When I went to law school students generally felt the most complicated area of the law was tax. We all feared tax because it seemed like you had to be a genius to understand it. That’s why I was attracted to Gary Wolfe’s newsletters. Pretty much anyone can read and understand them. Wolfe, who is an international tax attorney, has written about 20 books and over 150 articles on tax law and has received over 40 awards for his work. I suspect he only sleeps maybe, three hours a night, because he’s won all kinds of awards and his foot prints are all over the internet. He works closely with Mark Ivener, a U.S. immigration attorney also working in the field of investor immigration. Both are centered in Los Angeles.
Lately I have been emailing back and forth with Gary because in my work as an immigration attorney, when I talk to investors who want to immigrate to the United States, I am often asked questions about tax matters. I answer that because serious consequences can arise for investors who do not bother to inform themselves on tax exposure, the client needs to consult an expert in the field. As an illustration, the following recent summary prepared by Gary with his colleague David E. Richardson, who is a financial advisor, provides an excellent run down of the extent to which a new immigrant is exposed to U.S. taxation:
1) Imposition of Federal and State (e.g. CA) “blended income tax”rates up to 55%;2) 2017 US Estate & Gift Tax of 40% (after personal exemption of $5.49m or, combined $10.9 million plus gift exemptions of $ 14,000 each for that year thus totaling $11.26m for husband and wife).3) Risk of creditor attachments (>1million lawsuits filed yearly in California; plaintiff’s attorneys look for “deep pocket defendants” who hold assets titled in individual names or closely held entities).4) US world wide information reporting requirements for undisclosed foreign bank accounts (FBAR filings/FinCen Form 114 for foreign (offshore) bank accounts over $10k; failure to file is an annual 50% penalty, which can be up to 300% if non-tax compliant for 6 years. Willful FBAR violations failure can also result in a 10-year felony for each year FBAR not filed.5) Foreign Account Tax Compliance Act (FATCA) is reporting by foreign banks on US account holders (adopted 3/10, effective for tax years thereafter). Form 8938 is a separate tax filing due (attached to Form 1040) for foreign financial assets over $50k. Thus taxpayers with foreign bank accounts over $50k have to file both the FBAR and the FATCA filing (Form 8938) or risk multiple civil and criminal tax penalties.
This summary illustrates just how important tax planning is to the immigrant process. Through intelligent planning the impact of all these provisions on the new immigrant can be minimized. But this is beyond my field of expertise and as I’ve mentioned, requires the help of tax advisors.
Taxation is not the only area that my clients ask me about. In dealing with EB5 investor immigration, clients sometimes ask me to guide them on what regional centers are suitable for their investments. Here again I have to defer to financial experts. I am not qualified to advise on the suitability of regional center projects from a financial point of view. In this case, I advise clients to talk to their own financial advisors or to look to advisors like EB5 Diligence that does financial analysis of regional center projects for clients to use to evaluate whether they wish to invest there. Rupy Cheema and Kurt Ruess from that firm have prepared such reports on a good many of the EB-5 projects that are available for that purpose.
Finally, when it comes to inadmissibility advice, again this is a field where clients need expert advice. Applications for waivers of criminal inadmissibility are a good example. Assessing whether a previous conviction was a crime of moral turpitude or an aggravated felony can be very tricky and will determine eligibility of the client to enter the United States. A good starting point is this article. Also, Norton Tooby, a U.S. attorney, has an excellent data base that is most helpful in this area and it can be found here. Health issues, such as substance abuse, medical problems and vaccinations are another area to be concerned about. An excellent starting place in this area is this article from Nolo.
In all these cases, experts such as those I have identified here, are needed to help clients wade through the complexity of the problems they are dealing with. Whoa be it to those who seek to cross these landmines without the advice of experts.
This article is reprinted from an article formerly published in the Forbes.