Hello and welcome to Sherayzen Law Office Video Blog. My name is Eugene Sherayzen; I’m an International Tax Attorney and owner of Sherayzen Law Office, Ltd.
Today, I’m on a train in Eastern Europe and this is the perfect time to share my thoughts about unfiled FBARs. What I’m talking about is a situation where a taxpayer discovers all-of-a-sudden that he needed to file FBARs for prior years and he never did.
Today, I’d like to talk about the first option: Do Nothing; because this is often the first thing that comes to your mind, right? You discover noncompliance; you know you are panicking; you don’t know what to do. You are worried about the FBAR Penalties; they’re horrendous: criminal penalties, willful penalties and you think that maybe it’s better just to bury your head in the sand and do nothing.
The obvious advantage that you see behind this strategy, or so-called strategy is that if the IRS never discovers your past FBAR noncompliance, basically you can get away without ever paying FBAR Penalties.
The problem is that this is not a strategy; this is just hope. A hope which is based on nothing. In fact, this is an irrational hope, a hope born out of desperation. The reason for it is because the US Government has signed treaties with countries all over the world that make the discovery of noncompliant taxpayers an ever-present danger and an ever-increasing danger.
There are all kinds of treaties. There are FATCA treaties: the Foreign Account Tax Compliance Act treaties. There are bilateral agreements, multilateral agreements, mutual assistance treaties, information exchange treaties – all of that body of treaties basically makes it extremely unlikely that a taxpayer can get away with FBAR noncompliance in today’s world.
So in essence, doing nothing with respect to your unfiled FBARs is not just dangerous; it’s reckless and the consequences could be not just disastrous but life-altering, especially if the IRS deems your noncompliance a willful one.
So if you have undisclosed foreign accounts, contact Sherayzen Law Office as soon as possible. Remember, doing nothing is not an option; it’s a Russian Roulette. So, contact me today for professional help at (952) 500-8159 or send me an email at: [email protected].
Thank you for watching, until the next time.
http://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.png00adminhttp://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.pngadmin2020-04-28 21:48:162024-01-04 22:52:53FBAR Noncompliance - Doing Nothing is Not an Option | FBAR Law Firm
Now FATCA, when it came out in 2010, was a revolutionary piece of legislation. It completely changed not only US Tax Compliance but the entire landscape of International Tax Compliance. After FATCA, we have OECD countries developing a Common Reporting Standard, the CRS to which the US did not join for very interesting reasons; that could be a topic of a CLE in of itself.
But, FATCA affects pretty much everyone who is doing business internationally. Why is that? Well, there are the three parts of FATCA that I would like to discuss today. There are some different provisions of FATCA which do not quite fall within those three parts; but they’re not important for today’s discussion, or at least not directly important.
The first part of FATCA is the requirement by Foreign Financial Institutions to report assets owned by US Persons to the IRS directly or indirectly; it depends on the FATCA enforcement treaty. So in essence, all the Foreign Financial Institutions are now forced to become agents of the IRS, reporting agents. In essence it’s that third party verification of US Tax Compliance that has been completely absent from US Tax Law; it just never existed before. For example FBARs, they don’t have any third party verification. That’s why as an information return, FBARs actually have very limited utility.
Now why would Foreign Financial Institutions comply with it? There’s a second part of FATCA: a 30% withholding tax on the gross amount of transactions. Can you imagine that a 30% withholding tax on the entire value of the transaction, not on the gain, loss it doesn’t matter just on the gross value? So this means that if say Institution A which is FATCA compliant and there’s an Institution B which is not FATCA compliant and then your client comes to Institution A and says, ‘Here, I’m sending $100,000 to Institution B, Institution A is going to withhold 30% tax from that $100,000 and send the rest of it to Institution B and obviously when the clients, the other party comes in to collect, they will see that instead of $100,000 there is about $70,000; that’s a pretty big difference. It could be the entire profit margin.
And because every institution is linked to another institution (so basically we have a system where all FATCA compliant institutions are forcing all of the FATCA noncompliant banks to become FATCA compliant); otherwise there’s not going to be any dealing between them.
So under the first part of FATCA, the Foreign Financial Institutions provide this information so they’re a third party verification. But verification of what?
And then there’s a third part of FATCA which really came into the tax landscape without as much fanfare as the first part. The first part, people have heard about: there have been protests, letters to congressmen, organizations, lobbying against it: what have you. But the third part of FATCA, and this is form 8938, it came in sort of in a very quiet way, in gradually but very early on already in 2011.
http://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.png00adminhttp://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.pngadmin2020-04-28 14:33:152022-04-01 15:45:21FATCA Lawyer Boulder CO | Three Main Parts of FATCA
Form 8938, even though it does not share the same amount of penalties (and we will talk about penalties in a little bit later), still it’s importance is much more significant than that of FBAR.
The reason being is that not only are the US Persons required to report their Foreign Financial Accounts, which is very similar to FBAR, but they’re also required to disclose pretty much every type of a financial instrument.
So, we have Foreign Financial Accounts, we have Assets Held for Investment and not held in a financial institution, so we are talking about stocks and securities issued by a non US Person, any interest in a foreign entity, any interest in a foreign partnership, any financial instrument or contract including interest rate swaps, currency swaps, basis swaps, interest rate caps, bonds, notes, debentures, options, derivatives; I mean we’re talking about a whole range of financial assets that have to be now disclosed on form 8938 and they were never required to be disclosed in the same format at least before.
It’s a huge compliance burden obviously.
http://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.png00adminhttp://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.pngadmin2020-04-27 21:01:152022-03-22 22:14:21Indianapolis Form 8938 Lawyer | The Compliance Burden of Form 8938
| 
FBAR Noncompliance – Doing Nothing is Not an Option | FBAR Law Firm
/in International tax attorney & lawyer Video /by adminHello and welcome to Sherayzen Law Office Video Blog. My name is Eugene Sherayzen; I’m an International Tax Attorney and owner of Sherayzen Law Office, Ltd.
