US–Hungary Totalization Agreement Enters Into Force

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On September 1, 2016, the US–Hungary Totalization Agreement entered into force. In this article, I will briefly discuss the main benefits of this Agreement to US and Hungarian nations.

US–Hungary Totalization Agreement: What is a Totalization Agreement?

The Totalization Agreements are authorized by Section 233 of the Social Security Act for the purpose of eliminating the burden of dual social security taxes. In essence, these are social security agreements between two countries that protect the benefit rights of workers who have working careers in both countries and prevent such workers and their employers from paying social security taxes on the same earnings in both countries.

Usually, such a situation arises where a worker from country A works in Country B, but he is covered under the social security systems in both countries. In such cases, without a totalization agreement, the worker has to pay social security taxes to both countries A and B on the same earnings.

US–Hungary Totalization Agreement Background

The US–Hungary Totalization Agreement was signed by the United States and Hungary on February 3, 2015 and entered into force on September 1, 2016. This means that Hungary now joined 25 other countries – Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, South Korea, Spain, Sweden, Switzerland and the United Kingdom – that have similar Totalization Agreements with the United States.

US–Hungary Totalization Agreement: Key Provisions

There are three key provisions of the US–Hungary Totalization Agreement which are relevant to Hungarian and US workers. First, protection of workers’ benefits and prevention of dual taxation. US workers who work in Hungary and are already covered under Hungarian social security system should be exempt from US social security payments, including health insurance (under FICA and SECA only), retirement insurance, survivors and disability insurance contributions. However, US–Hungary Totalization Agreement does not apply to the Medicare; US employees must still make sure that they have adequate medical insurance coverage. Similarly, Hungarian workers who work in the United States and are already covered by the US social security system should be exempt from Hungarian social security taxes.

The second key provision of the US–Hungary Totalization Agreement provides for a Certificate of Coverage. The Certificate can be used by an employee to remain covered under his home country’s social security system for up to 60 months. Additional extensions are possible upon approval by the host country.

Finally, under the US–Hungary Totalization Agreement, workers may qualify for partial US benefits or partial Hungarian benefits based on combined (or “totalized”) work credits from both countries. This means that, where there is insufficient number of periods (or credits in the United States) to claim social security benefits, the periods of contributions in one country can be added to the period of contributions in another country to qualify to these benefits.

Contact Sherayzen Law Office for US Tax Issues Concerning Hungarian Assets and Income

If you have foreign accounts and other assets in Hungary and/or income from these Hungarian assets, contact Sherayzen Law Office for professional help. We have helped hundreds of clients throughout the world, including in Hungary, with their US tax issues and we can help you!

Miami FBAR Lawyer | Foreign Accounts Tax Attorney

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Are you looking for a competent Miami FBAR Lawyer to help you with the filing current or delinquent FBARs? Then, you need to understand who is considered to be a Miami FBAR Lawyer and why you should retain the services of Sherayzen Law Office, Ltd. – an international tax law firm that provides FBAR services to Miami residents.

Miami FBAR Lawyer Definition: Legal FBAR Services Provided in Miami, Florida

The definition of a Miami FBAR lawyer is determined based on the geographical spread of a lawyer’s legal services (i.e. where a lawyer offer his legal services) rather than his physical presence. This means that as long as a lawyer offers his FBAR services in Miami, Florida, he will be regarded as a Miami FBAR lawyer.

The reasoning for this definition is rather straightforward – FBAR is a creation of federal law, not state law. This means a lawyer can provide his services in Miami in the area of US international tax law and specifically FBARs irrespective of his actual location (but as long as he is licensed to practice law in any of the 50 states or District of Columbia).   Mr. Eugene Sherayzen of Sherayzen Law Office, Ltd. is an excellent example of such a lawyer -he is physically located in Minneapolis, but successfully provides FBAR services to its clients who reside in Miami.

What are these FBAR services? Mr. Sherayzen helps his clients with current (on-going) FBAR compliance as well as FBAR voluntary disclosures in cases where his clients did not timely comply with their required FBAR filings.

