Report of Foreign Bank and Financial Accounts FINCEN Form 114

Philadelphia FBAR Attorney | Foreign Accounts Lawyers

/0 Comments/in , /by

Are you looking for a highly-skilled Philadelphia FBAR Attorney? Then, you are among many Philadelphians who need to report their foreign accounts, but do not know how to find appropriate legal help. Often, they find the attorney that they like lives outside of Philadelphia and they are not sure if they should prefer him over local Philadelphia FBAR Attorneys. In this short article, I would like to address the issue of who is considered to be a Philadelphia FBAR Attorney and why you should retain the services of my firm, Sherayzen Law Office, Ltd. (Sherayzen Law Office).

Philadelphia FBAR Attorney: Geographical Location

From the outset, it is important to understand that the geographical location of a Philadelphia FBAR Attorney does not have any impact on the attorney’s ability to conduct your FBAR case. The reason for this statement lies in the fact that FBAR is federal law. The state of Pennsylvania and the city of Philadelphia have no influence whatsoever over the implementation and enforcement of FBAR. This means that the physical location of your Philadelphia FBAR Attorney does not affect the effectiveness of his legal representation of his clients in Philadelphia.

Furthermore, the development of modern communications technology has eliminated almost the entire advantage of retaining a local Philadelphia FBAR Attorney. Even if your attorney resides in Philadelphia, almost all of your entire communication with him is going to be through email, telephone and regular mail – i.e. the same as if your attorney resides in Minneapolis. The person-to-person meetings are now easily replaced by a video Skype conference.

All of this analysis leads us to two important conclusions. First, a Philadelphia FBAR Attorney is any attorney, irrespective of his residence, who offers his FBAR services in Philadelphia. Second, the geographical location should not have any impact on your decision to retain a Philadelphia FBAR Attorney.

Philadelphia FBAR Attorney: Knowledge of International Tax Law and FBARs is the Key

The conclusions from the first part of this essay point us now to the key consideration that you should have in retaining a Philadelphia FBAR Attorney: his knowledge of the subject matter.

What is this “subject matter”? Is it only limited to knowing the FBARs or is there something else a Philadelphia FBAR Attorney should know? Indeed, the subject matter that your attorney must know should not be limited to just how to file an FBAR. Rather, he should know about FBAR, the place this form occupies within the US international tax system and how FBAR interacts with other US international tax compliance requirements, such as foreign income reporting, Form 8938, Form 8621, foreign business ownership reporting returns (5471, 8865 and 8858), et cetera.

It is also important to understand that the FBAR issues are often highly intertwined with the rest of the US tax laws and this interaction is what will make the real impact on your tax position in the United States. This is why your Philadelphia FBAR Attorney should be highly knowledgeable in other areas of international tax law in addition to FBARs.

Philadelphia FBAR Attorney: Contact Sherayzen Law Office

We can now revert to the question we already posed at the beginning of the essay: who should you retain if you are looking for a highly-skilled Philadelphia FBAR Attorney. While the actual choice is ultimately personal, based on the objective criteria, Sherayzen Law Office should definitely occupy a top spot in your search.

Sherayzen Law Office holds a leading position in the world on FBAR compliance due to its highly-experienced international tax team, headed by its founder Attorney Eugene Sherayzen, that has been helping its clients throughout the world with FBAR and related international tax issues including foreign income reporting, FATCA compliance (Form 8938), PFIC compliance (Form 8621), Subpart F rules, all types of US tax information returns (3520, 3520-A, 5471, 8865, 8858, 926, et cetera), US income tax returns (individual, partnership and corporate) for domestic and foreign persons and other issues.

Furthermore, Sherayzen Law Office has helped hundreds of clients who are delinquent with respect to their FBAR and other US tax obligations. In fact, Sherayzen Law Office is one of the leading international tax law firms in the world with experience in all major IRS voluntary disclosure programs, including 2009 OVDP, 2011 OVDI, 2012 OVDP and 2014 OVDP now closed.

This is why, if you are looking for a Philadelphia FBAR Attorney, you should contact Sherayzen Law Office, Ltd. today to schedule Your Confidential Consultation!

FBAR PFIC Reporting | FBAR Tax Attorney

/0 Comments/in , /by

FBAR PFIC Reporting is an important issue for U.S. shareholders of passive foreign investment companies (“PFICs”). I will now briefly explore the FBAR PFIC Reporting requirement and when it applies to U.S. shareholders of a PFIC.

