Doing business overseas?
Foreign Asset reporting deadline in two weeks!
One of the best things about the internet and a globalized economy is the ability to do business overseas from the comfort of your living room. With the click of a mouse, funds can be transferred to build a factory in China or invest in a solar power farm in Germany.
Foreign investment is also big here in the U.S. It’s estimated that foreign companies employ more than five million American workers, accounting for more than $408 billion in paychecks each year.
But if you’re a U.S. citizen engaging in some international capitalism, make sure you have all of your ducks in a row. If you had any assets overseas that totaled more than $10,000 for even one day over the past year, you have two weeks to report them to the Internal Revenue Service – even if you didn’t make any money off of them.
With tax revenue tight and budget deficits putting the U.S. deeper in debt, you can count on Uncle Sam to step up his tax collection efforts. This puts an extra burden on us to report our international assets.
These assets include bank accounts, securities and other types of financial accounts. If you have signature authority over them but don’t report them, you’re looking at a fine as high as $500,000, 10 years in prison or both.
To report these assets, you have to file each year what’s commonly called an FBAR (Report of Foreign Bank and Financial Accounts). They’re due every June 30, and extensions – like those granted for federal income tax returns – aren’t an option.
This deadline shows the IRS isn’t taking anything lightly. If you need to report foreign bank accounts or income, hire a tax attorney now. Only a tax attorney can represent you with FBAR and OVDI issues (Offshore Voluntary Disclosure Initiatives), and they are bound by client confidentiality. The new FBAR requirement is one sign of how the IRS’ enforcement isn’t losing any momentum. With the IRS, your best defense is a good offense.