Reporting Overseas Gold? I dont think IRS can require this...

[BearBones]

I'd refer you to my post above quoting the FBAR FAQ which does in fact list out gold metal accounts as reportable.

I think that the issue is whether a safe deposit box is an "account." My interpretation from what you have provided and what I quoted above is that it is not (no more than a PVC pipe in your back yard constitutes a financial account). There is no other institution involved other than for storage, there is no "signature authority" (you need the key), and the ownership is "direct."

My recommendation is to report such accounts as required by law. If you are not involved in criminal enterprises/tax evasion there are not going to be any problems. But if you don't report and you are found deficient then there are huge fines that could be applied.

My point is that this is probably not "required by law." I am not an attorney, I am prone to human error, and I certainly do not want to be the test case, however.

[HB Reader]

I understand the disclaimer. But the vast majority of folks who might keep gold in a foreign vault or safe deposit box (especially those cautious, libertarian-leaning, HB-reading folks on this site) have no illegal intent, IMO. I will check with my accountant, but from what I can see, it is no safer reporting non-financial assets than it is in doing so. The referenced document indicates that the following are not reported on either form 8398 or FBAR: "Foreign currency held directly, precious metals held directly, personal property, held directly, such as art, antiques, jewelry, cars and other collectibles."

I understand. And perhaps if you travel to a foreign jurisdiction and place the contents in the box yourself it might not be reportable under the current rules. But logistically this is very difficult and expensive. Now, if you are using a service that is buying/selling the gold and storing it for you then please be aware that it probably is reportable even if just sitting in their vault. It would be considered a financial account.

I'd refer you to my post above quoting the FBAR FAQ which does in fact list out gold metal accounts as reportable.

And again keep in mind that the interpretation of these regulations is going to be done by the IRS and tax courts are much different in how they operate and place burden of proof. Keep that in mind when trying to navigate between the lines of these things. Even if you are right, it would likely be very expensive and time consuming to prove it when asked.

My recommendation is to report such accounts as required by law. If you are not involved in criminal enterprises/tax evasion there are not going to be any problems. But if you don't report and you are found deficient then there are huge fines that could be applied.

I very much agree with CraigR.  If you pay your taxes and otherwise avoid obvious money laundering-associated activities you are very unlikely to attract any attention.  Also, if you can use it like an account (remit and withdraw funds, issue purchase and sale instructions, etc) then I would consider a reportable account.   

The FBAR reports are used primarily in terrorism and drug-related investigations.  I worked in a "sister" law enforcement office in the Department for 24 years and I know they have very little interest in the mere fact of a foreign bank account (which is not illegal).  They have limited resources like everyone else.

Yes, from a libertarian perspective it is too bad we have to report the information, and theoretically it could be used in some future situation in a way you might not like (although for a host of reasons I seriously doubt we will ever again have a 1930's-style confiscation).  But to it would be silly to break, or potentially break, the law over a reporting issue.

I report mine every year. 

     

[BearBones]

I very much agree with CraigR...  Also, if you can use it like an account (remit and withdraw funds, issue purchase and sale instructions, etc) then I would consider a reportable account.   

How do you interpret gold being held in a personal safe deposit box as being used in these ways ("like an account")? I don't mean to sound obnoxious. If I ever get around to setting up a Canadian bank SDB I will do what you and Craig are suggesting, but I don't fully understand why based on the information provided.

[HB Reader]

I don't know about a garden variety safe deposit box in a bank immediately across the border.  I really doubt that you would ever get in trouble for not reporting it, but I can't say for sure.  I guess that isn't much help.   

[BearBones]

I don't know about a garden variety safe deposit box in a bank immediately across the border.  I really doubt that you would ever get in trouble for not reporting it, but I can't say for sure.  I guess that isn't much help.     

I am going to continue to strongly argue my position for 2 reasons:

1.  For those of us within a day’s drive of Canada, I think that bullion held in a Canadian bank safe deposit box is about as pure and convenient a method as one can find for achieving international diversification of hard assets. It is increasingly difficult/impossible to buy and store gold in a Swiss vault (or the like), as might have been done in the day of HB, and everything else has additional counterparty risk and much higher expense (such as allocated gold at Perth Mint).

2.  Although Craig has made a good point that reporting is low risk, if there is no need to do so, it is superfluous, IMO. You are simply filing forms to the government for no good reason. Would you tell Uncle Sam that you had gold in your community bank SDB if there were no reason to do so?

As it turns out, this was indeed a nebulous issue until this year:

1. On 3/26/12, with the publication/revision of “Comparison of Form 8938 and FBAR Requirements”? (http://www.irs.gov/businesses/article/0 ... 6,00.html/), the IRS clearly indicates that bullion (along with real estate, foreign currency, and personal property such as collectables) are not reportable under FBAR or form 8930 as long as they are “held directly.”?

Note: Private vaulting facilities, mint certificates, and companies that buy and store bullion through an account are all reportable, since they are NOT held directly.

2. In 6/7/12, the IRS further confirmed the non-reportability of directly owned bullion held offshore with the publication/revision of “Basic Questions and Answers on Form 8938”? (http://www.irs.gov/businesses/corporati ... 61,00.html). Note: 8938 is for specified foreign assets while FBAR is specifically for accounts maintained by a financial institution in a foreign country.

In this publication, question 20 reads as follows:
“I directly hold precious metals for investment, such as gold, in a foreign country.  Do I need to report these assets on Form 8938?”?
“No.  Directly held precious metals, such as gold, are not specified foreign financial assets.  Note, however, that gold certificates issued by a foreign person may be a specified foreign financial asset that you would have to report on Form 8938, if the total value of all your specified foreign financial assets is greater than the reporting threshold that applies to you.”?

Question 22 deals with foreign safe deposit boxes:
“I have a safe deposit box at a foreign financial institution.  Is the safe deposit box itself considered to a financial account?”?
“No, a safe deposit box is not a financial account.”?

Hope this helps.

[MediumTex]

That's good stuff BearBones.

Thanks for posting.