

Boston, MA |

In 2009/early 2010 a neighbor inherited $250,000. He transferred these funds to third party. He paid no taxes. Am I obligated by law to report them? Doesn't the bank have a legal obligation to report deposits of over 10k to the FBI, Treasury? Isn't a state official with knowledge of this transaction obligated to report it to the correct authorities? Please advise.

Attorney Answers 4

  1. Inheritance is generally not taxable. Nor is a gift to a third party. At worst, he maybe didn't declare the gift in excess of the 13k exclusion. But this likely wouldn't trigger a tax in any case.

    I believe the $10,000 requirement you speak of applies to foreign bank accounts.

    Christopher Larson
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  2. If he is a foreigner and the money is from overseas, form 3520 is needed. If you report anyone for any reason, the spotlight will be on you. I'd even suggest hiring an attorney if you were to want to report anyone for anything.

    Please remember to designate your question's BEST ANSWER.

    Please remember to designate your question's BEST ANSWER.

    Curt Harrington
    Certified Tax Specialist -- State Bar of California Board of Legal Specialization
    Electrical-Chemical-Mechanical Patent (Intellectual Property) Attorney
    (562) 594-9784
    About Curt:
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    Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.

  3. You're not obligated by law to report, such as in the case of certain child-beating statutes that hold you responsible for not reporting what other people do. If you're not intimately familiar with estate and gift tax you wouldn't know the rules anyway, so it would be pointless to require every citizen to report every time they think there is tax fraud. Most lawyers, even the ones with Tax LL.Ms, don't know all about estate and gift tax unless that is the specific area of law they practice on a daily basis.

    We all applaud your attention to ensuring the nation's income tax laws are fully complied with, however as suggested above by Curtis, you can find yourself facing scrutiny about your tax compliance if you start raising concerns about neighbors.

    There is NO attorney-client privilege based on this interaction. I am NOT your attorney. We have no signed engagement letter with a clear understanding regarding fees. Further, everything we both just wrote is publicly available on the internet and would be the same as if we were talking in a crowded restaurant, there are many witnesses looking over your shoulder and can repeat anything you write here. If you need legal assistance use Avvo to find a local attorney in your jurisdiction that you feel can best represent your interests as a zealous advocate. My experience is in corporate tax, white collar criminal defense, partnership tax, and tax controversy/litigation. If you're being audited by the IRS or state taxing authority, or you are taking an unusually risky tax position on a return, that is the kind of thing you should have experienced counsel on your side and we can set up an initial consultation. If you have a family law, debt collection, violent crime sort of issue then I do not handle that. Do not contact me for an initial consultation on non-tax matters.

  4. I really do not think this would be any of your business. First you may not know all the details and secondly they may not owe taxes and third unless this is the former east germany I don't think we are obligated to report our neighbors for having a foreign inheritance.

    This is not legal advice but a general comment on society. International Law 24/7 hotline +1-202-318-2406 - Dr. Jonathan Levy, PhD calls or emails usually returned within 24 hours.

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