Posts

Colombian Bank Accounts | International Tax Lawyer & Attorney Miami

Even today many US owners of Colombian bank accounts remain completely unaware of the numerous US tax requirements that may apply to them. The purpose of this essay is to educate these owners about the requirement to report income generated by these accounts in the United States as well as the FBAR and FATCA obligations concerning the disclosure of ownership of Colombian bank accounts to the IRS.

Colombian Bank Accounts: Individuals Who Must Report Them

Before we discuss the aforementioned requirements in more detail, we need to determine who is required to comply with them. In other words, is every Colombian required to file FBAR in the United States? Or, does this obligation apply only to certain individuals?

The answer is very clear: only Colombians who fall within one of the categories of US tax residents must comply with these requirements. US tax residents include US citizens, US Permanent Residents, an individual who satisfies the Substantial Presence test and an individual who properly declares himself a US tax resident. There are important exceptions to this general rule, but, if you fall within any of these categories, you need to contact an international tax attorney as soon as possible to determine your US tax obligations concerning your ownership of Colombian bank accounts.

Colombian Bank Accounts: Income Reporting

All US tax residents are subject to the worldwide income reporting requirement. In other words, they must disclose on their US tax returns not only their US-source income, but also their foreign income. The latter includes all bank interest income, dividends, royalties, capital gains and any other income generated by Colombian bank accounts.

The worldwide income reporting requirement also requires the disclosure of PFIC distributions, PFIC sales, Subpart F income and GILTI income. These are complex requirements which are outside the scope of this article, but US owners of Colombian bank accounts need to be aware of the existence of these requirements.

Colombian Bank Accounts: FinCEN Form 114 (FBAR)

FinCEN Form 114, the Report of Foreign Bank and Financial Accounts (commonly known as “FBAR”) mandates US tax residents to disclose their ownership interest in or signatory authority or any other authority over Colombian bank and financial accounts if the aggregate highest balance of these accounts exceeds $10,000. Every part of this sentence has a special significance and contains a trap for the unwary.

The most dangerous of these traps is the definition of an “account”. The FBAR definition of account is much broader than how this word is generally understood by taxpayers. For the purposes of FBAR compliance, this term includes checking accounts, savings accounts, fixed-deposit accounts, investments accounts, mutual funds, options/commodity futures accounts, life insurance policies with a cash surrender value, precious metals accounts, earth mineral accounts, et cetera. In fact, it is very likely that the IRS will find that an account exists whenever there is a custodial relationship between a foreign financial institution and a US person’s foreign asset.

FBAR has its own intricate penalty system which is widely known for its severity. The FBAR penalties range from incarceration to willful and even non-willful penalties which may easily exceed the value of the penalized accounts. In order to circumvent the potential 8th Amendment challenges and make the penalty imposition more flexible, the IRS has implemented a system of self-imposed limitations, but it is a completely voluntary system (i.e. the IRS can, and in fact already did several times, disregard these limitations).

Colombian Bank Accounts: FATCA Form 8938

While Form 8938 is a relative newcomer (since tax year 2011), it has occupied a special place among the US international tax requirements. In fact, one could argue that it is currently as important as FBAR for US taxpayers with Colombian bank accounts.

The Foreign Account Tax Compliance Act (“FATCA”) gave birth to Form 8938, making it part of a taxpayer’s federal tax return. This means that a failure to file Form 8938 may render the entire federal tax return incomplete, and the IRS may be able to audit the return. Immediately, we can see the profound impact Form 8938 has on the Statute of Limitations for the entire tax return.

Given the fact that it is a direct descendant of FATCA, it is not surprising Form 8938’s primary focus is on foreign financial assets. Form 8938 requires a US taxpayer to disclose all Specified Foreign Financial Assets (“SFFA”) as long as he satisfies the relevant filing threshold. The filing thresholds differ depending on the filing status and the place of residence (i.e. inside or outside of the United States) of the taxpayer.

SFFA includes an enormous variety of foreign financial assets, including foreign bank and financial accounts. In fact, with respect to bank and financial accounts, Form 8938 is very similar to FBAR, which often results in double-reporting of the same assets. It is important to emphasize that Form 8938 does not replace FBAR, both forms must still be filed. In other words, US taxpayers should report their Colombian bank accounts on FBAR and disclose them again on Form 8938.

Form 8938 has its own penalty system which contains some unique elements. In addition to its own $10,000 failure-to-file penalty, Form 8938 directly affects the accuracy-related income tax penalties and the ability of a taxpayer to use foreign tax credit.

Contact Sherayzen Law Office for Professional Help With the US Tax Reporting of Your Colombian Bank Accounts

US international tax compliance is extremely complex. It is very easy to get yourself into trouble, and much more difficult and expensive to get yourself out of this trouble. This is why, if you have Colombian bank accounts, you should contact the experienced international tax attorney and owner of Sherayzen Law Office, Mr. Eugene Sherayzen. Mr. Sherayzen has helped hundreds of US taxpayers with their US international tax issues, and He can help You!

Contact Mr. Sherayzen Today to Schedule Your Confidential Consultation!

FBAR Safe Deposit Box Reporting | FBAR Tax Lawyer & Attorney

One of the most common questions that US taxpayers have is regarding FBAR Safe Deposit Box reporting requirements. While the general answer is clear, there may be complications in certain cases.

