Guest Post: Do I Have To Report My Offshore Gold...?

Tyler Durden's picture

Via Simon Black of Sovereign Man blog,

Let’s do a little math problem today.

As you probably know, in 2010 the US government passed one of the most arrogant, destructive, poorly conceived pieces of legislation in history, now known as the Foreign Account Tax Compliance Act (FATCA).

FATCA heaps all sorts of reporting requirements on US taxpayers with foreign financial accounts. This is in ADDITION to form TDF 90-22.1, which is due to the Treasury Department each year by June 30th, and IRS form 1040 schedule B.

(Nothing says ‘government’ like passing along the same information on different forms to the same department multiple times…)

Another major provision of the law requires ALL financial institutions on the PLANET to share personal customer information with Uncle Sam.

The hubris is overwhelming. Imagine what would happen if the Chinese government passed a law requiring US banks to share customer information with Beijing. People would go nuts. But in the Land of the Free, it’s normal. Crazy.

It gets worse. FATCA was a mere 18 pages of poorly worded legislation that failed to define critical terms. For example, two terms that are used over and over again are “foreign financial institution” and “foreign financial account“.

The terms are ambiguous, to say the least. Does an account with an offshore gold depository like GoldMoney constitute a foreign financial account? Does a Swiss insurance company constitute a foreign financial institution? It’s not intuitively obvious.

Congress solved this problem in the most confusing way; they use the terms to define each other. It’s like saying, “What’s a dog? The opposite of a cat… OK, so what’s a cat? The opposite of a dog.”

Needless to say, this “who’s on first” legislation sent shockwaves through the global banking system. Many banks simply dropped US customers, erroneously believing that it would get them off the hook from having to abide by this bizarre, destructive law.

Enter the IRS.

After the law was passed in 2010, it became the responsibility of the IRS to figure out Congress’s intent in implementing FATCA. It has taken them nearly THREE YEARS to do so, and they will be releasing the final regulations next week.

So here’s the math problem: How many pages of regulations did the IRS issue? I’ll show you using the special arithmetic that only exists in government

18 pages of law + 33 months x 1 government agency (IRS) = X

Give up?

The answer is a mind numbing 544 pages…

Unbelievable, no? Eighteen pages of law turn into 544 pages of regulation.

What’s more, in all of those 544 pages, there is not a single mention of the words, “gold”, “silver”, or “precious metals”. So there’s still quite a bit of mystery with respect to the question, “Do I have to report my offshore gold…?”

I’m still having my team go through the rules; after an initial read, though, the language of the regulation does suggest that custodial gold institutions (like GoldMoney, etc.) should be reported. Offshore safety deposit boxes (like Das Safe) do not.

Here’s the bright side of all this nonsense: now that the rules are finally settled, it’s now going to be much, much easier for US taxpayers to open foreign bank accounts.

Over the past three years, the opacity of FATCA was too risky for banks. Today, while the final rules are cumbersome, they’re at least settled. So the banks know how to operate.

I’m hearing from a number of overseas banker contacts, from Singapore to Panama to Malta, that they’re once again opening their doors to US customers. More to follow on this development.

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rehypothecator's picture

But ... but ... but gold isn't money (so spake Ben) and therefore, by definition, gold holdings can't possibly be "financial" accounts.  They're just barbarous relic collections, with mere token collector's value.  

easypoints's picture

I can tell if it's a Simon post from the title, but still am curious and click to make sure before I stop reading.

ghengis86's picture

Why don't you just store 50 kilos of gold at each of your twelve Chilean villas? 

Redhotfill's picture

Because there isnt any room for them in the safe cuz thats where the kelo's of Coke are.

flacon's picture

I don't know why some of you don't like Simon Black. 

ghengis86's picture

It's not that I don't like what he has to say; he's usually spot on.  He just has a lot of douche-baggery in him, that's all.

AgAu_man's picture

What do you know that the rest of us don't? Thanks.

Pladizow's picture

Easy Solution - Leave the Plantation and renounce your US Citizenship!

Magnum's picture

Great iindicator of a naive person -- those who always spout off about how easy it is to leave. I'm very well traveled, bilingual and my kids have more than one passport. It's very very difficult to get legal residence in a foreign country. The easiest country in which to swing it, is USA, but that's not the point. Smart money is leaving USA, the challenge is finding a new home...

AgAu_man's picture

Doesn't that depend on what that second or third passport is, and what portable skills you have?

I have never had a problem with my language and job skills plus an EU passport from preventing me from working in several EU countries.
Also, depending on who you work for, your (multinational) company can have you working in whatever country they operate.

Magnum's picture

Yes it depends on your passport(s) as you said. For someone such as myself with only a US passport, obtaining legal residence and work permit in a foreign country is extremely difficult.

Harlequin001's picture

Where do you wish to go?

Magnum's picture

My kids are bright and I'd like to resettle in any country offering a fine education system. Fortunately I can afford to rent an apartment and pay to resettle most anywhere however it is impossible administratively to open a bank account and rent an apartment and someday find a job without a resident permit -- which are extremely difficult to obtain.

