If you have assets that may be subject to the IRS' Foreign Bank Account Reporting requirements, you need to understand the expansive view the IRS takes of assets that must be reported. The consequences for noncompliance are significant, with both tax penalties and criminal liability looming as serious possibilities.
This article examines the applicability of FBAR to gold holdings, including gold certificates tradable on a commodities exchange.
Federal Regulations on FBAR
The FBAR requirement is part of the Bank Secrecy Act passed by Congress in 1970. The Act allows regulators to "require U.S. citizens and residents and persons doing business in the United States to keep records and file reports regarding their foreign financial interests."
In February 2011, the U.S. Treasury Department issued final rules on foreign financial accounts maintained in 2010. If the accounts' value exceeded $10,000 in 2010, these accounts require an FBAR filing by June 30, 2011.
The rules, as written, define a "foreign account" broadly for purposes of FBAR. The definition of foreign accounts encompasses not only bank accounts, but various other financial interests such as securities, trusts, annuities, mutual funds and interests in commodities.
You should talk to an experienced tax attorney about how this definition applies to your specific case. But you need to know going in that the definition is a broad one.
Gold as an FBAR Asset
What about gold and other precious metals that can be traded on commodities exchanges?
The regulations state that the Secretary of the Treasury "shall require a resident or citizen of the United States or a person in, and doing business in, the United States, to keep records and file reports, when the resident, citizen, or person makes a transaction or maintains a relation for any person with a foreign financial agency." The rules go on to say that, "[f]or this purpose, foreign financial agency means 'a person acting for a person as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold, or a transaction in money, credit securities, or gold.'"
The bureaucratic density of this definition should not lull you to sleep, but if it does, contact a knowledgeable tax attorney to translate what it means for you. In many cases, interests in gold and other precious metals should be reported on your FBAR form. Talk with an experienced tax lawyer to discuss your specific situation.