Miami FBAR Lawyer Must Be an International Tax Lawyer

Unlike location, the competence of a lawyer should be the key factor in retaining the services of a Miami FBAR lawyer. The knowledge of FBARs and US international tax law should be the key consideration in this matter.

Why is competence in US international tax law so important? Two Reasons. First, FBAR forms part of a much bigger area of US international tax law. Second, in almost all cases, the FBAR issues are highly related to other international tax compliance requirements. In fact, the interaction between FBAR and other international tax issues is one of the main considerations that determines a taxpayer’s legal position. This is why your Miami FBAR lawyer should be an expert not just FBARs, but US international tax law in general.

Miami FBAR Lawyer: the Local Ease-of-Communication Myth

There is a substantial minority of persons who prefer, in spite of all of the factors in favor of a, for example, Minneapolis-based Miami FBAR lawyer (better knowledge of the FBARs and international tax law, higher experience and sometimes even better fee structure), to retain a local Miami FBAR lawyer mainly due to their belief that it would easier to communicate and control a local lawyer.

This belief is nothing more than an illusion and can be highly harmful to a person’s case. First of all, the development of modern means of communication completely erase any purported advantages of ease of communication with a lawyer in your town. Email, Video Skype Conferences, telephone and text messages make your out-of-state Miami FBAR lawyer at least as equally accessible as your local Miami FBAR lawyer.

Second, it is simply naive to believe that your local lawyer will be meeting with you every day while the case lasts. In addition to the unnecessary expense of such a situation, the lawyer simply will not have the time or the necessity to do it. In reality, almost the entire course of communication between you and your local lawyer is going to be exactly the same as it would be between you and your out-of-state lawyer – i.e. email, telephone and even regular mail. The only exception may be your initial consultation and your final meeting; both of these meetings can be easily replaced by Skype.

Sherayzen Law Office is a Preferred Choice for Your Miami FBAR Lawyer

Sherayzen Law Office is one of the leading US international tax firms with respect to FBARs and US international tax law. Our strength lies in extensive knowledge of the subject matter and large experience concerning all major relevant areas of international tax law including offshore voluntary disclosures (in fact, we are one of the few firms which advised clients regarding all major IRS voluntary disclosure programs, including 2009 OVDP, 2011 OVDI, 2012 OVDP and 2014 OVDP, as well as Streamlined Procedures (Domestic and Foreign)).

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

Sarshar Guilty Plea & Undisclosed Israeli Bank Accounts | FBAR Lawyer

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On August 1, 2016, the IRS scored another victory in a case involving Israeli Bank Accounts; the IRS and the DOJ announced that Mr. Masud Sarshar, a California businessman, was charged with one count of conspiracy to defraud the United States and one count of corruptly endeavoring to impair and impede the due administration of the internal revenue laws. Mr. Sarshar already signed a plea agreement agreeing to plead guilty and pay more than $8.3 million in restitution to the IRS. If the court accepts the parties’ agreement, Mr. Sarshar will be sentenced to 24 months in prison. Additionally, Mr. Sarshar agreed to pay a civil FBAR penalty in the amount of 50 percent of the high balance of his undeclared accounts for failure to disclose his Israeli bank accounts.

Facts of the Sarshar Case

Mr. Sarshar owned and operated Apparel Limited Inc., a clothing design business. Under his plea, he admitted that, between 2006 and 2009, he used unreported bank accounts at Bank Leumi and two other Israeli banks to hide $21 million of business revenue from the IRS. The accounts were owned by him personally and in the name of entities that he created with assistance of at least two relationship managers at the Israeli banks.

Between 2007 and 2012, Mr. Sarshar also earned more than $2.5 million in interest income from these accounts; none of this income was reported on his individual and corporate tax returns. No FBARs were ever filed.

In order to use the funds on his accounts, Mr. Sarshar utilized a creative stratagem where Bank Leumi would loan funds to Mr. Sarshar through its U.S. branch while the funds in Israel were used as a collateral. Mr. Sarshar was able to bring back to the United States approximately $19 million of his offshore assets without creating a paper trail or otherwise disclosing the existence of the offshore accounts to U.S. authorities.

