Is Sprott Investments Precious Metals Reported on FBAR or FATCA
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Sprott Investments Precious Metals Reported on FBAR/FATCA
With the recent shift in the global economy, the number of US Taxpayers investing in overseas gold, silver, and other precious metals has increased in popularity significantly over the past few years. And, with many of these types of investment companies, the Taxpayer does have direct ownership over the actual metals themselves — but actually an investment into a foreign mutual fund –– which is oftentimes called a unit trust or something similar. In order to make these investments into precious metals, many US Taxpayers have invested with overseas companies such as the Sprott Physical Trusts (Gold, Silver, Uranium). But, unlike many other foreign investment trust companies, this company is very proactive on the US tax front (which is a good thing) and sent out US person clients information about submitting form 8621 for PFIC purposes from the get-go – as it is much better to make an election in the first year than to have to go back and cleanse the taint from prior years with a purging election and possibly be subject to tax on excess distribution payment of tax. The question becomes whether this type of trust is reportable for FBAR & FATCA.
Mutual Funds are Reportable for FBAR & FATCA
In general, mutual funds and other types of investment funds are reportable accounts that are included on international information reporting forms such as FBAR and FATCA (Form 8938). Therefore, if this type of trust is considered an investment fund and generally it would be reportable on the FBAR and Form 8938 – although if the investment as reported in Form 8621, then while it is still required to be on the FBAR — it does not have to be duplicated again on Form 8938.
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Financial Account.
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A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution).
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A financial account also includes a commodity futures or options account, an insurance policy with a cash value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a regular net asset value determination and regular redemptions).
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Direct Ownership vs Fund
While direct ownership of precious metals is typically not disclosed on the international reporting forms, investment funds are. So, working backward, if the investment Company itself is actually sending out notices to US persons that the investment is formed as a fund, then generally a fund would be reportable on the FBAR and Form 8938 – except again, it does not have to be duplicated on Form 8938 if it is being reported on form 8621. But, presumably, it would still be reported on the FBAR if it is deemed an investment fund (If the Sprott Investment ownership is held within a bigger fund controlled by an investment company such as Fidelity or Vanguard and not the investor direct — and the investor owns the fund but no the Sprott investment directly — then the reporting rules would be different and more limited).
If you have this type of investment and are out of compliance for prior years — you may want to consider speaking with an experienced Board-Certified Tax Law Specialist to get the lay of the land.
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