Thursday, February 2, 2012
IRS: Offshore Banks Will Need to Disclose Precious Metals Held by U.S. Clients
The Foreign Account Tax Compliance Act (FATCA) appears to be a play setting up the confiscation of foreign held phyzz.
Henderson confirmed that foreign real estate owned by a U.S. individual isn’t reportable. By extension, precious metals, art, or other personal possessions you maintain in a foreign residence aren’t reportable, either. But, when asked about the reportability of precious metals held by an individual in offshore safe deposit boxes or private vaults. Henderson briefly consulted with one of his colleagues and replied, “That will be covered in forthcoming regulations under Chapter 4.”
Henderson was referring to Chapter 4 of FATCA, the subject heading of which is “Taxes to Enforce Reporting on Certain Foreign Accounts.” This is the notorious section that imposes the 30% withholding tax on most U.S. payments to FFIs and NFFEs.
To avoid withholding, FATCA requires FFIs (but not NFFEs) to:
“…Comply with requests by the Secretary for additional information with respect to any United States account maintained by such institution.”
In the context of offshore precious metals holdings, it would be simple for an FFI holding a custodial account on behalf of a U.S. person to provide this information to the IRS. However, Henderson was specifically asked about the reportability of precious metals held in a safety deposit box or private vault.
The only way the FFI would be able to obtain the requested information for a safety deposit box would be to obtain an inventory from the owner, or break open the safety deposit box and take its own inventory. If it failed to do so, the FFI would presumably be subject to the 30% withholding regime. I hope this draconian interpretation is incorrect, but the answer will apparently be found in the future regulations for Chapter 4.
Click here for more
Posted by The Doc at 1:12 PM