What is particularly surprising about this case is the creativity of the Israeli bankers in getting the information to Mr. Sarshar. At Mr. Sarshar’s request, none of the banks sent him account statements by mail; rather, they provided them to him in person in Los Angeles. In order to conceal the statements, a Bank Leumi banker would upload the account statements on a USB drive which she concealed in necklace worn during her U.S. trips. Sometimes, the meetings with bankers occurred in Mr. Sarshar’s car. Moreover, the Israeli bankers also advised Mr. Sarshar to obtain Israeli and Iranian passports to prevent him from being flagged as a U.S. citizen by the compliance departments at both banks.

Lessons of the Sarshar Case

Several lessons and conclusions can be drawn from this case. The first conclusion is that the IRS continues to focus on Israeli banks in its tax enforcement efforts. The focus on Israel is something that Sherayzen Law Office has repeatedly stated in the past. Again, we want to repeat our prediction that we will see more cases involving Israel and other countries outside of Switzerland. This means that, if you have undeclared bank accounts in Israel, you are at an increased risk of detection and prosecution by the IRS. This lesson can be expanded into a general statement that you run a high risk of getting caught by the IRS if you have undisclosed foreign accounts in any country that has implemented FATCA.

The second lesson that can be drawn from the Sarshar case is that he should have entered into a voluntary disclosure program while he had a chance to do it. It is very important to understand that, in a willful situation, using the IRS offshore voluntary disclosure program is indispensable to prevent the imposition of higher penalties and a criminal prosecution.

The third lesson is that Sarshar case reaffirms the most common fact pattern that leads to IRS criminal prosecution – willful divergence of U.S. earnings to overseas accounts to avoid taxation, the usage of entities to hide the ownership of foreign accounts and persistence in violation of U.S. laws. Even one of these factors might have been sufficient for the IRS to commence a criminal investigation; in this case, all three were present.

Contact Sherayzen Law Office if You Have Undisclosed Foreign Accounts in Israel or Any Other Country

If you have undisclosed foreign accounts in Israel or any other country, contact Sherayzen Law Office for legal help. Our experienced team of international tax professionals, headed by our founder and international tax attorney Eugene Sherayzen, can help you resolve all of your tax problems in the United States.

Contact Us Today to Schedule Your Confidential Consultation!

Austin Foreign Trust Lawyer | FATCA IRS Attorney

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If you reside in Austin, Texas, and you are a US beneficiary or a US owner of a foreign trust, you need the help of an experienced Austin Foreign Trust Lawyer as soon as possible due to very high penalties associated with US tax noncompliance regarding foreign trust reporting. However, a question arises: who is considered to an Austin Foreign Trust Lawyer?

Austin Foreign Trust Lawyer Definition: Legal Services Provided in Austin, Texas

It is first important to understand that the definition of an Austin Foreign Trust Lawyer is not limited by the physical presence of the lawyer in Austin, Texas. On the contrary, any international tax lawyer can be an Austin Foreign Trust Lawyer as long as he offers legal and tax services related to foreign trusts in Austin, Texas. This means that your foreign trust lawyer can reside in Minneapolis and still be considered as Austin Foreign Trust Lawyer even if he has never been to Austin.

Why? The answer is rather simple – the federal reporting requirements concerning foreign trusts are prescribed by federal law which can be practiced by any attorney who is licensed in any state of the United States. Since the focus is on the federal tax compliance, the physical residence of your foreign trust lawyer does not matter.

Austin Foreign Trust Lawyer Must Be an International Tax Lawyer

What really matters is the experience and knowledge of your Foreign Trust Lawyer with respect to foreign trusts and US international tax law that concerns foreign trust. Furthermore, a foreign trust lawyer should be aware of all areas of US international tax law that are indirectly related to foreign trusts in order to provide a proper advice to his clients.  Thus, the competence of your lawyer should be the most important criteria in your selection of an Austin Foreign Trust Lawyer.

