International tax lawyer, FBAR lawyer, FATCA lawyer, FBAR tax lawyer, international tax attorney, international tax lawyers, international tax attorney Minneapolis, international tax attorney New York, international tax lawyer Minnesota

IRS Audit Preparation With Annual Tax Compliance | IRS International Tax Audit Lawyer San Antonio

/in /by

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 San Antonio, Texas. In this series of blogs, I discuss issues related to IRS audits. In the previous video, I mentioned that the Inflation Reduction Act provided a humongous sum of money to the IRS to hire new IRS agents to conduct field audits. In fact the IRS said that it has plans to increase its staff by 40,000 people; this is an enormous amount of people. This means that the capacity of the IRS to audit US taxpayers is going to increase manifold.

In the previous video, I also mentioned that it is important for taxpayers to start preparing for an IRS audit before it actually happens. What does it mean to be preparing for an IRS audit? First of all, the preparation for an IRS audit must begin before a tax return is ever submitted, meaning that all tax positions that you are taking should be well documented and even better, if they’re not only documented but also disclosed to the IRS. That is do not take a position, with respect to a tax issue and not disclose it to the IRS. If the IRS later disagrees with you, they may think that you actually did it intentionally or tried to hide something. In this case, in order to avoid this issue, it is better to basically disclose it in a small statement saying, for example, “based on the IRC section internal revenue code, we’re taking the position that this and this and this must happen”. That’s it; a small statement, you don’t have to provide a huge analysis, just disclose it to the IRS either as an IRS audit at that point, the IRS cannot claim willfulness in your approach as long as your position is reasonable of course, based to a degree on certain facts.

Preparation for an IRS audit must happen already when the tax return is being prepared and submitted to the IRS; that’s the first stage.

The second stage is to get supporting documentation, organize it and that means not only getting the bank statements or statements from your broker but it also means getting the statements from third parties in support for your position – that’s the second stage of preparation.

The final stage of the preparation for an IRS audit involves saving all of that information; that is very important. Many people think that once they have prepared everything and put everything together, that it is enough. In reality, there may be years before an IRS audit happens and if you do not have this information, you will not be able to prove to the IRS that you once had it. Please make sure that you safeguard the information related to a possible audit.

In the next video, I will discuss how an IRS audit begins.

Thank you for watching, until the next time.

US Retirees in Mexico: US Tax Compliance | International Tax Lawyer & Attorney

/in /by

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

/in /by

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

/in /by

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

/in /by

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.