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Portland Oregon International Tax Lawyer: Streamlined Disclosure of Foreign Inheritance in Thailand

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Hello and welcome to Sherayzen Video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

Today, I’m continuing a series of blogs from Portland, Oregon. As part of the series, I’m discussing the cases that I’ve handled in the past with respect to Asian Americans and Asians who became US tax residents and today I’d like to talk to you about a case from Thailand that I had a few years ago. The essence of this case is foreign inheritance.

A client came to me a few years actually after receiving a sizeable foreign inheritance. As it turns out to be the case, this was not only issue. It appears that before his death, her father actually gifted her a large number of accounts in Thailand, all of them in Thai Bahts. None of these accounts were ever disclosed to the IRS on FBAR or Form 8938. When my client came to me, we could immediately identify several problems: FBAR, Form 8938 and Form 3520. As we started digging deeper into her assets, it turns out that a large amount of her assets were invested in life insurance policies. Now, Thai life insurance policies come in two parts: Simple life insurance policies and Investment life insurance policies.

When we talk about investment-type life insurance policies, we’re talking about PFIC compliance; these are almost always foreign mutual funds that they’re invested into. In addition to all of the forms I have mentioned, we also needed to do tax compliance concerning Form 8621.

The case was not an easy one but thankfully everything went well; we’ve done our due diligence; we’ve discovered all of the accounts, identified all of the compliance issues, we’ve completed the Streamlined Domestic Offshore Procedures disclosure and the IRS accepted it. There was no follow-up audit with respect to this voluntary disclosure.

This is a good example of how complex foreign inheritance compliance can be. It’s not only about the assets that you inherit, it’s also (about) the assets you had before that. It’s understanding the history of the foreign inheritance; it’s understanding the relationship in the family. It’s being diligent and getting through all of the facts in the case: analyzing the primary documents, bank statements etcetera.

I’ve handled hundreds of voluntary disclosures and I can tell you that every one of these has it’s certain individual face: meaning it has its own characteristics which are unlike any other case. Now, some of the cases, of course can be very similar but there’s always something in that particular case that will differ this case from another.

In the next blog, I will continue talking about my experience with respect to doing voluntary disclosures for Asian Americans and Asians who became US tax residents.

Thank you for watching, until the next time.

Portland Oregon International Tax Attorney: FBAR Case Study for Indian Bank Accounts

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Hello and welcome to Sherayzen Video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

Today, I’m continuing a series of blogs from Portland, Oregon. As part of this series, I’m doing a review of my cases related to Asian Americans or Asians who became US tax residents.

Today, I’d like to focus on India; on a case which is overall pretty ordinary except in one aspect: the number of accounts. In this case, a married couple from India (they’ve lived in the United States for a number of years, but they were still here on the H-1 Visa) and they came to me because they discovered the existence of FBAR. What in particular they discovered was is that foreign bank accounts need to be reported on FBAR. In their minds, a bank account really means a bank account, meaning a checking account or a savings account.

When they came to me, they told me that they had 15 bank accounts overall and it is very common in India to spread out your holdings over various banks. They had 15 accounts in four different banks. However, it turns out that instead of having 15 savings or checking accounts, the clients had also over 150 fixed-deposit accounts. In their mind, a fixed-deposit account was not a separate account; it is an account linked to a checking account or savings account.

However, when we talk about FBAR, we have to report all bank accounts separately; whether they are fixed-deposit accounts, checking accounts or savings accounts. We have to report each of them, no matter how short-lived they are – meaning if they were opened and closed even for one day, that would be enough to make it a reportable account for FBAR purposes. It also does not matter whether the funds from these accounts go back to the same checking account or savings account; all of these accounts are reportable. On top of that, this client also had about 10 mutual funds and about 7 (if my memory serves me well) life insurance policies.

I’ll talk a little later in another blog about Indian mutual funds and how they should be reported. This case is very important to understand that fixed-deposit accounts have to be separately reflected on FBARs.

It’s also important to understand that often times, you have to do your independent investigation of your client assets. A diligent attorney should always do an independent investigation of his clients’ assets; not to the point of intruding into clients’ affairs but asking the client if he sees something in the bank accounts that does not correspond with reality. The way I discovered there were fixed-deposit accounts was simply looking at the bank statements. It’s very important to look at the primary documents in order to understand how many accounts you have and what kind of reporting should be expected on FBAR and Form 8938.

In the next blog, I will continue my series of blogs related to Asians who became US tax residents and Asian Americans.

Thank you for watching, until the next time.

FBAR Reporting for Chinese Foreign Bank Accounts: A Case Study | FBAR Tax Lawyers Portland Oregon

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Good morning and welcome to Sherayzen Video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

Today, I’m continuing a series of blogs from Portland, Oregon. As part of this series, I’m doing a review of my cases related to Asian Americans or Asians who became US tax residents.

Today, I’d like to talk to you about a small but interesting case related to FBAR reporting. A Chinese couple has lived in the United States for over 20 years and discovered the existence of FBAR. My clients understood that FBAR requires the disclosure of foreign bank accounts.