Simon B offers insights into this which I find interesting to say the least.

Again it's always the sign of naïveté when someone says if you don't like America just leave. Far easier said than done.

Harlequin001's picture

What have you done to further your aims as yet?

What you say is absolutely correct, you can't just leave America and expect to keep your money, you have to look a lot further to make that work, but it can be done...

As with most things there are ways and means so to speak...

Magnum's picture

Two years of traveling around looking for the perfect opportunity but thats mostly short trips here and there followed up with correspondence that doesnt lead very far. I was stoked about Australia but personal visit was a turn-off. no offense to Aussies. I do prefer Europe, and my roots are pure Euro. i'm not broke by any definition. money is not really the issue but i should probably stop seeking the ultimate deal and just spend more time overseas making contacts, settling for what comes up then going from there. The leading European company in my current line of business, which I am very successful at, is based in Rotterdam. I should get over there soon... Dutch education and culture is to my liking.

Tango in the Blight's picture

I'd advise you not to live in Rotterdam, it's the crime capital of the Netherlands.


Also taxes in the Netherlands are very high. The lowest income tax bracket is 37%, the highest is 52%.




trav777's picture

how's that multiculturalism working out?  Not well?  shocking...

Who in the hell would report gold to anyone anyhow?

MassDecep's picture

Like my grandpa said, "If yah ain't Dutch, you ain't much"

Spoken by a true Van Dyke

mmanvil74's picture

I lived in Panama for 10 years and travelled to over 35 countries.  I speak fluent Spanish and I can say that you are right, it is not easy to just get up and move, especially with kids.  I dont recommend Panama if education is your priority.  I've searched and pondered the whole world to find that ideal location and have not found it yet.  The fact that EU is even a possibility is a big advantage for you.  As a Canadian it would be VERY difficult for me to get an EU passport, although I heard Spain is coming out with a residency option for investors that is sub $500k maybe less so that might be feasible.  As much as I love Spain as a visitor, I don't think I would relocate there permanently because I think, like most places, you'll be an outsider forever.  I've determined that Canada isn't that bad, all things considered.  Education here is relatively good, and there are many other advantages.  Taxes are stupid high though and the weather sucks so I may just settle for frequent vacations south.  Conclusion: nowhere is perfect.

trav777's picture

funny...I met people even from Russia when I was in Spain.  People move all over, EXCEPT Americans.  I travel quite a bit and am constantly meeting people from countries other than the one I'm in at the time, who moved there for work or whatever.

dragonspirit's picture

Look at the place that covers 1/6 of the earth's landmass. You can open accounts at most major banks, including state banks, while being a US citizen, withiout worrying the bank will report you. Residence permit is a solvable issue for a reasonable amount  of dough. From there - the world is your oyster.

Magnum's picture

Russia? Please clarify and thanks for your advice.

bank guy in Brussels's picture

No it's not all that difficult if you have a little capital ... funny that Americans seem to think so, when Americans even have an automatic right to live in the Netherlands if they open some (even halfway bogus) small business there

Living and settling in other countries can be quite easy ...

Of course it can be hard if you are totally broke, and have no starting seed money, especially if you have to make arrangements for family and children with you.

But with modest capital, it is very doable. There are actually large numbers of Americans who have escaped over here to Europe, very quietly. You run into them every now and then, it seems another of those 'hidden' stories. No doubt US media does not want to cover how many people have picked up their marbles and happily hit the exit door.

Chinese people who have saved money are arriving in the old Communist Eastern Europe ('everything for sale'), meeting a 'friendly' immigration lawyer who knows some 'friendly' government officials, and quickly becoming EU citizens, giving them the right to live and work anywhere in Europe. - This is true in much of the world. You go there, make connections and friends, you find a way to stay there. - If the Chinese can do it, so can people from America etc.

For Americans with modest capital, you have the 'Dutch-American friendship treaty', valid since the 1790s, you pop around 10k USD into a Dutch bank account, start some 'business' ... 4 years later you are a Dutch EU citizen. Of course this takes 50K or so to support yourself for 4 years, more with family. - Nearly everyone in the Netherlands speaks good English, to make it easy for you.

Or you can hire Simon Black's expatriate 'find a new home' services!

Magnum's picture

Hi. Thanks a lot for your post. It made my day. I appreciate the info and your delivery, and this is exactly he type of information I appreciate. Great advice. Thanks again and may our paths cross in he future....

samcontrol's picture

Ok ok holland is fine , but it almost sounds as propaganda..

IT's Europe , it has pros and cons , yes you can migrate to euroland if you are into culture and high taxes, yes you will have to pay there also........

now if you are into guns, hoarding gold and silver , beans , freedom, space , resourcefull places, no taxes via offshore account, etc.. there are other places, eg south america.