FBAR PFIC Reporting: FBAR Background

FinCEN Form 114, the Report of Foreign Bank and Financial Accounts, commonly known as FBAR, originally came into existence as a result of the 1970 Bank Secrecy Act. FBAR is one of the main and arguably the most important international tax requirement in the IRS. The form must be filed by every U.S. tax resident who has foreign financial accounts the aggregate value of which exceeds $10,000 at any time during the calendar year. The aggregate value should be calculated based on all foreign bank and financial accounts in which this U.S. tax resident has financial interest or over which he has signatory or other authority.

Failure to file an FBAR may result in the imposition of draconian FBAR penalties, including criminal penalties in grave cases of willful noncompliance.

FBAR PFIC Reporting: PFIC Definition

PFIC (Passive Foreign Investment Company) is one of the most complex tax requirements of the U.S. tax system. In addition to the potentially tremendously burdensome tax compliance required for PFICs, PFICs may result in the imposition of a much higher income tax with PFIC interest on the PFIC tax.

The basic definition of a PFIC is any foreign corporation in which: “(1) 75 percent or more of the gross income of such corporation for the taxable year is passive income, or (2) the average percentage of assets (as determined in accordance with subsection (e)) held by such corporation during the taxable year which produce passive income or which are held for the production of passive income is at least 50 percent.” IRC Section 1297(a). While many types of companies may unexpectedly be classified as PFICs by the IRS, foreign mutual funds seem to be the most common trap for the unwary U.S. taxpayers.

If a U.S. taxpayer has PFICs, he/she is required to file a separate Form 8621 “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund” for each PFIC.

FBAR PFIC Reporting: Three Potential FBAR Requirements

There are three most common situations when an FBAR should be filed for a PFIC, assuming the statutory aggregate threshold of $10,000 is satisfied. First, FBAR PFIC reporting is required if a PFIC is held in a financial account; in this case, FBAR PFIC reporting will occur for the account itself (which, in India especially, may correspond to the folio number of a PFIC in any case). For example, if a U.S. person has an Assurance Vie account in France that contains PFICs, he would have to report the Assurance Vie account on the FBAR, including the value of the PFICs.

Second, FBAR PFIC reporting is required if a PFIC shareholder has signature authority over foreign financial accounts owned by a PFIC. In this case, FBAR PFIC reporting will occur for these foreign financial accounts in Section IV of the FBAR.

Finally, the third most common situation where FBAR PFIC reporting is required is a scenario where a U.S. person owns more than 50% of a PFIC and this PFIC has foreign financial accounts. In such case, the U.S. person is assumed to have a financial interest in the foreign financial accounts of this PFIC and he needs to disclose these accounts on his FBAR.

FBAR PFIC Reporting: Filing Form 8621 does NOT Satisfy the FBAR Filing Requirement

It is important to emphasize that filing form 8621 for a PFIC does not relieve the filer from his FBAR obligations. Even if Form 8621 is filed, the filer must also file the FBAR.

Contact Sherayzen Law Office for Professional Help with FBAR PFIC Reporting

FBAR PFIC reporting can be extremely complex and it is very easy to make mistakes with respect to what needs to be disclosed and how. These mistakes, however, can be expensive to remedy and may result in imposition of various large penalties.

This is why, if you have PFICs that require FBAR and Form 8621 disclosure, you need to contact Sherayzen Law Office for professional help. Our team of experienced tax professionals will help you properly disclose your PFICs on your FBAR and report your PFIC income on your personal or business tax returns. If you have not complied with your FBAR PFIC reporting requirement in the past and wish to remedy this situation, Sherayzen Law Office will also help you with the voluntary disclosure of your FBARs and PFICs, including the preparation of all necessary tax forms and legal documents.

Contact Us Today to Schedule Your Confidential Consultation!

Remember to File Your 2015 FBARs | FBAR Tax Attorney

/0 Comments/in , /by

On June 17, 2016, the IRS again reminded U.S. taxpayers with foreign accounts to file their 2015 FBARs by Thursday, June 30, 2016. U.S. taxpayers have to file 2015 FBARs if they had financial interest in or signatory authority (or other authority) over foreign accounts with values which, in the aggregate (i.e. all accounts added together), exceeded $10,000 at any time during the calendar year 2015. The taxpayers who satisfied the FBAR threshold, should e-file their 2015 FBARs through the BSA E-Filing System website.

