Chicago Illinois International Tax Lawyer: Link Between FATCA and IRS Offshore Voluntary Disclosure

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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 Chicago. I’m in Grand Park in downtown Chicago. As I mentioned in a previous blog, this park has a very special meaning for me because it was precisely here where Obama made his speech and it was precisely under the Obama administration when FATCA the Foreign Account Tax Compliance Act, the most influencial piece of legislation, in US international tax law history was passed into law.

Once of the most important things we should note about FATCA is the link between FATCA and the popularity of the various IRS voluntary disclosure programs, including OVDP, the 2009 OVDP that was put into place while FATCA was still under discussion, the 2011 OVDI, the offshore voluntary disclosure initiative – a highly successful offshore voluntary disclosure program and it was precisely highly successful because of FATCA. It was FATCA that was a major impetus for US owners of foreign accounts to bring themselves into full compliance with US international tax laws and of course the 2012 OVDP with its modification of 2014 OVDP as well as the 2014 Streamlined compliance programs: the Streamlined Domestic Offshore Procedures and Streamlined Foreign Offshore Procedures.

All of these voluntary disclosure programs are directly linked to FATCA. Without FATCA, they would never have been as successful as they were and US international tax rules would not have had such a big impact as they do today.

In the next blog, I will talk more about US international tax issues concerning Chicago and (the) people who live here.

Thank you for watching, until the next time.

Portland Oregon International Tax Lawyer: Streamlined Disclosure of Foreign Inheritance in Thailand

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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 Portland, Oregon. As part of the series, I’m discussing the cases that I’ve handled in the past with respect to Asian Americans and Asians who became US tax residents and today I’d like to talk to you about a case from Thailand that I had a few years ago. The essence of this case is foreign inheritance.

A client came to me a few years actually after receiving a sizeable foreign inheritance. As it turns out to be the case, this was not only issue. It appears that before his death, her father actually gifted her a large number of accounts in Thailand, all of them in Thai Bahts. None of these accounts were ever disclosed to the IRS on FBAR or Form 8938. When my client came to me, we could immediately identify several problems: FBAR, Form 8938 and Form 3520. As we started digging deeper into her assets, it turns out that a large amount of her assets were invested in life insurance policies. Now, Thai life insurance policies come in two parts: Simple life insurance policies and Investment life insurance policies.

When we talk about investment-type life insurance policies, we’re talking about PFIC compliance; these are almost always foreign mutual funds that they’re invested into. In addition to all of the forms I have mentioned, we also needed to do tax compliance concerning Form 8621.

The case was not an easy one but thankfully everything went well; we’ve done our due diligence; we’ve discovered all of the accounts, identified all of the compliance issues, we’ve completed the Streamlined Domestic Offshore Procedures disclosure and the IRS accepted it. There was no follow-up audit with respect to this voluntary disclosure.

This is a good example of how complex foreign inheritance compliance can be. It’s not only about the assets that you inherit, it’s also (about) the assets you had before that. It’s understanding the history of the foreign inheritance; it’s understanding the relationship in the family. It’s being diligent and getting through all of the facts in the case: analyzing the primary documents, bank statements etcetera.

I’ve handled hundreds of voluntary disclosures and I can tell you that every one of these has it’s certain individual face: meaning it has its own characteristics which are unlike any other case. Now, some of the cases, of course can be very similar but there’s always something in that particular case that will differ this case from another.

In the next blog, I will continue talking about my experience with respect to doing voluntary disclosures for Asian Americans and Asians who became US tax residents.

Thank you for watching, until the next time.

Portland Oregon International Tax Attorney: FBAR Case Study for Indian Bank Accounts

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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 Portland, Oregon. As part of this series, I’m doing a review of my cases related to Asian Americans or Asians who became US tax residents.

Today, I’d like to focus on India; on a case which is overall pretty ordinary except in one aspect: the number of accounts. In this case, a married couple from India (they’ve lived in the United States for a number of years, but they were still here on the H-1 Visa) and they came to me because they discovered the existence of FBAR. What in particular they discovered was is that foreign bank accounts need to be reported on FBAR. In their minds, a bank account really means a bank account, meaning a checking account or a savings account.

When they came to me, they told me that they had 15 bank accounts overall and it is very common in India to spread out your holdings over various banks. They had 15 accounts in four different banks. However, it turns out that instead of having 15 savings or checking accounts, the clients had also over 150 fixed-deposit accounts. In their mind, a fixed-deposit account was not a separate account; it is an account linked to a checking account or savings account.

However, when we talk about FBAR, we have to report all bank accounts separately; whether they are fixed-deposit accounts, checking accounts or savings accounts. We have to report each of them, no matter how short-lived they are – meaning if they were opened and closed even for one day, that would be enough to make it a reportable account for FBAR purposes. It also does not matter whether the funds from these accounts go back to the same checking account or savings account; all of these accounts are reportable. On top of that, this client also had about 10 mutual funds and about 7 (if my memory serves me well) life insurance policies.

I’ll talk a little later in another blog about Indian mutual funds and how they should be reported. This case is very important to understand that fixed-deposit accounts have to be separately reflected on FBARs.

It’s also important to understand that often times, you have to do your independent investigation of your client assets. A diligent attorney should always do an independent investigation of his clients’ assets; not to the point of intruding into clients’ affairs but asking the client if he sees something in the bank accounts that does not correspond with reality. The way I discovered there were fixed-deposit accounts was simply looking at the bank statements. It’s very important to look at the primary documents in order to understand how many accounts you have and what kind of reporting should be expected on FBAR and Form 8938.

In the next blog, I will continue my series of blogs related to Asians who became US tax residents and Asian Americans.

Thank you for watching, until the next time.