Santa Barbara International Business Tax Attorney
International taxation is an intricate and potentially hazardous area of tax law for business entities, demanding close review by an experienced Attorney or CPA. At the Tax Law Office of David W. Klasing, we are Santa Barbara tax attorneys and corporate accountants who have over 20 years of experience assisting businesses with the full spectrum of international tax law issues. From tax planning for foreign companies and international estate planning, to compliance with FBAR and FATCA regulations, to tax audit defense and IRS appeals representation, we provide U.S. companies, multinational businesses, and investors with a comprehensive suite of legal and accounting services.
Do Corporations Need to File FBAR?
The acronym “FBAR” refers to the Foreign Bank and Financial Account Report, which is synonymous with FinCEN Form 114 (previously Form TD F 90-22.1). Federal law requires “U.S. persons” who meet certain criteria to file an FBAR with the Financial Crimes Enforcement Network (FinCEN). U.S. persons include U.S. citizens, U.S. residents, and, critically for small business owners, all of the following entities or individuals:
- S. corporations (C, S)
- S. limited liability companies (LLCs), including “disregarded entities” or single-member LLCs
- S. partnerships
- S. trusts and estates
- Any other taxpayer who “is not a foreign person”
- Note: For tax purposes, a “foreign person” is a foreign corporation, foreign partnership, foreign trust, foreign estate, or nonresident alien
However, simply being classified as a U.S. person does not automatically mean you must file an FBAR. The taxpayer must also meet additional criteria that trigger FBAR filing requirements, including the following:
- The taxpayer’s foreign assets must be reportable. Only certain types of foreign assets are deemed reportable for FBAR purposes. Reportable assets include offshore bank accounts, foreign mutual funds, and certain indirect interests in foreign financial assets. For purposes of FBAR, non-reportable assets include foreign partnership interests, foreign stocks or securities (when held outside of financial accounts), and foreign hedge funds.
- Note: Foreign assets that are non-reportable for FBAR purposes may still need to reported under FATCA, which is discussed below.
- Note: Bitcoin and Goldmoney accounts may be reportable under certain circumstances. You should discuss your reporting responsibilities with an FBAR attorney if you believe you are affected.
- The assets must be worth a certain amount. Assets only become reportable once they exceed certain financial thresholds. If your foreign assets are worth more than $10,000 in aggregate, either currently or at any previous time during the year, you may be required to file FinCEN Form 114.
Is My Small Business Affected by the Foreign Account Tax Compliance Act (FATCA)?
It is important not to confuse FBAR with FATCA, or the Foreign Account Tax Compliance Act, which creates similar but separate disclosure requirements that are not satisfied by filing FinCEN Form 114 (FBAR). FATCA is a federal law requiring affected taxpayers to report certain foreign assets, including foreign financial accounts, partnership interests, and certain stocks and securities, by timely filing Form 8938 (Statement of Specified Foreign Financial Assets) with the IRS.
Taxpayers who may be affected by FATCA compliance requirements include “specified entities” or “specified individuals,” which, with some exceptions, covers domestic S corporations, domestic C corporations, domestic partnerships, and domestic limited liability companies (LLCs). Such entities must generally disclose reportable foreign assets, such as the examples listed above, if such assets, when combined, exceed or exceeded $50,000 in value at any time during the tax year. Individual taxpayers are also responsible for FATCA compliance, including U.S. citizens, resident aliens, and in some cases, nonresident aliens (who are not affected by the separate FBAR requirement).
Note that there is a penalty of up to $10,000 per violation, i.e. per unfiled Form 8938. If the noncompliance persists, additional penalties may be imposed, up to a limit of $60,000. Even more dangerously, the taxpayer risks an IRS audit or criminal tax investigation, a situation which demands strategic counsel from a qualified tax defense attorney.
Santa Barbara International Business Tax Lawyer for Corporations, LLCs, & Partnerships
Ineffective tax strategies can cost your business money, hampering your ability to grow, innovate, and compete. Protect your competitive edge by working with an experienced business tax attorney from the Tax Law Office of David W. Klasing, who can help you find ways to limit your international tax liabilities and mitigate FBAR penalties. We will perform a comprehensive review of your financial strategy and accounting systems to identify opportunities, address problem areas, and ensure that you are in compliance with the law. We can also provide aggressive tax defense representation in the event that your business is chosen for an audit or is placed under investigation by IRS-CI.
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
Whether your business requires guidance concerning FATCA compliance, FBAR compliance, U.S. entity formation, the avoidance of double-taxation, the sourcing of income, the mitigation of IRS penalties, or other international tax issues, trust the Tax Law Office of David W. Klasing to deliver efficient and zealous representation. Contact us online today to arrange a reduced rate consultation or call our Santa Barbara tax office at (805) 200-4053.
Please note meetings at our Santa Barbara location are by appointment only.
International Business Tax FAQs
- Are U.S. corporations taxed on foreign-source income?
- Are U.S. partners in a foreign partnership taxed?
- How are foreign corporations taxed on U.S. source income?
- How are the shareholders of a foreign corporation taxed?
- How do Social Security and Medicare taxes affect taxpayers who are self-employed abroad?
- How is dividend income sourced?
- What constructive ownership rules apply to controlled foreign corporations?
- What is a controlled foreign corporation, and why is it important?
- What is the Foreign Tax Credit (FTC)?
- What basics should I know about the Foreign Tax Credit?
- What should I know about investing in a controlled foreign corporation?
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Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here