Ofac License Iran Inheritance
ZaherFallahi Certified Public Accountant (CPA) and Attorney At Law, is a CPA and Lawfirm with emphasis on U.S. Tax Law and Office of Foreign Assets Control (OFAC) Regulations. Weare licensed in California and Washington D. C., and represent tax and OFACclients throughout the U.S. Please call:
(310) 719-1040 (Los Angeles)
(714) 546-4272 (Orange County)
Toll Free 1-877-687-7558, click here for OFAC Attorney
E-mail taxattorney@zfcpa.com
Harvard LawSchool
Zaher Fallahihas completed “Negotiation and Leadership” and “Leveraging the Power ofEmotions as You Negotiate” Certificate Programs at Harvard Law School.
Iranian OFAC New Developments
June 27, 2018. Iranian OFAC, US Revokes JCPOA (BARJAM) related General Licenses H and I.For details see US Revokes Iranian OFAC General Licenses H and I
May 8, 2018. Iranian OFAC, United States withdraws from the Joint Comprehensive Plan of Action (JCPOA) also known as the “Iran Nuclear Deal”. For details see US Withdraws from JCPOA (BARJAM)
- Statement by Secretary Steven T. Mnuchin on Iran Decision. Treasury’s Office of Foreign Assets Control (OFAC) is taking immediate action to implement the President’s decision. Sanctions will be reimposed subject to certain 90 day and 180 day wind-down periods. At the conclusion of the wind-down periods, the applicable sanctions will come back.
- For example an individual who has property (money, valuable items, inheritance, etc.) in Iran could obtain an OFAC license to get authorization to transfer the property to US or do whatever dealings is necessary to sell the property in Iran (hiring agents, lawyers, accountants in Iran) and bring the proceeds to US.
What is OFAC?
Officeof Foreign Assets Control (OFAC) is a division of the US Treasury thatadministers the US economic sanctions programs against many countries,including Iran. OFAC issues specific licenses for conducting transactionsin Iran, and enforces the US economic sanctions laws against persons who mayviolate OFAC Regulations. Depending on the egregiousness of violations,OFAC may refer perpetrators to the Department of Justice for criminalprosecution.
What is anIranian OFAC license?
AnIranian OFAC license is an authorization or permit from OFAC to engage in atransaction in Iran that otherwise would be prohibited by law. There are twotypes of licenses; OFAC general licenses and OFAC specific licenses.
Who are USpersons?
USPersons are defined as US Citizens, Green Card Holders, individuals live in theUS, or US legal entities such as corporations, partnerships and LLCs.
Who needs anOFAC specific license?
Transactionsnot covered under the OFAC General License, may require an OFAC specificlicense to sell property in Iran and transfer the related funds to the US. Thefollowing are some transactions subject to OFAC Specific License:
(1) Selling a property in Iran acquired after becoming a US person;
(2) Selling a property acquired by gift (arguably);
(3) Selling a property built or developed after becoming a US person;
(4) Selling an income producing asset or commercial property;
(5) Closing a bank account in Iran;
(6) Purchasing a property in Iran; and,
(7) Engaging in employment or self-employment, subject to exceptions.
(8) Note,(3), (4), and (5) above, may also require an OFAC Voluntary SelfDisclosure ('VSD');
Important: Transfer of non-commercial familyremittances such as “cash inheritance” or “cash gift” do not require OFAClicenses. However, consultation with an OFAC compliance attorney is recommendedto prevent potential OFAC problems. Although, most Iranian transactions appearto be covered by OFAC General License provisions, it is advisable to consultadvice from an OFAC lawyer and a lawyer knowledgeable with the Bank Secrecy Act(BSA), to prevent potential un-intended consequences.
Toll Free 877-687-7558License Applications: Apply for an OFAC License Online Application for the Release of Blocked Funds (TD-F 90-22.54) Trade Sanctions Reform and Export Enhancement Act (TSRA) License Application - (For exports of agricultural commodities, medicine and medical devices to Iran and Sudan).
General License Ofac Iran
OFAC VoluntarySelf-Disclosure ('VSD')
OFACVoluntary Self-Disclosure (VSD) refers to self-initiated notification toOFAC of an apparent violation by a person that has committed, or otherwiseparticipated in, an apparent violation of a statute, Executive Order, orregulation administered or enforced by OFAC, prior to or at the same time thatOFAC, or any other federal, state, or local government agency or official,discovers the apparent violation or another substantially similar apparentviolation.
