If you are a US citizen resident anywhere in the world, or in space for that matter, or are a US resident for tax purposes, AND you have:
a financial interest in or signature authority, or other authority over any financial accounts, including bank, securities, or other types of financial accounts in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year, must report that relationship each calendar year by filing TD F 90-22.1 with the Department of the Treasury on or before June 30, of the succeeding year.
My favorite thing about complying with this law is that when you do, you automatically add your name to a FINCEN database of potential money launderers. This heightens the government’s scrutiny of everything you do. This is a Treasury form, NOT an IRS form, so you do not even have the very limited privacy protection that goes along with IRS filings.
In this age of databases that control whether or not we can get credit, or fly on an airplane or rent a car, the more bad databases we end up on, the more likely it is that we will suffer “the slings and arrows of outrageous caution”.
So what are your choices?
The course most often chosen is simply not to file. This is illegal and can carry a fine of up to US$500,000 and prison time. That being said, I have never known anyone who was prosecuted simply for not filing this form. The government’s preferred modus operandi is to prosecute a person for tax evasion and/or money-laundering, and then add every year they did not file this form as a predicate count in order to run up the total number of years in prison that the defendant is facing. You see this in action when the IRS does its periodic subpoenaing of all offshore credit card records for the entire Caribbean basin, or when they catch a crooked offshore banker for something like stealing cable TV (this really happened) and then use that to extort the names of hundred of clients from him.
The second most chosen course is to file the report and hope for the best. So long as everything you do is legal and squeaky clean, compliance is always the best route. This is the course I take. This is mitigated somewhat by the fact that I actually live outside the country, and as such, it is more natural for me to sign on foreign accounts.
That being said, there are two more choices that allow you NOT TO FILE AND NOT TO BREAK THE LAW.
FIRSTLY, you can hire a bonded fiduciary who signs on foreign accounts on behalf of a company, or other entity; but in that case you have to trust the fiduciary, make sure the bond is bulletproof, AND do your company paperwork in exactly the proper way so you don’t end up still having “other authority” as the IRS defines it, and defeating the whole exercise.
LASTLY, you could establish a gold repository account, at some place like the Perth Mint where you could be the signatory on the account and STILL LEGALLY NOT REPORT IT because, properly set up, it is a storage contract, NOT a financial account.
For many people this is absolutely the very best choice. If you:
- avoid using a US representative, and
- set up the account outside the US, and
- make the payment through a non-US payment service,
There are other steps you can take to add layers of asset protection as well—all without filing special reports or tax filings. The best thing about this option is that you do not have to trust anyone else to sign on your account!
For more information on this option, contact the Navigator directly and he will tell you how to accomplish without ANY US filings.