Lost My Shorts's picture

Just yesterday there was a rant on ZH about European socialism coming to America, and the whole choir was singing.  Now you tell them to move to Europe !!

Some guy posted a link a few days ago about how Spain was thinking of offering residence to anyone who springs for a $200K house.  So I researched further.  Bottom tax rate is 24.75%, next is 30%, top is 52% (vs. 10, 15, and 40 in that cruel country called USA.)  If you are self-employed, you also get hit with an extra 260 euro per month or thereabouts for social security fee, analagous to the payroll tax in the USA.  Plus if you spend 183 days per year in Spain, they want to tax you on your worldwide income.  Plus you must report all assets held outside of Spain, and report again if said assets grow by 20,000 euros, and presumably pay a tax on the gain.  It sounds like out of the frying pan and into the fire.

Stuntgirl's picture

Any country offering residence/citizenship via real estate purchase will hit you hard later.

The info you provide on Spain is exact, and the same could be said for cyprus back when I was considering it. (it was selling residence permits as well)

My personal favorite in Europe is Luxembourg, which WILL want to tax you on your worldwide income, but to advantageous rates compared to almost any other european country. The tax rates look high until you look at the minimum income to make the cuts and deductions for family/children. They are fake high rates to get out of EU tax haven definitions. Plus capital gains are exempt.

As far as I know, If you live there 6 months, shove 20-40K Eur into a bank account and pay for health insurance (3K year), you're a long term resident.

I'm currently switching Spain for Luxembourg.

Lost My Shorts's picture

I guess I am not really rich enough to travel in the Simon Black crowd anyway.  I think Luxembourg is like Monaco in terms of real estate prices -- super high.

But I know a country with a passport that gets you in almost anywhere you would want to go, and if you live somewhere else as an expat, your tax rate can be as low as 15% on the first $85,000 of self-employment income (which even brings you an old-age pension, assuming they don't go broke).  Mabye I will just stick with that.

zerozulu's picture

I still believe USA is a batter place to live, just need to stay off the Doogle and Farcebook.


Harlequin001's picture

You seem to be talking about working overseas as opposed to finding a new home. They are entirely different.

One merely requires that you satisfy a domestic branch of an international company's requirements to qualify for a work permit or some such document.

That's not the same as obtaining residence or permanenet residence elsewhere.


GenXer's picture

Some good messages, but really he is an internet marketer first and foremost.

ghengis86's picture

fucking dupe....i guess i have some DB in me too...

Cabreado's picture

I will admit...

I'm wondering what a "sovereign man" is, by Mr. Black's definition. 

All Out Of Bubblegum's picture

No idea, but we know what it means to the Powers That Be:


"The sovereignty fetish is still so strong in the public mind, that there would appear to be little chance of winning popular assent to American membership in anything approaching a super-state organization. Much will depend on the kind of approach which is used in further popular education."


CFR, 1944.

Harlequin001's picture

National Curriculum - it's not education, it's programming.

It's how they manage popular opinion...

and we pay money for that...

zhandax's picture

It's how they manage popular opinion...  and we pay money for that...

I wouldn't be shocked if that comprised at least 10% of BEA reported GDP..... Let's see, FIRE: 40%.  Sickcare: 15%.  Propaganda: 10%  Probably more; Apple and McDonald's can't make up 35%.

A Nanny Moose's picture

You don't even know. Even if you did don't wanna know.

Pay attention to the Jan 25th Training topic.

Terrorist's picture

If you are not a socialist, you are a terrorist.

Buckaroo Banzai's picture

From the brochure:

"The course will examine the origin and ideology of the sovereign citizen extremist movement and discuss the tactics utilized by sovereign citizen extremists, including violence, fraudulent schemes and “paper terrorism.” Additionally, recognizable behavioral indicators of sovereign citizen extremists will be identified with discussion of evolving and serious threat sovereign citizen extremist pose to law enforcement and government officials and offer strategic tactics to counter this threat."

Paper terrorism, LOL.


donsluck's picture

Next is "opinion terrorism" where a divergent opinion gets in the way of efficient US boosterism.

taniquetil's picture

That's what I do. I would use depositories, but that's where I store my arable Argentenian farmland.

knukles's picture

Mrs K tells me I should use suppositories, too.

wee-weed up's picture

The results of which will probably also help produce a little arable farmland. ;-)

Fedaykinx's picture

gotta start somewhere, i guess.

El Oregonian's picture

"Those who can make you believe absurdities can make you commit atrocities."


Getting Old Sucks's picture

The day will come when it becomes known that the only gold the USSA has is the plating around tungsten.  When the rest of the world with real gold decides it's money, watch how fast the second confiscation takes place.  Hide it well. 

aaxiom's picture

The most heinous part of these "laws" is that the terms are ambiguous at best, and should one fail to report, they risk losing 50% of the maximum value of the holdings in the year that the filing was delinquent (or US$100,000... whichever is greater).

That's an unlubricated blue glove treatment if I have ever heard of one.

Scumbags, all of them.