Forthese purposes, ‘‘substantially similar apparent violation’’ means an apparentviolation that is part of a series of similar apparent violations or is relatedto the same pattern or practice of conduct. Notification of an apparentviolation to another government agency, but not to OFAC, by a Person, which isconsidered a VSD by that agency, may be considered a VSD by OFAC, based on acase-by-case assessment.
ZaherFallahi, an Iranian OFAC Sanctions Lawyer, CPA, advises Iranian -American OFACclients in responding to OFAC Administrative Subpoena, filing an OFAC VoluntarySelf-Disclosure (VSD) petition and responding to inquiries by IRS, CriminalInvestigation Division of IRS, Financial Crimes Enforcement Network (FinCen).
We help clientswith OFAC problems
ZaherFallahi, Iranian OFAC Lawyer, CPA, advises clients with respect to sale ofproperty in Iran and transfer of net proceeds to the US according toIranian OFAC Regulations and the US tax laws. We practice asOrange County and Los Angeles Iranian OFAC Attorney in California. ZaherFallahi has a radio program in a Los Angles radio station on OFAC Regulations regarding Iran and takesquestions from the public on Iranian OFAC Sanctions Regulations. As a LosAngeles and Orange County Tax Attorney, CPA, we advise clients with taximplication of OFAC related transactions.
Itis important to know how OFAC Sanctions Regulations apply to the transactionsoccur in Iran before filing for an OFAC license or causing transactions in Iranthat may be covered under OFAC general license. OFAC general licenserefers to transactions which are exempt from OFAC specific licensingrequirements. General license doesn’t mean that such transactions are tax free.OFAC Sanctions Regulations do not discuss tax consequences. Most Iraniantransactions covered by general license have tax implications.
Compliancewith OFAC Regulations can prevent potential violations which may haveun-intended monetary cost and criminal prosecution.
Many OFACcases entail one or more of the following tax issues:
(1) Income Tax;
(2) Capital Gains Tax;
(3) Gift Tax;
(4) Inheritance Tax;
(5) Annual Return to Report Transactions with Foreign Trusts and Receipt of CertainForeign Gifts;
(6) Offshore Voluntary Disclosure Program (OVDP);
(7) Report of Foreign Bank & Financial Accounts (FBAR); and,
(8) Foreign Account Tax Compliance Act (FATCA) and other Tax law.
Toll Free 877-687-7558OFAC History
TheUS Treasury Department has a long history of dealing with sanctions, dating tothe War of 1812; Secretary of the Treasury Gallatin administered sanctions imposedagainst Great Britain for the harassment of American sailors.
Duringthe Civil War (1861-1865), the US Congress enacted a law which prohibitedtransactions with the Confederacy; a secessionist government established in1861 by seven Southern States who were called slave states. OFACis the successor to the Office of Foreign Funds Control (the “FFC”), which wasestablished at the advent of World War II following the German invasion ofNorway in 1940. The FFC program was administered by the Secretary of theTreasury throughout the war.
TheFFC’s initial purpose was to prevent Nazi use of the occupied countries’holdings of foreign exchange and securities and to prevent forced repatriationof funds belonging to nationals of those countries. These controls were laterextended to protect assets of other invaded countries.
Afterthe United States formally entered World War II, the FFC played a leading rolein economic warfare against the Axis powers (German, Japan and Italy) byblocking enemy assets and prohibiting foreign trade and financial transactions.
OFACwas formally created in December 1950, following the entry of China into theKorean War, when President Truman declared a national emergency and blocked allChinese and North Korean assets subject to U.S. jurisdiction.
Iranian OFACRegulations Overview
OFACis sister agency of the IRS and administers and enforces economic sanctionsagainst countries and groups of individuals. The Iranian Transactions& Sanctions Regulations, Title 31 C.F.R. Part 560 (the “ITSR”), of Officeof Foreign Office Assets Control (OFAC) Regulations, generallyprohibit the exportation, re-exportation, sale, or supply of any goods,technology, or services directly or indirectly, from US or by a US person,to Iran or the Government of Iran.
TheseIranian OFAC Sanctions Regulations prohibit US persons (citizens, greencard holders or US businesses), from engaging in any transaction ordealing in or related to goods or services of Iranian origin, or owned orcontrolled by the Government of Iran, or goods or technology or servicesfor exportation, re-exportation, sale or supply, directly or indirectly,to Iran or the Government of Iran.
Employmentin Iran or conducting a business in Iran such as practice of medicine, law,engineering, dentistry, consulting, software development, real estatedevelopment, construction, etc. by a US person requires an OFAClicense, unless exempted by law. And, there is a high likelihood thatsuch request will be denied, because they may violate the Iranian OFACRegulations.