Today, I’m on a train in Eastern Europe and this is the perfect time to share my thoughts about unfiled FBARs. What I’m talking about is a situation where a taxpayer discovers all-of-a-sudden that he needed to file FBARs for prior years and he never did.
In this situation a taxpayer really has three options. First: do nothing; second, a Quiet Disclosure and finally, a real Voluntary Disclosure.
Today, I’d like to talk about the first option: Do Nothing; because this is often the first thing that comes to your mind, right? You discover noncompliance; you know you are panicking; you don’t know what to do. You are worried about the FBAR Penalties; they’re horrendous: criminal penalties, willful penalties and you think that maybe it’s better just to bury your head in the sand and do nothing.
The obvious advantage that you see behind this strategy, or so-called strategy is that if the IRS never discovers your past FBAR noncompliance, basically you can get away without ever paying FBAR Penalties.
The problem is that this is not a strategy; this is just hope. A hope which is based on nothing. In fact, this is an irrational hope, a hope born out of desperation. The reason for it is because the US Government has signed treaties with countries all over the world that make the discovery of noncompliant taxpayers an ever-present danger and an ever-increasing danger.
There are all kinds of treaties. There are FATCA treaties: the Foreign Account Tax Compliance Act treaties. There are bilateral agreements, multilateral agreements, mutual assistance treaties, information exchange treaties – all of that body of treaties basically makes it extremely unlikely that a taxpayer can get away with FBAR noncompliance in today’s world.
So in essence, doing nothing with respect to your unfiled FBARs is not just dangerous; it’s reckless and the consequences could be not just disastrous but life-altering, especially if the IRS deems your noncompliance a willful one.
So if you have undisclosed foreign accounts, contact Sherayzen Law Office as soon as possible. Remember, doing nothing is not an option; it’s a Russian Roulette. So, contact me today for professional help at (952) 500-8159 or send me an email at: [email protected].
Thank you for watching, until the next time.
FATCA Lawyer Boulder CO | Three Main Parts of FATCA
/in International tax attorney & lawyer Video /by adminNow FATCA, when it came out in 2010, was a revolutionary piece of legislation. It completely changed not only US Tax Compliance but the entire landscape of International Tax Compliance. After FATCA, we have OECD countries developing a Common Reporting Standard, the CRS to which the US did not join for very interesting reasons; that could be a topic of a CLE in of itself.
But, FATCA affects pretty much everyone who is doing business internationally. Why is that? Well, there are the three parts of FATCA that I would like to discuss today. There are some different provisions of FATCA which do not quite fall within those three parts; but they’re not important for today’s discussion, or at least not directly important.
The first part of FATCA is the requirement by Foreign Financial Institutions to report assets owned by US Persons to the IRS directly or indirectly; it depends on the FATCA enforcement treaty. So in essence, all the Foreign Financial Institutions are now forced to become agents of the IRS, reporting agents. In essence it’s that third party verification of US Tax Compliance that has been completely absent from US Tax Law; it just never existed before. For example FBARs, they don’t have any third party verification. That’s why as an information return, FBARs actually have very limited utility.
Now why would Foreign Financial Institutions comply with it? There’s a second part of FATCA: a 30% withholding tax on the gross amount of transactions. Can you imagine that a 30% withholding tax on the entire value of the transaction, not on the gain, loss it doesn’t matter just on the gross value? So this means that if say Institution A which is FATCA compliant and there’s an Institution B which is not FATCA compliant and then your client comes to Institution A and says, ‘Here, I’m sending $100,000 to Institution B, Institution A is going to withhold 30% tax from that $100,000 and send the rest of it to Institution B and obviously when the clients, the other party comes in to collect, they will see that instead of $100,000 there is about $70,000; that’s a pretty big difference. It could be the entire profit margin.
And because every institution is linked to another institution (so basically we have a system where all FATCA compliant institutions are forcing all of the FATCA noncompliant banks to become FATCA compliant); otherwise there’s not going to be any dealing between them.
So under the first part of FATCA, the Foreign Financial Institutions provide this information so they’re a third party verification. But verification of what?
And then there’s a third part of FATCA which really came into the tax landscape without as much fanfare as the first part. The first part, people have heard about: there have been protests, letters to congressmen, organizations, lobbying against it: what have you. But the third part of FATCA, and this is form 8938, it came in sort of in a very quiet way, in gradually but very early on already in 2011.
Indianapolis Form 8938 Lawyer | The Compliance Burden of Form 8938
/in International tax attorney & lawyer Video /by adminForm 8938, even though it does not share the same amount of penalties (and we will talk about penalties in a little bit later), still it’s importance is much more significant than that of FBAR.
The reason being is that not only are the US Persons required to report their Foreign Financial Accounts, which is very similar to FBAR, but they’re also required to disclose pretty much every type of a financial instrument.
In your handout you see here ‘Specified Foreign Financial Assets‘ under the column, under line I it should say: ‘Specified Foreign Financial Assets‘; this is a huge paragraph of assets. All of these assets must be disclosed on the form 8938.
So, we have Foreign Financial Accounts, we have Assets Held for Investment and not held in a financial institution, so we are talking about stocks and securities issued by a non US Person, any interest in a foreign entity, any interest in a foreign partnership, any financial instrument or contract including interest rate swaps, currency swaps, basis swaps, interest rate caps, bonds, notes, debentures, options, derivatives; I mean we’re talking about a whole range of financial assets that have to be now disclosed on form 8938 and they were never required to be disclosed in the same format at least before.
It’s a huge compliance burden obviously.