FBAR; Reporting your offshore account to uncle sam

Download Foreign Bank Account Tax Form (FBAR)

Download IRS Form 3250, Foreign Trust Reporting

Download Foreign Bank Account IRS Tax Form (FBAR)

More info on filing FBAR form, how to file fbar form and other details – http://www.irs.gov/businesses/small/article/0,,id=148849,00.html

Today, I’m going to deal with reporting your offshore bank account to the IRS. You all know that I do think that offshore is about the only real safe place that you can put your money if you’re under creditor attack. There’s many videos as to the multitude of reasons why I believe that but to do that you all are going to need an offshore bank account and as most of you know, offshore bank accounts are different than going to Wells Fargo or Chase or Bank of America.

Those banks offshore really take care of you and they allow you to trade securities and they have a lot more confidentiality and literally a good 15 of them are stronger than any of the banks in the United States and although there are videos on choosing bank accounts, don’t forget my rule, always stay with Fortune 500 level banks, nothing, nothing less than Bank of America, Wells Fargo and Chase abroad. And believe me there are plenty of stronger banks than those and don’t deal with the boutiques, deal with the big ones. But that’s for a different video.

Today, I’m going to show you how to stay out of trouble with Uncle Sam and it’s really very simple. First, I want you to take the problem or the issues of doing business internationally very seriously. The U.S. government is being cheated out of over $100 billion a year by people failing to disclose or fraudulently reporting income from offshore bank accounts. It’s a big deal. It’s serious.

The IRS is going to get to the people that aren’t reporting offshore bank accounts and if you think you’ve slipped through a crack, think again, you have it. The IRS knows every single bank account abroad, at least every single bank account abroad that has any relationship with a U.S. bank and you can’t transfer money without a correspondent relationship so the Patriot Act has given the U.S. government access to any and all offshore bank accounts. In addition, they’re spending a large amount of money and energy interviewing banks, buying information, looking for cheaters and that the deal is very serious. The penalties are extremely large.

Filing the FBAR form

Now first, take it seriously. Don’t mess with the government. Don’t mess with the government. I’m going to show you the FBAR, the FBAR form. It’s called the TDF 90-22.1. I don’t why it’s such a dumb name but that’s what it is. It’s a little form. It’s due on June 30th. It has nothing to do with your tax return.

All it does it says I have an offshore bank account I either signed on or I control and it had basically $10,000 in it. Any significant activity, any significant control even if you’re not a signatory requires that this form be signed. Don’t mess with it. Don’t walk a tight rope. I’m not even going to go over how to walk a tight rope because it isn’t worth it. If there’s any doubt, file a form. The form doesn’t increase taxes. The form doesn’t expose you to more audit. The form is a nothing form and it just simply keeps you out of trouble. It doesn’t create any problems. I want you to look at it.

See part one, they want your name, no brainer. They want information on the organization because it can be an organization and not just an individual. It’s really short. Look at it. And I’m going to be giving you this form. You don’t have to read it from this video, really no brainer. There are some simple instructions and then each bank account has a separate box, you fill in, you give them the bank account number, you talk about the maximum value of the account during the calendar year.

See, this is number 15, each account, each account you have to do this. It does not, I want to repeat, it does not increase your audit risk but I tell you what having your money abroad certainly increases your safety and keeps your creditors from being able to get to it. Same thing with part three, it’s a separate block for each jointly-owned account. It’s a no brainer. You’d see it’s done.

The whole form, I’m just flipping through it. Here are the instructions. Look it takes less than an hour to do this form for the typical client. Don’t mess with it. Don’t be sloppy with it because remember there’s $5,000 penalties. In some cases if you are willful about your failure to file, you can go to jail for five years and pay a $250,000 fine. It simply isn’t worth it.

Now, don’t forget your other tax forms that are required if you have a foreign trust. Again, these are informational returns. They take a very small amount of time to do. That would be primarily the Form 3520. I will be giving – doing a video on the 3520 form and giving you a copy of it, too. And, again, I recommend that you don’t try to do this yourself. This isn’t do it yourself work. But don’t be afraid of it. Don’t be put off by it. The price of having safety is disclosing information to the IRS.

more info apcorp- Offshore Bank Accounts Explained

View Instructions from IRS on how to file FBAR form and other details – www.irs.gov/businesses/small/article/0,,id=148849,00.html

When is your Offshore Trust Domestic for Tax Purposes

 

When is your Offshore Trust Domestic for Tax PurposesDownload IRS Form 3520, Foreign Trust Reporting

 

Today I am going to be talking about ‘When is your offshore trust domestic for tax purposes?’. It is really weird but sometimes in fact many times you can have a asset protection trust that is offshore, international, when translated: unreachable by most creditors…an offshore international trust for debtor/creditor purposes but treated as a domestic trust for tax purposes. I am going to talk about this unique situation and what the possible consequences are; they are not that great if you take a conservative approach. These tax issues are not for regular people so you should seek professional tax advice when doing compliance because if you do things wrong it can cost you a lot of heartache in trouble.

First let us start with what is the definition of a domestic trust. In the IRS code 7701 [a] we define offshore and we define domestic trust.

(30)The term ‘United States person’means
any trust if –
1. A court within the United States is able to exercise primary supervision over the administration of the trust, and
2. One or more United States persons have the authority to control all substantial decisions of the trust.

(31) Foreign estate or trust…
(B) foreign trust
the term ‘foreign trust’ means any trust other than the trust described in subparagraph E of paragraph 30.

Basically if you structure a trust so that a court in United States is able to exercise primary supervision over the administration of the trust and one or more persons have control all substantial decisions of the trust it is reasonable for your tax preparer to take a position that it is domestic.

This is usually a comfortable position if the assets are in the United States and the trustee is domestic, which is very common. If you have a domestic trustee and you submitted to the jurisdiction of one of the 50 states, and the assets are in the United States, you can comfortably take the position that it is domestic. This is a year-by-year decision and is not a one-time decision.

What’s the big deal? The big deal is nothing. It doesn’t cost more or expose you to more risk. The complication is the time (about 6hrs) to fill out a complicated form, the 3520, which offers substantial protection. If there is any doubt about filing it, comply, but don’t try to do this yourself. Don’t let the taxes scare you off, even if you over-comply, it never seems to hurt. If the government sees you being forthright, they might give you the benefit of the doubt.