If you’re hunting for bank accounts the IRS can’t touch, you probably want an account in a reputable international jurisdiction with low deposits that leans into banking privacy.
First of all, wanting to protect financial assets and your money from unlawful or preemptive seizure is not a crime. But, banking secrecy no longer exists and most countries take steps to ensure you disclose your foreign financial accounts, especially the United States.
So, if you are exploring international, offshore, and privacy-oriented accounts as an American, you need to make sure you understand and meet all of your reporting and disclosure requirements. With this in mind, we will explore your banking options below and share what the IRS can (and cannot) do.
Feel free to use the table of contents to jump ahead to any sections that are immediately relevant to your search.
Table of Contents
- Bank Accounts the IRS Can’t Touch
- Bank Accounts vs Asset Protection
- Frequently Asked Questions
- Ready to Explore Your Options?
Bank Accounts the IRS Can’t Touch
If you’re looking for bank accounts the IRS can’t touch in foreign jurisdictions, you need to consider key variables like your ongoing relationship balance, the safety of the jurisdictions, and the fees you are willing to pay monthly.
Additionally, an important (and overlooked) consideration is assigning beneficiaries to the account to make sure your family has access to your overseas financial assets if anything happens to you.
Before navigating these “offshore considerations” you first need to decide whether opening overseas will offer the benefits (or protection) you’re after. For example, you might be worried about your accounts or funds being frozen. However, in most cases, the IRS will only freeze financial accounts if that person has an income tax debt to the IRS or is unresponsive to IRS communications.
When this happens, the IRS will get in touch with your bank and ask that they place a hold (or freeze) on your accounts. At this point, they will not take your money. However, if you do not resolve the outstanding debts, then it will advance to an account levy.
Before the IRS levies an account they will notify you. This notice comes in the form of a “Final Notice of Intent to Levy and Notice of a Right to a Hearing.” After this final notice is issued, you have 30 days to sort out your debts with the IRS. If you don’t the IRS is taking control of your bank account.
The account levy (along with garnishing accounts) is the most popular way that the IRS recoups debts. Less popular ways include seizing and selling physical assets, though that is possible as well.
In other words, the IRS doesn’t necessarily need to freeze your bank account to collect payment for tax debts. Instead, they can simply take money from your pay and freeze your physical assets in the United States.
For this reason, if you are concerned with tax debt, you may want to consider hiring a tax consultant to directly negotiate with the IRS. This can help to resolve any existing debts or potential debts that you may face.
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Bank Accounts vs Asset Protection
Many people confuse “asset protection” with “holding assets” outside of their home country. But, as we’ve shared in past articles, a bank account cannot offer asset protection on its own. This is true whether your account is located in your home country or a far-flung South Pacific island.
Instead, asset protection is achieved through asset protection vehicles like trusts, foundations, and in some cases foreign LLCs. Of course, the common thread that ties these structures together is that they are registered in jurisdictions with strong asset protection laws.
With this in mind, if you are concerned with asset protection, you should speak to a qualified tax professional. Specifically, someone who specializes in asset protection and understands the intricacies of your citizenship and residency.
Frequently Asked Questions
Below are two of the most common questions that we receive from people looking to open bank accounts the IRS can’t touch. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Can the IRS Look at Your Bank Account Without Permission?
If you hold foreign financial accounts, the IRS will have access to your bank account information through FATCA reporting via the financial institution. Likewise, if the aggregate value of your foreign accounts exceeds 10,000 at any point in the year, you are required to report the financial accounts personally.
What Transactions Do Banks Report to the IRS?
Generally speaking, transactions over $10,000 in value must be reported to the IRS. This is true whether the transaction is in cash, cashier’s check, treasurer’s check, drafts, or any combination of financial instruments with a face value of more than $10,000. Transactions matching this description would need to be reported via a Currency Transaction Report or CTR.
Ready to Explore Your Options?
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