TCM: Steven Mopsick, US Tax attorney

Today the meeting at the BCP started early, at 10:15, not because I changed the time, but because the room was full, and the doors were closed. The topic of great interest to US taxpayers,  taxes and the new federal requirements imposed by FATCA. I wrote about FATCA May 19 2011, the post brought us the speaker who did todays presentation.  Mr. Mopsick read my post and asked if he could speak to at our meeting, I of course said yes.

Mr. Mopsick has years of experience as a Tax attorney both within and outside the IRS and he provided a detailed and clear presentation of the changes FATCA imposes on the ordinary expatriate taxpayer. He did point out our concerns about this seemingly draconian law are not shared in the US, there people are both unaffected and unconcerned, as US citizens abroad are being presented new hurdles and reporting requirements.

The text below is full of links to the IRS and tax sources for forms and circulars, some are PDF links and will download forms to your computer.

The summary is this, the new law adds to the reporting requirements of US taxpayers with assets out of the US. The original requirement of filing a FBAR Form TDF 90-22.1. This form requires you to report all foreign bank accounts if the  total deposited in the sum of all those accounts $10,000 or more at any time in the year.

He pointed out that despite Panamanian laws if you control the check book or assets of a corporation or foundation, even if you are not the owner of the stock, to the IRS it is your asset. Those accounts count for the FBAR. If you are like many people here you have never heard of a FBAR and never filed one. If not, the penalty for failing to file is $10,000, BUT if you have had taxable earnings in the off shore entities you can retroactively complete a pile of FBAR’s and mail them in with a letter saying, oops, sorry I was ignorant and the IRS will  not assess a penalty.

If however you had taxable earnings and did not report them under the current amnesty program you can pay the tax bill with interest and a sizable penalty of 27.5% of assets at their highest point of value to avoid criminal charges. I would certainly talk to a Tax Attorney before recommending this action.

If this was not enough to aggravate, there is a new form effective with your 2011 tax return. The form number 8938 requires much more information about your offshore assets. The circular explaining it is at this link .

If you live in Panama this portion might take you off the hook for this form.

“Taxpayers living abroad.
If your tax home is in a foreign country and you meet one of the presence abroad tests described next, you satisfy the reporting threshold if you are not filing a joint return and the total value of in determining the total value of your specified foreign financial assets is more than $200,000 on the last day during the tax year or more than $300,000 at any time during the tax year.

If you are married and file a joint income tax return, you satisfy the reporting threshold only if the total maximum
value of all specified foreign financial assets you or your spouse owns is more than $400,000 on the last day of the tax year or more than $600,000 any time during the tax year. plan.

Presence abroad.
You satisfy the presence abroad test if you are one of the following.
• A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted during the tax year.

• A U.S. citizen or resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months during the tax year being


If you do not qualify as a foreign resident the threshold for reporting is much lower, read the linked document above.

This is a link to the current draft form : Form 8938

Other forms to make life fun for US citizens include

Reporting a foreign Corporation Form 5471

Reporting a Foreign Partnership Form 8865

Reporting a Foreign Trust (Foundation) Form 3520 

Mr Mopsick explained that it is to your advantage to use a qualified CPA or other tax consultant approved by the IRS to assist in tax preparation, he does not suggest you do it yourself.

The meeting lasted from 10:15 to 1pm and many many questions, I am only going to clarify two points here.

1. The fear that in 2013 you will need to pay 30% to the IRS to remove your money from the US. The FATCA regulations have not yet been published for comment and therefore are not available. But the intent of the law is to force non US banks into contracting with the IRS and reporting on US Taxpayers. If you move your money from a US bank to a complying foreign bank there will be no 30% witholding. If you go to an ATM and withdraw your money there will be nothing withheld. Beyond that we need to wait for regulations.

2. As far as the IRS is concerned our local corporations and fundaciones are transparent. They will attribute assets and income to whomever controls the money. This in no way effects the laws of Panama but does mean if you have checkbook on a Panama Foundation or Corporation as far as the IRS is concerned it is your money.

There was much more and I will let others post more under comments. I am not sure if Mr. Mopsick is looking for clients in Panama, he is heading out to seminar lawyers and bankers in Panama City next. Still I am posting his contact information if you wish to followup with him.

