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FBAR Criminal Penalties

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Hello and welcome to Sherayzen Law Office Video Blog. My name is Eugene Sherayzen and I’m an International Tax Attorney and owner of Sherayzen Law Office, Ltd.

We’re continuing a series of blogs from the Czech Republic, Prague. Today I would like to talk more about FBAR Penalties. In a recent blog, I described the Civil FBAR Penalties and today I would like to answer a question that worries a lot of US Taxpayers with Undisclosed Foreign Accounts, including foreign accounts in the Czech Republic.

Can FBAR Penalties be Criminal? The answer unfortunately, is Yes. The FBAR Penalties in grave situations may carry a sentence of up to five years in prison and if the FBAR Penalties are combined with noncompliance with other US Tax Laws then the potential sentence can be increased to up to ten years in prison.

If you would like to learn more about FBAR Criminal Penalties and how to avoid them, go on my website: Sherayzenlaw.com or contact me directly at (952) 500-8159 or email me at: [email protected].

Thank you for watching, until the next time.

International Tax Lawyer Twin Cities | Introduction to Law Firm

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Before we delve into the subject matter of today’s discussion, I’d like to introduce myself so that you know a little bit about who I am and what it is I do.

I know that about half of you already know but the other half does not. As I’ve just said in my crude French a minute ago, I’m an international Tax Lawyer and owner of Sherayzen Law Office, Ltd., a law firm that specializes in International Tax Compliance, in particular Offshore Voluntary Disclosures and this is by far my biggest area of law or sub-area: Annual US Tax Compliance, IRS Audits and Appeals and International Tax Planning.

I’ve dealt with clients from over 60 countries with assets around the world including Francophone countries like France, Belgium, and Switzerland – the French part of Switzerland and even some French speaking African countries.

Unfortunately, I only offer my services in three languages at this point: English, Russian and Spanish but maybe in a couple of years I’ll do it in French as well.

US Business Tax Lawyer | Tax Definition of Business Owner

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The Tax Owner is really a Holder of Economic Interest, not necessarily the Legal owner of the actual entity.

Let me clarify that with an example. Let’s say this is a Taxpayer; this is the LLC and he owns 100% of that LLC. The LLC owns 50% of the Limited Partnership. The Taxpayer owns 50% of the Limited Partnership.

How many entities do we have for US Tax Purposes? Does anyone want to take a gander? The Taxpayer is not an entity. There’s a maximum of two available.

Anyone else want to guess? None. There are no entities for US Tax Purposes here.

This is Disregarded because it’s 100% owned. Because there’s one, a single Holder of Economic Interest, the Taxpayer from both sides is basically that the Taxpayer’s being treated as 100% Disregarded Entity.

You cannot have a one Partner; there’s always got to be at least two Partners. So, the Taxpayer owns the assets of the LP and the LLC directly for US Tax Purposes. That’s what I mean by the Holder of Economic Interest.

International Tax Lawyers Duluth | Definition of US Owners

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US Owners: I listed out for you what US Owner means.

It’s US Citizens, US Tax Residents, meaning Permanent Residents and a person who has satisfied the US Presence Test, Non-residents who declare themselves as Tax Residents for the purposes of filing a joint tax return are also considered to be US Owners.

Residents of Puerto Rico and all other US Possessions are also considered to be US Owners.

Determination of Whether a Business Entity Exists | FACC Seminar October 19 2017

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The question of a Business Entity actually involves a complex analysis and I lay out some of it here; it is a very simplified analysis but basically the very first question that we have to ask is: Is there a Business Entity?

I’m going to jump to the point 1b right away. Suppose that ‘Pierre’ a French National and let’s say ‘John’ a US National come together in Paris over a glass of wine and they decide: ‘You know what? Why don’t we sell product X on the streets of Paris? We’re going to sell it together; then divide it up – profits and that’s it. Each of us will report it on the French Tax Return: our share of profit and that’s it.’

Did they create an entity? Or let’s put it this way: Do you think they created an entity under French Law? Audience member answer: ‘No.’ Most likely, No. French Law is a civil law system; they wouldn’t apply the Common Law Partnership concept.

But US Law would and when it comes to determining whether there is or there isn’t a business entity in existence, it’s the US Federal Law that will dominate. We always go to US Federal Law to determine whether there is identity or not and probably in this case they created a Common Law Partnership which means they have created a Partnership for tax purposes which I will explain the difference in a second.

The second question that we have to ask is: Is this a Business Entity or Trust? I’m not going to spend much time on it because it’s a huge topic, but one thing I will mention here just so that I know that some of you may have clients or deal with investment trusts outside of the United States if an Investment Trust happens to have one class of beneficiaries, most likely it is a Trust. If it has more than one class of beneficiaries, most likely it is a Corporation.