Despitethese OFAC prohibitions, a US person may still conduct some prohibited actseither by obtaining an OFAC specific license or based on an OFAC exception. See General licenses H IranNuclear Deal, BARJAM
JointComprehensive Plan of Action ('JCPOA'), Iran Nuclear Deal (BARJAM inFarsi)
Followingthe 2013 nuclear negotiations between Iran and the 5+1 superpower nations,resulted in lifting of certain non-US or secondary sanctions on January 16,2016, See IranNuclear Deal, BARJAM
Contraryto what was expected, most of the US sanctions against Iran remained in effect. I receive many calls from the Persian-American community as to whetherOFAC has been abolished forever. My answer is “no”. I further explainthat OFAC was not created for Iranian purposes and will not cease to exist whenthe Iranian sanctions are completely lifted in the future.
Importationsfrom Iranian to U.S.
Goodsor services from Iran may not be imported into the United States, eitherdirectly or through third countries, with the following exceptions:
1-Gifts valued at $100 or less;
2-Information and informational materials;
3-Household and personal effects, of persons arriving in the United States, thatwere actually used abroad by the importer or by other family members arrivingfrom the same foreign household, that are not intended for any other person orfor sale, and that are not otherwise prohibited from importation;
4-Accompanied luggages for personal use normally incident to travel; Download lagu anoman obong koplo monata.
5-Foodstuffs; including caviar and pistachio, effective January 16, 2016; and,
6-Persian Carpet, effective January 16, 2016. See IranNuclear Deal, BARJAM
OFAC GeneralLicense
AnOFAC general license authorizes a particular type of transaction fora class of persons without the need to apply for an OFAC license. Transfer ofcash inheritance or cash gift are examples of general license.
OFAC SpecificLicense
AnOFAC specific license is a writing issued by OFAC to a particularperson or entity, authorizing a particular transaction in response to a writtenlicense application, for a specific period time, generally two years. Saleof a property acquired in Iran subsequent to becoming a US person and transferof the related funds to the US is an example of specific license.
Personsengaging in transactions pursuant to OFAC general licenses or OFAC specificlicenses must make sure to comply with all OFAC specific license requirements.OFAC Sanctions Regulations may contain statements of OFAC’s specific licensingpolicy with respect to particular types of transactions.
Do I need anOFAC license?
EffectiveOctober 22, 2012, sale of inherited property in Iran, or property owned beforebecoming a US person, and transfer of the related proceeds to the US, donot require OFAC Specific Licenses.
Additionally,transfer of non-commercial family remittances such as“cash inheritance” or “cash gift” do not require OFAC licenses.Notwithstanding, consultation with OFAC attorney is recommended to avoidpotential OFAC problems. Although, most transactions may seem to be authorizedunder OFAC General License provisions, it is advisable to seek legaladvice from an OFAC attorney to prevent missteps.
Itis also important to obtain tax advice from a tax attorney with knowledgeof international tax laws and a counsel familiar with the laws of BankSecrecy Act ('BSA'), as well.
TheBSA, also known as the Currency and Foreign Transactions Reporting Act, isa legislation passed by the United States Congress in 1970 that requiresUS financial institutions to collaborate with the US government in casesof suspected money laundering and fraud.
Therefore,the US banks and financial institutions are cautious about their ownsecurity, and strive to prevent any potentially illegal funds being transferredthrough them.
This sectionof the bank issue a “Suspicious Activity Report (SAR)” when they discern asuspicion. From time to time, these financial institutions reject theincoming funds and return them to the country where they came from.
Itis recommended to seek legal advice from an Iranian OFAC lawyer regardingdocumentation of the source of funds as to “gift” and “inheritance”,among other things.
E-2 and EB-5visa applicants
SinceOctober 22, 2012, the OFAC General License provisions apply to the seekers ofE-2 visa and EB-5 visas. In other words, you do not need to obtain OFACSpecific License for these transfers.
Tax implicationof E-2 and EB-5 visa holders
Holdersare visas E-2 and EB-5 visas become US persons and subject the US taxation ontheir world wide income.
Goods covered byOFAC General License
Exportationof most medical devices, medicine, and food stuffs from US to Iranare also authorized by OFAC General License. Merchants exporting the aboveitems to Iran are advised to consult Iranian OFAC attorneys and be compliantwith the requirements of the Commerce Department.
Which one?Inheritance or Gift?
Inheritance isa property received from estate of another who has died. If yourfolks live in the US, property you receive from them in Iran is notinheritance, because they are still alive and the property they give you is a“gift “and may have additional tax reporting issues.