Steven J. Mopsick

Federal Tax Attorney

Not admitted in California

Practice Limited to Matters before the

Internal Revenue Service

United States Treasury Department

United States Tax Court


Fax:  916.550.5059




  1. Judy Sacco says:

    If you use TurboTax to do your taxes, it will prompt you to fill out form 8938 and TDF 90.22.1 and will give you a nice printed version with all the info you enter. I just did it, and it was easy. 8938 goes with the 1040. The TDF is mailed to another IRS address. You have until June 30 to send the TDF.

  2. Well …. Plan A was expatriation, but that is morphing into Plan B: find a Russian bride to own the corporation and then expatriate. It’s a whole new can of worms, but it surely would be less intrusive and less risk than dealing with the IRS. Anyone interested in my slightly used wife? She still has a few good miles left and is a good cook.

  3. Sure would appreciate a guide for new expats coming to Panama. The benefits of such a reference would go a long way to keep as much of our money in our pockets – to spend in our new communities as we see fit; to stay out of the jaws of US/IRS, and to optimize our new lives there. Having a David-based centralized clearing house for real estate, tax issues, Panama legal advice, and routine / every day matters, like getting a driver’s license, registering one’s vehicle, and so on.

  4. Yes, you are correct the the meeting did start early! I showed up at 10:25 because I READ the “reminder” email stating that the meetings start at 10:30 and was not allowed in. Thanks!

  5. Just don’t control over your money and it’ll be fine. If a corporation is controlled by another corporation that is controlled by some Julio Gonzales and the paycheck is redeemed by some Marta Caballero, the cash physically delivered by Rodriguez Montenegro and you’re depositing the cash into x bank in order to wire it into y bank then the IRS (who’s hopefully listening to this here :) is having a hard time to follow up the $20 notes that have been circulating around for a while.

    Enjoy & have fun…

  6. Sorry but the house was full by 10:15 and the BCP closed the doors.

  7. @Judy: Judy, as stated in the article, Form 8938 currently is a draft form . Is it permissible to fill out and send in a DRAFT Form?
    “This is a link to the current draft form : Form 8938″
    Wouldn’t the term DRAFT mean that it’s not final and should not be used until FINAL?

  8. Judy Sacco says:

    I don’t know about it being a draft. All I know is TurboTax included it, and I filled it out. It has basically the same information as the TDF form.

  9. Susan Guberman-Garcia says:

    There is one interesting question that I have not seen answered anywhere: How is the “value” of a Panamanian corporation to be computed for purposes of determining if it meets the requirements for filing the Form 8938. If its a bank or securities account, its easy to determine: What is the dollar amount in the account? But what if its a corporation, not a bank account, and the corporation doesn’t have a bank account?
    1. The “book value” of the corporation (the stated value of the shares, which is almost always $10,000);
    2. If the corporation owns real estate, how is the “value” of that real estate to be computed? For example, is it:
    a. the value of the property assessed by Panamanian tax authorities?
    b. The value of the property assessed by a non governmental assessor?
    c. The most recent sales price of the property?
    d. Your “estimate” of what the “market value” of the real estate is (always an iffy, highly subjective thing…)
    I’d love to hear from the tax expert on this issue…..

  10. Susan G
    I would as well like an answer to your question.
    Many of us here have a modest home in a corporation which does not have a bank account . This said corporation does not do business, does not make profit. We do not (nor ever) have more than $10K in bank accounts here….and we pay all our taxes every year. We are retired and not earning assts outside of the US. Everything we have here, own here and recieve here we have paid all US tax on. What’s to report? Nothing is what I’m told by my CPA. I’ve heard other stories from people supposedlyh “in the know” and lots of fear of fines and jail if “you don’t file this or that form”. Plus there’s increasing numbers of IRS agents here just waiting to find us out…us non-filers.
    I’d like a definate answer and have all this put to rest once and for all.

  11. Alison, FATCA is not about you, it is a bank reporting requirement.

    If you never have more that $10,000 cumulative in an offshore bank account you do not need to file an FBAR. If you do not have combined assets oversees, as a married couple of $600,000 you do not need to file a 8938. They are not looking for you, they are looking for people earning or hiding big sums overseas and not declaring them.

    There are lots of panicky lies being spread by people who think they know something that is not real.

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