It is important to note that the number of FBAR filings has grown exponentially. According to FinCEN data, on average, there has been a seventeen percent increase per year during the last five years. In fact, in 2015, FinCEN received a record high 1,163,229 of 2014 FBARs. We can reasonably expect that the number of 2015 FBARs will beat last year’s record.

The growth in the number of FBARs is mainly caused by two factors. First, the greater awareness of the FBAR requirement is due to a series of IRS legal victories against foreign banks and offshore jurisdictions, starting with 2008 UBS case through a complete destruction of the Swiss bank secrecy in the Swiss Bank Program and even more recent criminal conviction of two Caymanian banks.

Second and probably the most important reason is the implementation of the Foreign Account Tax Compliance Act (FATCA) which requires foreign financial institutions to report foreign accounts owned by U.S. persons. Additionally, FATCA created a new filing requirement, IRS Form 8938. Unlike the FBAR, Form 8938 has to be filed with U.S. individual tax returns (the implementation of Form 8938 for business returns still has not occurred). This new requirement created a much greater awareness of the FBAR among the accountants who generally do not file FBARs for their clients due to the fact that FBARs carry criminal penalties.

Both of these factors will continue to play a great role in 2016 when the 2015 FBARs have to filed. Additionally, by June 30, a much greater of foreign banks will have delivered FATCA letters, further promoting FBAR awareness among U.S. persons who have to file 2015 FBARs.

Contact Sherayzen Law Office for FBAR Help

If you have undisclosed foreign accounts for which delinquent FBARs have to be filed or you need help with determining what needs to be filed for 2015 FBAR, contact the experienced international tax law firm of Sherayzen Law Office. Our talented team of tax professionals, headed by a highly-experienced FBAR tax attorney, Mr. Eugene Sherayzen, has helped hundreds of U.S. taxpayers around the world and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Foreign Inheritance FBAR Reporting | FBAR Lawyer

/0 Comments/in , /by

Foreign Inheritance FBAR Reporting is one of the most common issues among U.S. taxpayers with foreign parents, uncles, aunts, siblings and other relatives. The issue discussed in this article is not reporting foreign inheritance itself (although this is an important concern which I already addressed in other articles), but whether FBAR needs to be filed upon the receipt of a foreign inheritance. Let’s explore this subject in more detail.

Foreign Inheritance FBAR Reporting: What is FBAR?

The Report of Foreign Bank and Financial Accounts, officially now called FinCEN Form 114 and also known as “FBAR”, is one of the main U.S. international tax requirements for reporting bank and financial accounts overseas. FBAR should be filed by every U.S. tax resident who has foreign financial accounts the aggregate value of which exceeds $10,000 at any time during the calendar year. The aggregate value should be calculated on all foreign bank and financial accounts in which this U.S. tax resident has financial interest or over which he has signatory or other authority.

The 2015 FBAR must be received by the IRS by June 30, 2016 without any extension possible; however, starting the reporting for the calendar year 2016 (i.e. 2016 FBAR) the FBARs are due on April 15 (an extension is possible).

Foreign Inheritance FBAR Reporting: Foreign Bank and Financial Accounts

A foreign inheritance may be received by a U.S. heir in a great variety of forms: cash, bank accounts, investments, business ownership, real estate, a foreign trust beneficiary interest, jewelry, art, intellectual property, et cetera. For the FBAR reporting purposes, it is important to understand exactly what the U.S. heir in inheriting.

Foreign Inheritance FBAR reporting becomes relevant when a U.S. heir receives either financial interest in or signatory (or other) authority over any foreign bank and financial accounts. It is important to emphasize that, no matter how brief is this financial interest or signatory authority, the foreign inheritance FBAR reporting will come into play as long as the aggregate value of all accounts exceeds $10,000.

I often see that U.S. heirs would set up foreign accounts in which foreign inheritance is deposited and they would believe that such accounts would not be reportable because they are simply depositing foreign inheritance. This is incorrect – as soon as foreign accounts are involved, foreign inheritance FBAR reporting considerations immediately become relevant whether these are inherited foreign accounts or accounts which are set up to receive the inheritance.

Contact Foreign Inheritance FBAR Lawyer for Professional Help

If you received a foreign inheritance, you need to contact Sherayzen Law Office as soon as possible for professional help. Mr. Sherayzen has successfully advised hundreds of U.S. taxpayers with respect to U.S. tax compliance foreign inheritance issues. He can help You!

