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US Retirees in Mexico: US Tax Compliance | International Tax Lawyer & 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 the US-Mexico border near Laredo Texas. In the previous blog, I discussed the multiple US international tax reporting requirements concerning people from Laredo who moved to Mexico or who have business or bank accounts or any other foreign assets in Mexico.

Today I’d like to discuss or focus on the very specific group of US persons who moved to Mexico: US retirees. Unfortunately, too often, US retirees forget that when they retire in Mexico and they open up bank accounts here, they buy houses there, they buy land and they construct on it and later, they may sell it. They forget that all of these actions have US income tax consequences. For this reason, it’s important to contact your US international tax attorney as soon as possible if you decide to retire in Mexico. You need to tell your attorney exactly what it is you are planning on doing and why you plan on doing it and how you are planning on doing it. For example, I as your international tax attorney can help you determine what your US international tax reporting requirements are, what the cost of annual compliance would be, etcetera.

If you decide to retire to Mexico, you can call me at (952) 500-8159 or you can email me at [email protected]

Thank you for watching, until the next time.

New Series of Vlogs on IRS Audits | International Tax Lawyer & Attorney San Antonio

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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 starting a new series of blogs from San Antonio, Texas. In fact, behind me you will see the famous Alamo, the historical place where the Texians stood up to the Mexicans during their independence war. The whole battle with the Mexicans for independence reminds me of the battle that taxpayers are doing with respect to the IRS US international tax enforcement.

In this series, I’d like to start out with saying that right now, due to the Inflation Reduction Act that just passed in congress, we expect a humongous increase in IRS litigation and IRS audits. This whole series is going to be dedicated to IRS audits. I will cover a little bit of the international tax compliance in this series, but most of it will be focused on audits.

The first thing to say about the IRS audits is that they are never pleasant and it is best to provide documents to the IRS in a manner that would reduce the risk of an IRS audit. However, sometimes, this cannot be done.

Thank you for watching, until the next time.

US Tax Residents in Mexico: US Tax Obligations | International Tax Lawyers Laredo Texas

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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 standing on the border of the United States and Mexico near Laredo, Texas. As you can see, this is the Rio Grande that separates Mexico from the United States and you can see over there, there is the fence from the US side separating the border.

What I would like to talk to you about today is how this fence and this border affect the perception of people with respect to their US international tax compliance requirements and why many of these perceptions are absolutely wrong. A lot of people think that once they cross this river from the United States into Mexico, that their US tax reporting requirements have ended – a lot of people think they’re not responsible for anything to Uncle Sam and this is absolutely wrong.

I have seen a lot of examples, by the way of this, where people think that ‘Well, I have a business in Mexico; I’ve crossed the border. I don’t own anything to the IRS’. That is not correct. As a US citizen or a US permanent resident who maintains his US permanent residency, that is he’s not abandoning his US permanent residency, he is required to disclose his worldwide assets and worldwide income and foreign assets.

In essence, there are two reporting requirements: one is the worldwide income – that is income that is earned anywhere in the world, whether it is inside of the United States or outside of the United States, that income has to be disclosed on your US tax return and you have the obligation to disclose your foreign assets on US information returns as long as you, of course, satisfy the filing threshold. For example, if you have foreign bank accounts, this means that you need to disclose these foreign bank accounts on forms like FBAR and Form 8938 as long as you satisfy the threshold. If you have a foreign business, if it is a foreign corporation, then you have to disclose it on Form 5471 as well as related forms concerning the transactions between you and the corporation, or certain transactions that the corporation performs. For a controlled foreign partnership, it’s Form 8865 and if you have a disregarded entity, then it’s form 8858, etc etc.

Basically the point being said: if you have foreign assets, you have to disclose them to Uncle Sam irrespective of whether you reside in the United States or outside of the United States on the other side of the border in Mexico. All of these obligations are very important; they carry significant noncompliance penalties and you want to make sure that you avoid them.

The other important thing to understand is that your obligations to the IRS, once you cross the border, not only will they not decrease, they’re more likely to increase significantly vis-a-vie what you used to do while you were here in the United States. Again, this is the rule that applies to US tax residents of any type: whether you are a US permanent resident or a US citizen.