General FBAR Safe Deposit Box Reporting Requirements

In general, a safe deposit box is not considered to be a financial account and, therefore, not reportable on FBAR.

This is a general rule and it is important to understand that it applies only to a safe deposit box – i.e. an individually secured container, usually held within a larger safe or bank vault. It is important to understand that the bank vault itself is NOT a safe deposit box. In fact, if you were to store gold in a bank vault with bank employees able to directly and legally access the contents of your storage, you would create a reportable account.

The most common example of accounts created by storing items in a bank vault are precious metals, particularly gold and silver (but also any other similar accounts, such as rare minerals accounts).

Exception: FBAR Safe Deposit Box Reporting May Arise If Custodial Relationship Is Established With Respect to the Safe Deposit Box

The great majority of cases are easily resolved under the general rule. However, as I hinted at above, an FBAR safe deposit box reporting requirement may arise if the owner of a safe deposit box enters into a custodial relationship with respect to this safe deposit box.

In such situations, a foreign financial institution is usually given direct legal access to the safe deposit box, is responsible for the safety of its contents and may change the contents according to the instructions from the box’s owner. Of course, in such a case, a safe deposit box can hardly be called in such a way and becomes very similar to a regular bank vault account.

This exception is very rare. I have personally encountered such exceptions only in the context of precious metals accounts.

Contact Sherayzen Law Office for Professional Help With Your FBAR Reporting Requirements

If you need professional help with your FBAR filings, or if you have not timely filed your FBARs for past years and need to resolve your past tax noncompliance, please contact Sherayzen Law Office. Our experienced legal team of tax professionals, headed by our international tax attorney Eugene Sherayzen, will thoroughly analyze your case, determine the US tax reporting requirements that may apply to your case, develop your voluntary disclosure plan and implement it.

Contact Us Today to Schedule Your Confidential Consultation!

Boulder FBAR Lawyer | Offshore Accounts Tax Attorney

The definition of a Boulder FBAR Lawyer is much broader than many people believe. In this brief essay, I would like to explain who is considered to be a Boulder FBAR Lawyer and why you should retain the services of Sherayzen Law Office, Ltd. for professional help with your FBAR issues.

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

Obviously, the definition of a Boulder FBAR lawyer includes all FBAR lawyers who are physically located in Boulder, Colorado, and offer services there. However, this definition also includes every international tax lawyer who offers FBAR services in Boulder, Colorado,

This is the case because FBAR is a creation of federal law, not state law. This means that, irrespective of his physical location, an international tax lawyer can provide his FBAR services in Boulder as long as he is licensed to practice law in any of the 50 states or District of Columbia. What is really important is the competence and experience of an international tax lawyer, not his residence in Boulder.

Boulder FBAR Lawyer’s Knowledge of US International Tax Law is the Key Factor

Indeed, the competence of a lawyer should be the key factor in retaining the services of a Boulder FBAR lawyer. The level of competence of an FBAR lawyer depends on his knowledge of and the experience in US international tax law in general and FBARs specifically.

Why this emphasis not just on FBARs, but competence in US international tax law? First, FBAR forms just a part of a much bigger area of US international tax law. Second, in almost all cases, the FBAR issues are related to and often depend on other international tax compliance requirements (e.g. foreign income determination). In fact, the interaction between FBAR and other international tax issues is a major factor that determines a taxpayer’s legal position. This is why your Boulder FBAR lawyer should have a profound understanding of both FBARs and US international tax law in general.

Boulder FBAR Lawyer: Out-of-State Ability to Communicate is Not a Problem

Some readers may wonder why I emphasize the competence as a key factor in retainer of a Boulder FBAR lawyer and ignore the ease-of-communication considerations. It seems that some persons still cling to an obsolete belief that it would be more convenient to communicate with a local Boulder FBAR lawyer rather than an out-of-state one.

This is a flawed belief that I have been battling for a long time now. There are two reasons for why the communications factor no longer depends on the actual residence of your Boulder FBAR lawyer. First of all, the development of modern means of communications completely resolved the communications issues of the earlier centuries. Email, Video Skype Conferences, telephone and text messages make your out-of-state Boulder FBAR lawyer as equally accessible as your local Boulder FBAR lawyer.

Second, 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. Your local Boulder FBAR lawyer simply would not have the time to meet with you every time he needs to communicate something to you. Moreover, given the large amount of issues that often arise with respect to FBARs, personal meetings on every issue would simply make the case too expensive and inconvenient.

There is one additional point that is worth making here. While the geography of your Boulder FBAR lawyer does not matter, it is important that the lawyer is accessible to you and you can communicate with him on the progress of the case. However, this is a retainer factor that is highly personal to each lawyer.

In my case, my clients have no problems communicating with me; most of the time I will be able to respond before the end of the day and, often, immediately.

Sherayzen Law Office is Your Preferred Choice for Your Boulder FBAR Lawyer

Sherayzen Law Office is a highly experienced international tax law firm with profound knowledge of FBARs. We have been helping our clients worldwide with their FBAR issues for a very long time; in fact, we are one of the few firms which advised clients with respect to all major IRS voluntary disclosure programs, including 2009 OVDP, 2011 OVDI, 2012 OVDP, 2014 OVDP and Streamlined Procedures (Domestic and Foreign). We can help you!

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