More FBAR Stuff

Remember FBAR?  That nasty form that MUST be filed by June 30 each year for the previous calendar year?  Well, the US Treasury department is making it easier (?!) to file now.  Read this notice:

Effective July 1, 2013 – Electronic filing of FBARs is mandatory

E-filing is a quick and secure way for individuals to file FBARs. Filers will receive an acknowledgement of each submission. For more information about electronic filing, read the FinCEN news release . Help with electronic filing technical questions is available at BSAEfilinghelp@fincen.gov or through the BSA E-Filing Help Desk at 866-346-9478.

Now, you are not allowed to MAIL in the form.  Electronic filing is required.

Well, on the plus side, you won't have to worry about postage now.

Additionally, there is a provision to allow you to hire someone to file for you.

Details in another post.

Cheers.

Implementing FATCA

Here's a news flash gang!  FATCA implementation has been delayed for 6 months until July 1, 2014.  Who cares why they say, I think they are getting serious resistance, if for no other reason than the technical difficulty to comply.  FATCA is a deal killer and will have the unintended consequence of US Citizens being unable to do business internationally because foreign banks are so scared of the ramifications if they do it wrong.  Business people will not be able to get wire transfers in a timely manner, if at all, and deals will die.  Official estimates are that FATCA will gather $87 billion over a ten year period. Huh? That's $ 8.7 billion per year with the risk of bringing international trade to a dead stop.  What kind of impact will that have on an annual deficit of over $600 billion?  Exports from the US are over a trillion, yes trillion, dollars each year.  If that is damaged, not only will business suffer domestically but tax revenues will fall off by more than FATCA could ever gain. 

Special stuff for Chile

Just to let you know, I have the regulation in front of me as I type.

A “foreign eligible entity” is NOT an S.A. (Sociedad Anonima) for our purposes.

That means E.I.R.L.’s and Limitadas ARE “foreign eligible entities”.

Unless a Limitada elects to be a “pass-through” within 75 days of its formation, it is a partnership and all the foreign partnership rules apply.

If the owner of the EIRL does not have limited liability, the EIRL is disregarded by default and the owner doesn’t have to do anything.

I don’t know if the Limitada and EIRL designations provide limited liability.  If they do, then the elections would have to be made in a timely manner.

That’s good news.  Plus, the fact that Social Security has exempted US citizens and residents who are living in Chile, makes things a lot easier.

Setting up for business overseas

We all know that the United States Code Title 26 (income tax) code is spider's web of laws and regulations that capture the unwary and sometimes those that are very wary.  It's so complicated that no one really knows what's going on.  A lot of people think, if you live overseas, you can reduce taxes by setting up a foreign business entity (S.A., Limitada, EIRL, IBC, Trust, etc., you get the picture) except DON'T!  If you think the domestic tax policy is complicated, you won't believe what the international side looks like.  Some international tax professionals state the rules are "insanely" complicated.  That's on a good day.  Some "entities" can be designated as "pass through" and, thus, simplify your life.  Others can't be.  For instance, Chile has an S.A. (Sociedad Anonima) and that particular entity isn't allowed the "pass-through" election.  This means, depending on the exact numbers, if you own a piece of that action, you will be required to file such nasty forms as 5471.  If you don't, you have to pony up US$ 10,000 in fines the IRS WILL levy.  Not only that, the IRS has the authority to "deem" a Limidata to be a foreign corporation unless you file a form electing to be a "pass-through" within 75 days of creating the Limitada.  These are just two examples.  There are many others.  I can't count the number of times I've been asked to help with a Limitada only to find it had been created the year before.  There's not much that can be done for relief at that point.  So, the moral of the story is, if you want to set up a legal business entity in a foreign country, talk to a tax adviser first.  At least get all the information before you move.  Maybe you'll decide an S.A. is the best way to go.  OK, if you make the decision with all the information.  There'll be no surprises and in business we all know we don't want surprises.  Tune in again as I detail some other issues that may concern you.

Oh yeah, ABOLISH THE IRS!!  WRITE YOUR CONGRESSMEN AND SENATORS!!

Later.

Abolishing the IRS

There is an amazing effort underway in the US Senate and House of Representatives.  That effort is to abolish the IRS and the tax code that it enforces.  This would be an incredible boost to the American economy and a HUGE step forward for the cause of liberty!  If you don't know about it, contact your Senator and Congressman and urge them to DO IT!  Yes, I know, it would put me out of a job but the cause of liberty is MUCH larger than that!  CALL THEM!  PUSH THEM! HOLD THEM ACCOUNTABLE!  This is the time to make the change!  Not just for you but your children and grand-children and on!

US Ex-pat filing extension

If you are an ex-pat living overseas, you have available an automatic 2 month extension to file AND pay your taxes due, to June 15.  To invoke this extension, you MUST include a statement with your tax return that you are claiming the extension.  If you need more time, you must file a form 4868 before the June 15 deadline but if you want to file for an extension electronically, do it by April 15.  The on-line services won't take an extension request after April 15th.
If you don't believe me, see what the IRS says, click here.

Filing thresholds

People are starting to ask me if they have to file now.  Living outside the US does have a different set of rules but the filing thresholds are the same.  So here they are, if you are below the number for your filing status, you don't have to file:

Filing Status	Age	Gross Income at least:
Single	< 65	$          9,750
Single	>= 65	$        11,200
Married Filing Jointly	< 65 (both)	$        19,500
Married Filing Jointly	>= 65 (either)	$        20,650
Married Filing Jointly	>= 65 (both)	$        21,800
Married Filing Separately	All	$          3,800
Head of Household	< 65	$        12,500
Head of Household	>= 65	$        13,950
Qualifying Widow(er)	< 65	$        15,700
Qualifying Widow(er)	>= 65	$        16,850