If you would like to learn more about your US international tax reporting requirements, you can call me at (952) 500-8159 or you can email me at [email protected]

Thank you for watching, until the next time.

Foreign Inheritance: US Taxation & Reporting | Form 3520 | International Tax Lawyers Austin

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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 vlogs from Austin, Texas. Today, I’d like to talk about a previous client experience here in Texas. I had a client from the United Kingdom who received foreign inheritance and it was not reported, neither were the assets he received in the subsequent years on FBAR, Form 8938 and Form 8621 for PFICs obviously.

We were talking about this situation where he essentially was deeply in noncompliance. We resolved all of the PFIC issues in a very interesting way. It was from awhile ago from the old OVDI program from 2011 and in that case, were were able to choose a different PFIC calculation methodology, mark to market which resulted in recognition of significant losses for the client which pretty much which pretty much wiped out his US income tax liability.

Of course, he still needed to pay the OVDI penalty on his foreign assets but we were able to put them in a middle category where his reporting and his penalty was also lower than what it would’ve been otherwise. That is in essence an old but very memorable case because of the fact that it came from the United Kingdom with respect to such a wide array of reporting requirements: foreign inheritance, FBAR, 8938, 8621. The only thing he didn’t have were foreign businesses; otherwise that would’ve been even more of a complicated case because a lot of rules were in flux at that point that gave a lot of opportunities with respect to lowering his income tax liability and his offshore penalty.

In the next vlog, I will continue talking about my prior client experience here in Austin, Texas.

Thank you for watching, until the next time.

Foreign Inheritance & US International Tax Issues | Form 3520 Lawyer & Attorney Austin Texas

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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 my series of blogs from Austin, Texas. In this series of blogs, I’m talking about the US tax reporting requirements that concern immigrants who came to live and work in Austin.

Today, I would like to discuss a very important topic of foreign inheritance. Foreign inheritance, as I’ve said in one of my seminars, is a Pandora’s box of US tax reporting requirements because it’s not only about the reporting of foreign inheritance itself, but also the continuous reporting requirements that may stem from the original foreign inheritance. These reporting requirements may continue for many many years and can be very diverse; so let’s discuss first things first.

Is foreign inheritance taxable in the United States? The answer is usually ‘no’. Of course, US situs property inherited in the United States may be taxed in the United States and the reporting and taxation requirements, will apply to the foreign estate, not to the person who inherited the asset.

The second question is: Is foreign inheritance reportable in the United States? The answer to this question is absolutely, yes. It is highly important that you disclose your foreign inheritance in a timely manner here in the United States. Failure to do so on form 3520, may lead to the imposition of absolutely humongous penalties, up to 25% of the foreign inheritance. I have seen personally, where the IRS imposed penalties like these and I had to fight them.

The other aspect that I mentioned, are the reporting requirements that are associated with foreign inheritance, because usually people inherit assets. That means foreign assets; that means sometimes foreign financial accounts. It may mean foreign businesses; it may mean a foreign trust or beneficiary interest. It may mean other foreign financial assets likely bonds or bond certificates; it also may mean real estate. These foreign assets, which were inherited, may have and usually do have special reporting requirements associated with each of these assets and sometimes, even if they don’t, aside from the Form 3520 reporting of inherited real estate, there may not be any other reporting requirements for the real estate because personally, there may be income tax reporting requirements that are tied to your Form 3520 compliance and may reappear all of a sudden 10, 15, 20 years later.

In some cases, a foreign inheritance may be tied to an IRS audit and there, it could be very significant. For example, I’ve had audits where we had to go back to the 1980s with respect to foreign inheritance and establishing the fair market value of those assets.

Foreign inheritance is not just one reporting requirement; it’s a whole family of reporting requirements that may come in sometimes at the time of a foreign inheritance as well as after the foreign inheritance.

If you would like to learn more about your foreign inheritance reporting requirements, you can contact me at [email protected] or call me at (952) 500-8159.

Thank you for watching, until the next time.