Contact Us Today to Schedule Your Confidential Consultation!

Foreign Life Insurance Policies – FBAR Reporting

/0 Comments/in , /by

Foreign Life Insurance Policies are very popular around the world, especially in India, Germany and France (Assurance Vie accounts). Yet, very few U.S. taxpayers (especially H-1B holders and U.S. permanent residents) are aware of the fact that these policies may be subject to numerous and complex IRS tax reporting requirements in the United States. In this article, I would like to generally discuss the FBAR requirements applicable to foreign life insurance policies.

I will not be discussing here the requirements for a qualified foreign life insurance policy, because it is mostly irrelevant since the great majority of foreign life insurance policies would not be qualified policies.

Types of Foreign Life Insurance Policies

Before we start exploring which foreign life insurance policies (also known as Life Assurance Policies) are subject to the FBAR requirement, it is important to distinguish three general categories of foreign life insurance policies.

In the order of rising complexity, the first category of foreign life insurance policies consists of simple, straightforward life insurance policies with no cash surrender value, no income payments and no income accumulations. The taxpayer simply makes the required premium payments and he expects a fixed-amount payout at death.

The second category of foreign life insurance policies has a cash-surrender value, but no income. The taxpayer pays a premium and expects a certain payout when the policy is surrendered or matures. The cash surrender value grows over time mostly through premiums and bonuses which would be paid out when the policy is surrendered. There is also a potential death benefit.

Finally, the third category of foreign life insurance policies has a cash-surrender value with investments and/or income. There is a large variety of investment life insurance policies. The most common arrangement, though, is where the taxpayer pays a relatively large initial premium which is invested in foreign mutual funds; the growth in mutual funds will usually determine the cash-surrender value. Oftentimes, the cash-surrender value in these policies is tax-free if certain requirements are met (for example, Assurance Vie policies in France or certain life insurance policies in India).

In some cases (for example, in Malaysia), an investment foreign health insurance policy may be tied into a life insurance policy.

FBAR – FinCEN Form 114

FinCEN Form 114 – Report of Foreign Bank and Financial Accounts (commonly known as FBAR) is the most important US tax information return. FBAR must be filed by a US tax resident if the aggregate value of foreign financial accounts (in which this US person has financial interest and/or over which this US person has signatory authority) exceeds $10,000 at any time during the calendar year. The 2015 FBAR must be received by the IRS by June 30, 2016 without any extension possible; however, starting the reporting for the calendar year 2016 (i.e. 2016 FBAR) the FBARs are due on April 15 with an extension possible.

The importance of FBAR stems from the draconian FBAR penalties. Unlike many other information returns, FBAR imposes penalty not only on the willful non-filing, but also on the non-willful failure to file the FBAR. The willful FBAR penalties range from criminal penalties with up to 5 years in prison to up to $100,000 penalty per account per year. The FBAR statute of limitations is six years, which means that up to six years maybe subject to a penalty (though, usually it would be 2-4 years).

Foreign Life Insurance Policies and FBAR Reporting

Foreign life insurance policies must be reported on the FBAR if they have a cash-surrender value. Therefore, foreign life insurance policies that fall into categories two and three described above are always reportable. Investment foreign life insurance policies promoted by national governments (such as Assurance Vie accounts in France) are reportable even if they are considered to be held by a foreign trust (such as Superannuation Accounts in Australia).

The first category of foreign life insurance policies I listed above (i.e. life insurance policies without any cash-surrender value) are not likely to be reportable, but there are exceptions.

The determination of whether your foreign life insurance policies are reportable on the FBAR should be made by an international tax attorney; I strongly discourage any attempt by US taxpayers to make this determination without legal assistance.

Foreign Life Insurance Policies and Other Reporting Requirements

It is important to note that other US reporting requirements may apply to foreign life insurance policies. Examples include FATCA Form 8938, PFIC compliance, foreign trust reporting, et cetera.

Contact Sherayzen Law Office for Help With Foreign Life Insurance Policies

If you have foreign life insurance policies, contact Sherayzen Law Office for assistance as soon as possible. Foreign life insurance policies can be extremely complex and the US reporting requirements associated with them vary from country to country. Sherayzen Law Office has accumulated tremendous experience in dealing with foreign life insurance policies from Australia, Canada, New Zealand, Europe and Asia. We can help You!

Contact Us Today to Schedule Your Confidential Consultation!