They came to me and said: “We have four bank accounts” and I said, “Fine, we’ll do a voluntary disclosure“. They gave me the amounts, they gave me the information and as I was going through the bank accounts, I discovered that there were a lot of deposits and withdrawals; a pattern compatible with that of fixed-deposit accounts. At that point, I asked them: “Besides the four bank accounts you’ve given me, do you have any other accounts which would be fixed-deposit accounts?” At this point, he said: “I didn’t realize that fixed-deposit accounts are treated as separate accounts because all of the money eventually goes back to the main account. Wouldn’t we be double-counting the values on these accounts if we were to include all of them separately on the FBAR?”

My answer was: “Indeed, we would be double-counting but FBAR not only permits but requires that kind of double-counting. You have to report the highest balance of each foreign account on the FBAR“. It turns out that he had over 20 fixed-deposit accounts during a six-year period that is covered by the SDOP disclosure.

We successfully completed the voluntary disclosure; The client paid the penalty. Of course the penalty for SDOP purposes does not double-count the balances because it is based not on the highest balances but on the end-of-year balances.

The morale of the story is that you have to report each account separately; even if this is just an account that was opened and closed in the same year and even if the money came from and went back to the same savings account or checking account.

In my next blog, I will continue discussing issues related to my cases that I’ve handled in the past concerning Asian Americans or Asians who became US tax residents.

Thank you for watching, until the next time.

US Owners’ Tax Reporting Requirements for Uruguayan Corporations | International Tax Attorney

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Hello and welcome to Sherayzen Video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

Today, I’m continuing a series of blogs from Montevideo, Uruguay and in this blog, I’d like to continue discussing what I started in the previous blog: US international tax reporting requirements for US citizens and US tax residents in general who engage in tax planning here in Uruguay who take advantage of the local territorial system of taxation.

In the previous blog, I discussed the issue of FBAR compliance; today I’d like to discuss the issue of business information reporting requirements concerning Uruguayan corporations owned by US persons.

It’s a huge topic and I am just going to outline the main things here to watch out for. First of all you have to determine how you are going to treat this corporation for US international tax reporting purposes. If you are going to treat it as a corporation and maybe by default it is a corporation; then, you will have a form 5471 requirement here in the United States, especially in the first year for sure. Otherwise, it will depend on whether this is a controlled foreign corporation or not.

The other possibility is to us the ‘check the box rules‘ to modify the default status of your Uruguayan company. If for example, it is a default corporation, you can use the check the box rules to treat the corporation either as a partnership, if that is a possibility, that is if you have more than one owner or a disregarded entity. If it’s a partnership, you are likely to trigger form 8865 depending on your specific circumstances and particularly your ownership percentage and in the case of a disregarded entity, we’re talking about Form 8858.

Besides that, we have to really focus on whether this is a controlled foreign corporation or not. The reason is because you have to understand that the controlled foreign corporation is going to be subject to various anti-deferral tax regimes like Subpart F rules or GILTI tax.

If it is not a controlled foreign corporation, you still need to worry about potential PFIC designation for your company. A PFIC (Passive Foreign Investment Company) is a very complex concept that in my experience only exists really in the United States and nowhere else. It is a concept that has huge US income tax obligations that are absolutely enormous, not to mention that it will make your life a lot harder if you have to use a default methodology.

If you would like to learn more about your US international tax compliance concerning ownership of an Uruguayan corporation, you can call me at (952) 500-8159 or you can email me at [email protected]

Thank you for watching, until the next time.

FBAR Obligations for US Owners of Uruguayan Bank Accounts | FBAR Tax Lawyer Montevideo

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Hello and welcome to Sherayzen Video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

Today, I’m continuing a series of blogs from Montevideo, Uruguay. I’d like to draw your attention in this blog to the fact that a lot of US taxpayers, who utilize Uruguayan consult – they often focus only on their Uruguayan tax compliance and they keep forgetting about the important US international tax reporting requirements that may apply to the new business structures that they create through with the help of Uruguayan tax consults. One of the first and foremost things you must remember is that if you organize an Uruguayan corporation and open a bank account in Uruguay or outside of Uruguay but not in the United States, then you will have to report your indirect ownership of the account on FBAR and possibly other forms, depending on what exactly happens in these accounts but FBAR would be the main form that you would have to contend with.

The FBAR is obviously a form that is highly important; it has tremendous draconian IRS penalties. You want to make sure that you comply with the form and it’s very easy to trigger this form. You just need to have a highest balance in excess of $10,000 at any point during the year and we’re talking about aggregate assets; so if you have two accounts, you have to figure out the highest balance for both accounts, add them up and you will see if you are required to file FBAR.

If this is a corporation which you own jointly with someone else and you don’t have the majority ownership over the corporation then, you have to look at whether you have signatory authority over the corporate accounts and if you do, then you also have to disclose that signatory authority on FBARs.

In the next blog, I will continue talking about US international tax reporting requirements concerning Uruguayan tax planning for US taxpayers.

Thank you for watching, until the next time.