Warka Tax Implications

[roger-write]

As I understand it, the IRS is working on a crackdown of offshore account holders who have more than $10,000 in assets offshore. I don't know all the ins and outs, but apparently if you don't voluntarily disclose such offshore accounts by (interestingly enough) end of August, 2011 you could face serious consequences such as stiff penalties and possibly even jail time.

This brings me to a couple of questions. First off, I have a Warka account, but it is currently valued less than $10k, so presumably there are no worries at the moment. However, if it RV's, I assume those of us with Warka accounts would need to immediately disclose to the IRS the account or face losing big or even imprisonment, which would be a sad day, immediately following one of the best days of our lives. Any comments on this?

Equally as important as this issue is, is what I have read about concerning Warka's position that we can only wire up to, but not more than, $10k per day out of the account. Here is my concern and would appreciate any feedback. Let's say it RV's and, like good U.S. Citizens we report our Warka account which would then likely be valued in the millions of USD. So the IRS thanks us and then requires us to send them a check for some percentage of our gains. You might see where I'm going with this. How do we send the IRS a million or two in taxes if we can only get $10k per day out of Warka? Could this possibly end up being like those who win the $2 million dollar home but go broke because they can't possibly afford to pay the taxes on it?

[War Eagle]

Yes,this is a problem-----------------------but a good one. Under these circumstances I'm sure Warka will cooperate with you. They have signed the Patriot Act---so,Uncle Sam knows all about OUR accounts with Warka I have been filing Form TD F 90-22.1 for the last several years. I sure hope we have this PROBLEM SOON!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Redwizard]

Good question, but I think the IRS would put you on a payment plan, of course with interst.

[elblondee]

It appears you have a choice:

In an effort to reduce the likelihood of offshore accounts being used to evade taxes, European governments participating in the European Union have agreed to the Savings Tax Directive. This directive makes EU residents, with offshore bank accounts, choose between one of two options:

* Allowing their offshore bank(s) to report savings income directly to local tax authorities.

* Pay tax immediately at such time income is provided to the account holder by their offshore bank.

Over time, it is expected that an increasing number of offshore banks will be affected by this decision. In addition, if the accountholder chooses the second option mentioned above, then the tax rate used to collect monies due is scheduled to rise in the years 2008 and 2011.

These subsequent increases in the tax rate are viewed as a way of eventually forcing all account holders in offshore banks to choose the first option mentioned above. That is, allowing those banks to report directly to their country's tax collecting agencies

This was copied from:

http://www.money-zine.com/Investing/Investing/Offshore-Bank-Account/

[Guest ac63corvette2]

There was a box to check on the fed return, if you have an offshore bank account, I checked it last year and the year before. I also reported and paid tax on the earned interest . By the way your base account is not taxed until it is exchanged for US dollars. With what I have in IQD savings (7%) and IQD CD (10.5%) I won't be too quick to close out the accounts, especially with what I hold cash in hand.