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Are You Required to Report an Offshore Goldmoney Account to the IRS?

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    Goldmoney describes itself as “a global leader in precious metal custody, and the world’s largest precious metals network.” According to the company’s website, Goldmoney currently protects “over $2 billion of assets for clients in 150 countries,” with several U.S. branches located along the East Coast. If you are a Goldmoney user, you have probably wondered how, or even if, you are required to report your offshore Goldmoney account to the IRS – particularly if you’re familiar with the IRS’ treatment of other foreign financial account holders. If you are an international Goldmoney user, continue reading to learn more about the Goldmoney IRS reporting requirements that may affect you or your business, such as offshore disclosure requirements related to FBAR and FATCA

    Do You Have to Report the Holdings in Your Goldmoney Account to the IRS? 

    According to the overview supplied on the company’s website, “A Goldmoney Holding is an online structure that allows you to securely purchase in precious metals owned in your name at insured vaults across five countries,” which, according to Goldmoney’s Safety & Transparency page, include the United States, the United Kingdom, Singapore, Canada, and Switzerland. More broadly than its name might suggest, Goldmoney also enables users to purchase other precious metals, including “silver, platinum, and palladium,” a rare metal currently valued at more than $1,870 per ounce as of December 6, 2019. (On the same date, gold was valued at roughly $1,475 per ounce; platinum, around $900 per ounce; and silver, less than $17 per ounce.) 

    While websites like Goldmoney have made it faster, easier, and more convenient for beginners to trade and invest in precious metals, they can also open the doors to complex and unexpected IRS reporting requirements. It is vital for taxpayers to be aware of these requirements, as noncompliance can lead to hefty penalties. For example, some Goldmoney account holders may unknowingly be affected by federal laws requiring certain taxpayers to file FinCEN Form 114, better known as the FBAR (Report of Foreign Bank and Financial Accounts).

    FBAR regulations are established by 31 CFR § 1010.350, which governs “reports of foreign financial accounts.” Under the law, U.S. citizens, resident aliens, and domestic trusts or business entities are generally required to disclose to the IRS any “reportable accounts” whose contents exceed $10,000. These “reportable accounts” include foreign bank accounts (31 CFR § 1010.350(c)(1)); various foreign securities accounts (31 CFR § 1010.350(c)(2)); and, central to our discussion here, “other financial account[s]” (31 CFR § 1010.350(c)(3)), tentatively excluding Bitcoin accounts. (at the moment … may change at any point in the future…) 

    These “other” accounts are defined to include, at 31 CFR § 1010.350(c)(3)(iii), “An account with a person that acts as a broker or dealer for futures or options transactions in any commodity on or subject to the rules of a commodity exchange or association.” Also relevant is 31 U.S. Code § 5312(a)(1), which defines a “financial agency” to mean “a person acting for a person… as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold, or a transaction in money, credit, securities, or gold.” 

    Since Goldmoney arguably meets these definitions, users are advised to report their holdings to the IRS, assuming they meet the reporting thresholds. The FBAR reporting threshold is $10,000, which means that, depending on the dates in question, just a few ounces of gold or palladium could potentially trigger FBAR filing requirements

    In addition to the FBAR requirement, which is part of the Bank Secrecy Act (BSA), some Goldmoney users might also be impacted by a related reporting requirement that is part of the Foreign Account Tax Compliance Act (FATCA). In accordance with FATCA, U.S. citizens, resident aliens, non-resident aliens (who are not generally subject to FBAR requirements), and domestic trusts or business entities are all required to report offshore assets whose aggregate value exceeds $50,000 in certain circumstances.  (See form 8938 filing instructions for the specific limitations that may apply to your specific circumstances) 

    To report offshore assets above $50,000 and comply with FATCA, taxpayers must file Form 8938 (Statement of Specified Foreign Financial Assets), which should be submitted to the IRS. The FBAR – which can only be filed online through the federal government’s official web portal – should be submitted to the Financial Crimes Enforcement Network (FinCEN). Do not attempt to file an FBAR or Form 8938 without first consulting an international tax law attorney. If you have unreported offshore assets, a tax attorney from the Tax Law Office of David W. Klasing can protect you and minimize the penalties you face while identifying strategies to bring you into compliance. 

    One final word of caution: by leveraging massive penalties under FATCA (including “a 30% withholding tax on certain U.S.-source payments made to them”), the IRS has successfully compelled banks and businesses around the world to give up information on U.S. customers. Even if you do not reveal your assets to the IRS, you can bet that your bank or another third party will – and if that occurs, you will be at high risk of a tax fraud investigation. Take the safe route and consult with a trusted, experienced FBAR lawyer, who can help you avoid penalties by ensuring your Goldmoney account is reported to the IRS correctly. 

    For more information about FBAR and FATCA requirements, you may find the following resources helpful: 

    See our 2011 OVDI Q and A Library 

    See our FBAR Compliance and Disclosure Q and A Library  

    See our Foreign Audit Q and A Library 

    FBAR + FATCA Compliance Attorneys for International Taxpayers 

    The requirement to file an FBAR and/or Form 8938 typically affects taxpayers who control offshore bank / financial accounts, such as expats, dual citizens, or frequent businesses travelers. However, with vaults located all over the world, it can also impact Goldmoney users. Review your reporting responsibilities confidentially in a reduced-rate tax consultation with an experienced FBAR audit attorney from the Tax Law Office of David W. Klasing. Call 24 hours at (800) 681-1295, or contact us online to get started.

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