Gift isa property given to another person without consideration. Although, there areexceptions to the rule, generally gifts or inheritance are received from arelative or family member, not from strangers or neighbors.
Tobe prudent, obtain documents with evidentiary value to potentiallysubstantiate the character of property that may be required by OFAC, FinancialCrimes Enforcement Network (FinCen), IRS CriminalInvestigation Division (CID), and other government authorities interestedin the true character of your incoming money, in case circumstances arise.
Characterizationof a property or naming it something which is not to evade compliance, isillegal and may subject perpetrators to criminal prosecution regardless ofwhose idea it was; a non-lawyer friend, lawyer friend, paid lawyer, accountant,CPA, neighbor or your car mechanic.
Carryingmoney in excess of $10,000 through the US Customs
Strictrules apply to transfer of funds via a financial institution or carried in abriefcase through the boarders or airports. Click below foradditional information. See Carryingmore than $10,000 through US Customs
ZaherFallahi, Iranian OFAC Lawyer, Certified Public Accountant (CPA), advisesIranian-American clients in obtaining necessary evidentiary documents forproperly responding to potential OFAC Administrative Subpoenasand inquiries by BSA, IRS Criminal Investigation Division (CID), FinCen,and the US Customs and Border Protection.
Taxation ofMoney Transfer from Iran
Who is subjectto U.S. taxation?
Ifyou are a U.S. citizen or resident alien (green card holder), the applicabletax laws for filing income tax, estate tax, and gift tax returns aregenerally apply the same way whether you live in the United States oroverseas. And your worldwide income from interests, dividends, wages, orother compensation for services, income from rental property or royalties,and other types of income, must be reported on your U.S. taxreturn whether they are earned within or outside the United States.
Inaddition, you are subject to requirements of the FBAR, FATCA and otherInternational Tax Laws. See below for details.
ZaherFallahi, International Tax Attorney, Certified Public Accountant (CPA),advises clients on US taxation throughout the world. Telephoneappointments are available for clients who may not be able to meet in person.
Taximplication of transactions conducted in Iran are as follows:
Inheritance Tax
Ifthe decedent was a US person, the estate of the decedent may be required tofile an Inheritance Tax Return. For the year 2017 estates up to$5,490,000 are not taxable. However, a return may still be filed for theportability election (an election to use the deceased spouse’s unusedexclusion) purposes. If the decedent was not a US person, or the estate did notfile an estate tax return, the recipient may be required to report amounts inexcess of $100,000 per year.
Gift Tax
Ifthe donor is a US person, she or he may be required to file a Gift Tax Return,IRS Form 709 for gifts in excess of $15,000 per person per year.
Forthe year 2018 gifts up to $11,180,000 (2017 was $5,490,000) are not taxable. If the donor was not a US person, the recipient may be required to reportamounts in excess of $100,000 per year. Non-compliance with the foreigngift and inheritance reporting may subject the recipient to substantialpenalty. In case of failure to report foreign gifts timely, seek tax advicefrom a tax attorney for remedial ion.
Capital Gains
Transactionswhere the underlying assets are gift or inheritance, may be subject to CapitalGains taxes.
Anexample that I hear often is; this is my inheritance property from my deceaseddad and I am told it is tax free. When I express my condolences and ask “whendid your dad pass away”?, I learn that the dad had passed away twentyyears ago or before the 1979 revolution or something like that. Although,sale of such assets may be considered personal family remittances for OFACpurposes and exempt under the sanctions laws, however, they most of them resultin substantial capital gains taxes.
Report of ForeignBank and Financial Accounts (FBAR)
USpersons defined as citizen, resident (green card holder or meeting substantialpresence test) with an interest in, signature authority or other authority overfinancial accounts with an aggregate value in excess of $10,000, are requiredto e-file their “Report of Foreign Bank and Financial Accounts (FBAR)”,Form FinCEN 114 with the Financial Crimes Enforcement Network (FinCEN),See FBAR.
Foreign AccountTax Compliance Account (FATCA), 2010 Law
USpersons with an interest in certain Foreign Financial Assets with an aggregatevalue of more than $50,000 (singles living in the US) are required to include“Statement of Specified Foreign Financial Assets” in their regular taxreturns. See FATCA
ThePersian-Americans living abroad are subject to the US tax laws and are requiredto file their annual income tax returns. They are also required to comply withthe laws of US sanctions against Iran. Application of the US tax laws isindependent of the laws of sanctions. See VSD above.