Sherayzen Law Office Can Be Your Austin Foreign Trust Lawyer

If you are looking for a competent Austin Foreign Trust Lawyer, Sherayzen Law Office should be your choice. Sherayzen Law Office occupies a leading position in the world on this subject with extensive knowledge and experience concerning all major relevant areas of US international tax law including Form 3520, Form 3520-A, PFIC compliance, FATCA, FBAR and other relevant requirements. We have helped numerous taxpayers with their foreign trust issues, including situations involving multiple trusts and multiple jurisdictions. We have also helped our clients defend against IRS attempts to make our clients owners of a foreign trusts where, in reality, they were simply beneficiaries.

This is why, if you are looking for an Austin Foreign Trust Lawyer, you should contact Sherayzen Law Office today to schedule Your Confidential Consultation!

Denver FBAR Lawyer | Foreign Accounts Tax Attorney

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Finding a good Denver FBAR Lawyer is not easy, especially if you do not know what exactly Denver FBAR Lawyer means. In this essay, I will define what lawyers fit into the definition of a Denver FBAR Lawyer and why you should retain the services of my firm, Sherayzen Law Office, Ltd.

Denver FBAR Lawyer Definition: Legal FBAR Services Provided in Denver, Colorado

Some of the readers may be surprised to learn that the definition of a Denver FBAR Lawyer is not limited by the physical presence of the lawyer. Rather, a Denver FBAR Lawyer is any international tax lawyer who offers legal and tax services related to FBARs in Denver, Colorado. This means that your FBAR lawyer can reside in Minneapolis and still be considered as Denver FBAR Lawyer even if he has never been to Denver.

Why is that? The reason is simple: FBAR is federal law, not state law; i.e. the city of Denver and the State of Colorado have absolutely nothing to do with the implementation of FBAR. Since there is no local input, the physical residence of your lawyer gives you no advantage whatsoever when it comes to legal services related to FBARs.

Denver FBAR Lawyer Must Be an International Tax Lawyer

While the physical location of a your FBAR lawyer is irrelevant, his competence in FBARs and the US international tax law is an indispensable quality. It is important to understand that, in the great majority of cases, the FBAR issues are tightly intertwined with other international tax compliance requirements, and it is the interaction between the FBAR and other international tax issues that is relevant to the determination of a taxpayer’s legal position. This is why your Denver FBAR lawyer should be highly knowledgeable in other areas of international tax law in addition to FBARs.

Denver FBAR Lawyer: the Convenience of Communication

Perhaps, while the readers agree that the definition of a Denver FBAR lawyer should include any experienced international tax lawyer who provides FBAR-related services in Denver, they may still point to old belief of the ease of communication with a local lawyer. In essence, this myth holds that while an out-of-state FBAR lawyer may be more competent in international tax law, it is better to rely on a local FBAR lawyer because it would be easier to communicate with him.

This myth is simply incorrect, because it does not take into account the development modern communications technology and it incorrectly represents a client’s communication with their Denver FBAR lawyer.

The modern communications technology has virtually eliminated the entire advantage of retaining a local Denver FBAR Lawyer. Email, telephone, fax and Skype video conferences provide ample opportunities to communicate with your lawyer wherever he is and at any point of time. In fact, as an international tax lawyer, I have continuously relied on these means of communication to successfully represent all of my out-of-state clients, including Denver, Colorado. There has not been a single case where my geographical location was of any importance.

Furthermore, it is important to understand that, aside from the initial consultation (which can also be conducted on Skype or telephone), almost all of your communication with a local Denver FBAR lawyer will be through the same modern means of communication – email and telephone. This means that 98% of communication between you and your lawyer will be done in the same manner irrespective of whether he resides in Denver!

Sherayzen Law Office is a Top Choice for Your Denver FBAR Lawyer

Sherayzen Law Office occupies a leading position in the world on this subject with extensive knowledge and experience concerning all major relevant areas of international tax law including PFIC compliance, Subpart F rules, all types of US international reporting returns, US income tax returns (individual, partnership and corporate) for domestic and foreign persons, et cetera. Furthermore, this 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 Denver FBAR lawyer, contact Sherayzen Law Office, Ltd. today to schedule Your Confidential Consultation!