The Ultimate Guide To International Taxation

Shady, secret offshore banks accounts make great fodder for fiction novels and binge-worthy dramas, but in fact, there are many legitimate reasons why U.S. taxpayers have offshore accounts. 

Some of these reasons include diversification, better interest rates and that some of the best money managers in the world are found outside the United States. Other reasons include convenience while travelling or if living abroad, maintaining inherited assets in a foreign country, and having relatives back in another country whom they are supporting. 

American business interests have also grown across the globe, and both multinational corporations and individuals maintain accounts abroad to fund their various business operations or their living expenses.

Under the law, U.S. citizens, resident aliens and certain nonresident aliens are required to report worldwide income from all sources including foreign bank and financial accounts to the IRS under the Foreign Account Tax Compliance Act (FATCA). 

Additionally, under FATCA, taxpayers must certify their foreign or nonforeign status by filing forms Form W-8BEN or Form W-9, respectively. Taxpayers are required to pay taxes on income from these accounts at their individual tax rates. 

This overseas income is reported on a disclosure form, Foreign Bank Account Report (FBAR) and must be filed by certain taxpayers with respect to financial accounts maintained abroad. Although this is often a concern for the millions of expatriates living and working in foreign countries, FBAR applies to an even broader demographic of taxpayers. Remember the acronym FBAR; we will be referring to it a lot.

U.S. taxpayers using offshore accounts, including foreign banks, security accounts and trusts, to avoid paying taxes are committing fraud. 

The Departments of Justice and Treasury have joined forces to crack down on the failure to report foreign accounts and income. They are utilizing the Internal Revenue Service, Financial Crimes Enforcement Network (FinCEN), and the United States Attorney General’s office in a collaborative effort to target individuals, banks, foreign financial institutions, and countries who don’t comply with FATCA and the U.S. tax laws. 

As their effort has proved profitable with $6.5 billion dollars of collected revenue, more assets have been allocated to allow Justice and Treasury to expand upon their success.

This is where the services of an experienced tax attorney are advantageous. While your CPA may excel at preparing your tax returns, international tax laws are very complex. Recent changes have been made to the reporting requirements and deadlines, and two IRS voluntary disclosure programs have ended. 

This tightening up of the “escape hatches” has made taxpayers with foreign assets more vulnerable to scrutiny and that is where our firm, Brotman Law, can help. We have helped many clients untangle the knots associated with FACTA and with completing the numerous disclosure forms.

That is why we created this free book, “The Ultimate Guide to International Taxation.” Whether you were actively looking for information on this topic or stumbled upon it and realize you need help, you are in the right place. 

Our firm has helped many clients with their FBAR filings or voluntary compliance plans. Whether or not you retain us to represent you in your international tax dealings, we wanted to make this information available. Information is power.

Thank you in advance for reading “The Ultimate Guide to International Taxation.” It was a labor of love and our law firm welcomes all questions, comments, concerns, and feedback that you may have about this free resource.