OffshoreVoluntary Disclosure Program (OVDP), Amnesty
Anynon-compliance with FBAR may turn into a criminal tax case and requires adviceof tax lawyer with special skill must be sought. Your tax attorney may adviseyou on a proper course of action such as the Offshore Voluntary DisclosureProgram (OVDP). See OVDP
ZaherFallahi, OVDP Attorney, CPA, practices in California; Orange County andLos Angeles and advises clients on the legal and tax implication of IranianOFAC transactions worldwide.
US Taxation of Iranian-Americans livingin Iran
Ifyou are a U.S. green card holder or citizen of the United States (a US personthe Internal Revenue Code 7701(b)) and live in Iran, you are taxed on yourworldwide income regardless where you earned it.
Additionally,you are subject to all the US international tax laws, including Report ofForeign Bank & Financial Accounts (FBAR),Foreign Account Tax Compliance Act (FATCA),and one potential remedy (OVDP).
Thegood news is that you may be able exclude up to an amount of your earned(compensation) income in Iran which is adjusted annually for inflation ($97,600for 2013, $99,200 for 2014, $100,800 for 2015, $101,300 for 2016, $102,100 for2017, and $104,00 for 2018), if you otherwise qualify. For example not stay inthe US more than 35 days in a calendar year, under the Foreign Earned Exclusionprovided under the Section 911 of the Internal Revenue Code.
Youmay deduct certain foreign housing amounts. This exclusion can only be taken bytimely filing the tax return. It is important to note that this exclusion doesnot apply to passive or un-earned income (see below). Neither does it waive therequirements of filing the FBAR and FATCA (seeabove).
Generally, thereare three categories of foreign income;
I)Earned Income;
II)Un-earned Income; and,
III)Variable Income.
I- Earned incomeincludes:
1)Salaries & wages
2)Commissions,
3)Bonuses
4)Professional fees and tips.
II- Unearnedincome includes:
1)Dividends;
2)Interest;
3)Capital gains;
4)Gambling winnings;
5)Alimony, social security benefits; and,
6)Annuities.
III- Variableincome; may fall in one of these categories:
1)Business income;
2)Royalties; and,
3)Rents.
Thebad news is that unfortunately your employment in Iran may violate the USlaws of sanctions against Iran also known as the Iranian Transactions andSanctions Regulations (ITSR) administered and enforced by the Office of ForeignAssets Control (OFAC).
Ofcourse, there are certain exceptions to the ITSR. For instance, employment atthe World Bank, International Monetary Fund (IMF) or other United Nationsrelated organizations that may be authorized. It is prudent to ask yourpotential employer to ensure that your employment in Iran is otherwiseauthorized by OFAC.
Also,your self-employment income in Iran even if were authorized by OFAC is excludedonly for income tax purposes and not for Social Security or Medicare purposes.
Furthermore,you may not take a foreign income tax credit for taxes paid in Iran, due to theeconomic sanctions against Iran, but may deducted as an expense. Under theITSR, a US person is not allowed to open a bank account in Iran.
Itis important to note that the lifting of the Secondary-US sanctions (Europeansand South East Asian countries, etc.) effective January 16, 2016, have notaltered the above referenced laws. Click here for more information; IranNuclear Deal, BARJAM
Non-willfulIranian OFAC Violations
Ifyou have worked in Iran without the knowledge of the ITSR, and reading thisarticle raises your curiosity as to whether you may have violated any US laws,you may seek legal advice from an OFAC attorney, including our firm.
ZaherFallahi, Tax attorney, CPA, assists Americans living abroad with US taxes andoffshore accounts; OVDP, FBAR and FATCA. As an OFAC Attorney, he guides clientson OFAC Licenses, sale of property in Iran and transfer of money from Iran tothe US under OFAC Regulations. Telephones: (310) 719-1040 (Los Angeles), and (714) 546-4272 (Orange County), ore-mail to: taxattorney@zfcpa.com
We assistclients regarding Iranian OFAC Licenses
ZaherFallahi, attorney at law, has been rated 10 by Avvo: Rated10 of 10 .
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About1.8% of the U.S. lawyers are also CPAs, and we are proudly one of them;
Wehave successfully assisted many clients with legal and tax implication ofIranian OFAC transactions
Outside General Counsel Services ( through our law firm)Need OFACLicense, Contact:
ZaherFallahi, Attorney At Law, Certified Public Accountant (CPA) both in California andWashington D.C.
(310)719-1040 (Los Angeles)
(714)546-4272 (Orange County)
Toll Free 877-687-7558
E-mail taxattorney@zfcpa.com