I often get the question from Sovereign Society members and readers as to whether or not there is any U.S. law requiring reporting to the U.S. government the holding of gold, silver or other precious metals in foreign accounts or offshore storage.
The question arises because the law does require a U.S. person to report on the annual income tax IRS Form 1040 if they have any direct or indirect control over any offshore "account". If that account exceeds $10,000 at any time the calendar year, they also must file a foreign bank account disclosure form (FBAR), due no later than June 30th each year.
Vern Jacobs Says
My friend and long time associate, Vern Jacobs CPA, CLU, recently addressed this question in his free online "Jacobs Report" sent in by a U.S. person who asked whether metals held in their name at the Perth Mint in Australia had to be reported to the IRS or U.S. Treasury on the forms mentioned above.
The inquiring person had research the Perth Mint web site and among other statements, found this: "Perth Mint Depository Services (PMDS) operates like a private client bank account or stockbroking account, except with balances of precious metals in troy ounces."
The web site also described Perth Mint Depository Certificates as allowing clients to hold, deposit and withdraw funds in various national currencies, place market orders for precious metals, plus exercise put and call options for gold and silver.
Wise Advice
Vern Jacobs, assessing these facts gave this opinion, with which I concur: ''Perth Mint states that they function like a bank or brokerage account except with balances of precious metals in troy ounces. I mention this because I anticipate questions from readers who will want to use that 'exception' as a justification for not reporting [to the IRS] funds held in bullion form in a segregated account."
"To the extent that the bullion can be converted into other currencies or used to purchase investments it seems to me that the IRS will treat the account as a foreign financial account. To the extent that the bullion is physically being stored in a segregated vault or deposit box and can't be converted into currencies or investments as part of an integrated banking service, then there might be some justification for claiming it is not a financial account...I agree that the IRS is likely to argue that the Perth Mint program is a foreign financial account."
My view is that when in doubt about reporting to the IRS, err on the side of caution and go ahead and report. Better safe than sorry.
Learn More
This November 5-8, I'll be in Cancun, Mexico with the rest of The Sovereign Society "professors" for our third annual Offshore Advantage Academy.
In three days, we'll cover questions about which offshore assets you have to report to the IRS (plus three you can keep a secret), how to save on your tax bills, get "guaranteed" returns with investments most Americans never hear about, buy and sell stronger currencies than the dollar and much more.
A word to the wise: This seminar has sold out for the past two years, so if you're interested please sign up now early while we can still accommodate you. Get all the details here.
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