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Zaher Fallahi, Attorney, CPA; What are the consequences of carrying more than $10,000 in currency or other monetary value, into or out of the US?

Posted by: Zaher Fallahi
Posted On: Oct 25, 2013

I practice the Customs and Border Protection Laws, Laws of the US Sanctions against Iran, and the US Tax laws. I get the above question often on my radio or TV programs or through telephone calls to my offices. Here is the answer:

There is no limit as to how much money can be taken out of or brought into the United States. However, a person or persons traveling together and filing a joint declaration (CBP Form 6059-B), carrying more than $10,000 in the US currency or currencies of other countries or negotiable monetary instruments, must answer “Yes” to the question number 13 (thirteen) on the form 6059-B. Then, they will be required to fill out a form “Report of International Transportation of Currency and Monetary Instruments” FinCEN 105. Passengers who falsify the form 6059-B or restructure their money between or among the family members travelling together or fill out more than one form to avoid filling out the form 105 and get caught, risk civil penalty of forfeiting their entire funds and criminal penalty of up to five years in prison. Generally, these funds may be recovered through a legal process and assistance of an experienced attorney.

Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of the Treasury and requires filling out the form 105. The Director of FinCEN is appointed by the Secretary of the Treasury and reports to the Treasury under Secretary for Terrorism and Financial Intelligence. FinCEN’s mission is to enhance the integrity of financial systems by facilitating the detection and deterrence of financial crime.

The information revealed on the form 105, for example source of the funds, may have other legal significance; such as international tax issues. Therefore, it is extremely important that individuals filing the form 105 consult a tax attorney, be aware of the potential legal and tax consequences and take appropriate remedial actions. Contrary to mistaken belief, “the Report of International Transportation of Currency and Monetary Instruments” are not directly related to the US Sanctions Laws against foreign countries or the US Immigrations Laws. I hope this has been helpful information.

If your money or non-cash property has been seized at a US airport or have concerns regarding the legal and tax implications of transferring your asset into the US, we can assist you. Please call us at (310 719-1040 (Los Angeles) or (714) 546-4272 (Orange County).

Office of Foreign Assets Control (OFAC); Legal & Tax Implications of Transfer of Funds From Iran

posted Oct 24, 2013, 9:38 PM by Zaher Fallahi   [ updated Oct 24, 2013, 9:58 PM ]

By: Zaher Fallahi, Attorney At Law, CPA

The Iranian Transactions & Sanctions Regulations, 31 C.F.R.  Part 560 (the “ITSR”), generally prohibits the exportation, re-exportation, sale, or supply of any goods, technology, or services directly or indirectly, from the United States or by a U.S. person, wherever located, to Iran or the Government of Iran. The ITR also prohibits U.S. persons (citizen, green card holder or US businesses), wherever located, from engaging in any transaction or dealing in or related to goods or services of Iranian origin, or owned or controlled by the Government of Iran; or goods, technology or services for exportation, re-exportation, sale or supply, directly or indirectly, to Iran or the Government of Iran.  The Office of Foreign Assets Control (OFAC) is a division of the US Treasury that administers and enforces economic sanctions programs against countries and groups of individuals.

Despite the laws of sanctions, a US person may still conduct one of the prohibited acts either by obtaining a license from OFAC or based on an exception. A license is an authorization from OFAC to engage in a transaction that otherwise would be prohibited. There are two types of licenses: general licenses and specific licenses. A general license authorizes a particular type of transaction for a class of persons without the need to apply for a license. A specific license is a written document issued by OFAC to a particular person or entity, authorizing a particular transaction in response to a written license application. Although, OFAC has no formal application form for seeking a license, it is imperative to complete the request for a license properly and with the knowledge of legal and tax consequences of the desired transaction. Employment in Iran or conducting a business there by a US person requires an OFAC license, unless exempted by law.

IMPORTS FROM IRAN – Goods or services of Iranian origin may not be imported into the United States, either directly or through third countries, with the following exceptions:  a) Gifts valued at $100 or less; b) Information and informational materials;  c) Household and personal effects, of persons arriving in the United States, that were actually used abroad by the importer or by other family members arriving from the same foreign household, that are not intended for any other person or for sale, and that are not otherwise prohibited from importation; and  d) Accompanied baggage for personal use normally incident to travel.

FINANCIAL DEALINGS WITH IRAN – New investments by U.S. persons, including commitments of funds or other assets, loans or any other extensions of credit, in Iran or in property (including entities) owned or controlled by the Government of Iran are prohibited. Exceptions are as follows: a) a noncommercial family remittance; b) an exportation to Iran or importation from Iran of information and informational materials; c) a travel-related remittance; d) a payment for the shipment of a donation of articles to relieve human suffering; or e) a transaction authorized by OFAC through a specific or general license.

Even if a particular transaction is authorized under a general license, or covered under an exception, it is advisable to obtain an OFAC “interpretive guidance”. This written document may be used to avoid report of a potential Suspicious Activity Report (SAR) by a bank, or it may used as a defensive measure in handling a tax controversy with the IRS.

Tax Implications

The tax implication of a transaction subject to the ITR depends on its particular facts and circumstances, as follows:

A-        Inheritance Tax.  If the decedent is a US person, the estate of the decedent files an Inheritance Tax Return. For the year estates of up to $5,250,000 are not taxable. If the decedent is not a US person, the recipient may be subject to US filing requirements.

B-        Gift Tax.   If the donor is a US person, the estate of the decedent files a Gift Tax Return. If the decedent is not a US person, the recipient may be subject to US filing requirements.

C-        Transactions that are neither inheritance nor gift are subject to regular US tax laws. In all above situations, the recipient must comply with the application of “Report of Foreign Bank and Financial Accounts (FBAR)” for the amounts in excess of $10,000, and Foreign Account Tax Compliance Act (FATCA) for the amounts in excess of $50,000 (single living in the US).

US Persons Living in Iran The US persons living in Iran are subject to the following:

1-         Legal, subject to all Laws of Sanctions, the same as any other US person, plus obtaining license to work in Iran, exception; IMF, World Bank and UN Others (ask the organization before working for them).

2-         Tax, US tax laws apply and are required to file their annual tax returns timely. Application of the US tax laws is independent of the laws of sanctions. Generally, these individuals are subject to International Taxation, like any other US person living anywhere in the world. Under the circumstances, such persons may be eligible for Foreign Earned Income Exclusion of up to $97,600 for 2013. Does not apply to other than earned income such as Investments and so forth. Must file tax return o claim the exclusion. This law has many exceptions.

For assistance with transfer of money from Iran from both legal and tax viewpoint, you may contact Zaher Fallahi, Attorney At Law, CPA, at (310) 719-1040 (Los Angeles) or (714) 546-4272 (Orange County), or e-mail to [email protected]