IRS Foreign Bank Account Reporting Requirements For Offshore Gold Bullion Investments
In my work as an offshore finance consultant, most of my readers are already involved in offshore or international banking. A lot of them recently have been moving into gold, as a hedge against devaluation of fiat currencies such as the dollar. A question that frequently pops up, consequently, is “Do I have to Report Gold Stored Offshore to the IRS on the FBAR (Foreign Bank Account Reporting) form?”
This question is also applicable to non-US residents, of course, as similar reporting requirements exist in other countries – although you should be sure to check local reporting requirements very carefully in the country where you typically file tax returns, as reporting requirements do differ considerably.
The so-called IRS FBAR requirements refer to the requirements of a Foreign Bank and Financial Account Reporting form. The actual IRS document you will be working with is called form TD F 90-22.1. Under existing U.S. tax law, any US taxpayer must file this form if he or she has a financial interest or identifying characteristics authority in a foreign financial account that has an aggregate value of over $10,000 at any time during the time of a year. This not only includes U.S. citizens but also all alien residents, domestic partnerships, domestic corporations or domestic estates.
The question has been raised and answered many times before, but was addressed recently raised again in the press by commentator and asset protection expert Mark Nestmann. In a syndicated article entitled “Are Precious Metals Stored Offshore Reportable Financial Accounts?” Nestmann says that tax authorities “construe the term ‘financial account’ very broadly. The definition unquestionably includes bank, securities, and other accounts that keep up financial instruments. However, it does not include individual bonds or stock certificates.”
The important question for us, consequently, is whether physical gold bullion that you keep up in an offshore vault (or anywhere else offshore for that matter) is reportable. The IRS gives no clear guidelines on the matter, and you probably wouldn’t want to call your local IRS office and ask them directly. Better to check with a suitably qualified tax attorney who is working on your side of the fence.
Nestmann’s conclusion is that “If you keep up the metals in a safety place box or private vault, without opening a bank or other financial account, you don’t appear to have any reporting obligation.” At many offshore edges you must open an account in order to rent a safety place box, but if you don’t want the hassles of filling out the FBAR form you could always keep the balance of this account under the $10,000 FBAR reporting requirement. There are also a number of non-bank safe place facilities obtainable in Austria, Switzerland and the Caribbean. You can find information on these on the internet.
If you are not a Q Wealth member and don’t want to sign up, you can now also buy Peter Macfarlane’s Gold Report as an e-book at the Expat Wealth bookstore.