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Articles, Taxes

Foreign Asset Control and You

BY ORLANDO GOTAY / TAX ATTORNEY

If you are a US person who runs a business in Mexico and have not heard about OFAC, perhaps you should. OFAC (Office of Foreign Asset Control), is part of the US Treasury. It administers dozens of programs related to trade and economic sanctions to further US national security interests.

OFAC foreign asset control programs designate both foreign individuals and entities for economic sanctions. Some of these are country focused, such as Cuba, Iran, Venezuela and North Korea. Others are broader, making designations under Global Terrorism, Narcotics Trafficking and “Kingpin” lists, among others. Because these are economic sanctions, the lists include entities in which target persons have a majority ownership too, even if the named entities themselves have no actual relation to what got the “owners” on the list. This is the so-called “Specially Designated Nationals (SDN) and Blocked Persons” list.

Sanctions are a bad thing. One does not want to be on these lists. Why is this relevant to you? Great question!

If you are a US person, you are not allowed- in fact, you are prohibited by federal law- from doing business, receiving or giving property to anyone on these lists. OFAC has a comprehensive database of listed persons and entities that change constantly. I just searched it to figure out how many entries it had for Mexico; it returned over seven hundred names. On the basis of a name alone, some businesses would hardly be noticed. There is a childcare center, hotels, even an air taxi service. But the rule is there and it’s on you to not do any business with listed persons.

Why? Because, you can be fined for a violation of OFAC sanctions if you have prohibited transactions with sanctioned persons. More serious cases could warrant more comprehensive actions, ranging all the way to criminal prosecution.

Compliance with these rules can be burdensome. There are screening services that will clear names for you. If you are operating a souvenir shop somewhere, you may not need to do much screening. If you are a real estate developer, the scope of your activities could be such where it may be worth the while, maybe even critical, to screen against the OFAC list.

Of course, the screening universe includes not only clients, but even partners and service providers.  Remember, it’s on you not to do business with them!  You were told.

Orlando Gotay is a California licensed tax attorney (Master of Laws in Taxation) admitted to practice before the IRS, the U.S. Tax Court and other taxing agencies.  His love of things Mexican has led him to devote part of his practice to federal and state tax matters of U.S. expats in Mexico.  He can be reached at tax@orlandogotay.com Facebook: GotayTaxLawyer or WhatsApp at +17604491668. This is just a most general outline. It is informational only and not meant as legal advice.

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 Articles, Rosarito

Victor Diaz Dies at 77

On Saturday, August 8th, Victor Diaz, loving husband and father of 4, passed away at the age of 77 in Tijuana.

He was born in Mexico City on December 1st, 1942, although he lived his final years in Rosarito, where he helped countless families move between the US and Mexico with his business “Fletes y Mudanzas Diaz”.

Mr. Diaz, an honest man of strong convictions, was very well appreciated in the local community, especially by the staff of this newspaper where he was a good friend and a client for over 5 years.

He is survived by his wife Juanita Ramirez, his four children, Victor Hugo, Jose Humberto, Leo Kenneth and Omar Saul, his 7 grandchildren and 2 great-grandchildren.

He will be greatly missed.

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 Baja Norte

Big Brother Tech Increases at Border

Big Brother will be watching you more closely when you enter the US from Mexico. More comprehensive screening technology may be installed at an inspection station near you! Even though cross-border traffic is severely limited, tens of thousands of pedestrians and motor vehicles cross to and from California daily.

Way back in the 1980’s Congress mandated (in US Code 1365b) that the entry and exit of all foreigners be biometrically recorded. They are recording American travelers too. In February, House Bill 5273 (Securing America’s Ports Act) was passed. This bill requires the Department of Homeland Security “to report to Congress a plan to…scan all commercial and passenger vehicles entering the US at a land port of entry using large-scale non-intrusive inspection systems.” DHS would then periodically report to Congress on the progress of implementing the plan, which would eventually be increased to 100% of all vehicular traffic.

The X-ray and Gamma Ray systems currently in use in Tijuana are time-consuming and inefficient. According to Border Now magazine, only 15% of commercial vehicles and 1% of private cars are scanned by these methods.

A pilot biometric program was instituted at the Otay Mesa crossing, primarily to identify foreigners (i.e. Mexicans) who were travelling on expired visas and/or stayed in the United States past their permitted date.

Many airports in North America instituted Biometric Facial Recognition software that automatically matches a person’s face with their passport photo, a process  reported to be 97% accurate. However, if one’s appearance has changed, a secondary review is required. When I travelled to Nova Scotia in 2019, the camera was unable to take an acceptable photo of me to match the photo on my passport. Therefore my printed form displayed a blank face. I passed through customs without a second glance from the border patrol officer. So much for security.

A $28.8 million (US) was awarded to Viken Detection, maker of the two X-ray systems being employed at US borders, in October 2019 for the handheld scanner. There was no information on the cost of the under-car X-ray detection units. Jim Ryan, CEO of Viken Detection, states that a combination of these two systems are powerful “in the fight against drugs, human trafficking and terrorism that targets critical infrastructure;” instead of merely relying on camera-based methods and drug-sniffing dogs.

Currently, the United States has installed Osprey X-ray scanners to detect drugs and contraband underneath motor vehicles entering Texas from Mexico. Since this technology has been designed specifically for high-density border crossings it is expected to be implemented at the Tijuana border crossing in the future. While these vehicles are being safely X-rayed, a border patrol agent will be dutifully checking the identification and documentation of all passengers with hand-held devices that are already in use at many US border crossings.

The CBP is not confirming the identification of all of the southern points of entry that will receive one or more of the new screening instruments at this time, but it’s safe to say that one or more of these technological advances will be implemented at the Tijuana crossing in the near future.

Attempts to obtain additional information on the detection systems from Viken Detection were unanswered.

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 Articles, Baja Norte

Border Closure Lengthened (Again)

Mexican Foreign Minister Marcelo Ebrard proposed that border crossings with the United States be “closed” until September 21st, citing the continued spread of coronavirus in both countries. Per Aristegui Noticias, “Currently the US has had a resurgence in… the south belt, which is the southern part and so the border could not be opened now.”

Mr. Ebrard further acknowledged that the restriction of land border crossings has severely impacted trade and the economy on both sides of the border for the past six months. He emphasized “prioritizing health.” There has been a 48% drop in the VAT (Value Added Tax) paid through customs versus this time last year, and a decrease of 36% in the General Import Tax.

This may not be the final word on “closing” the border. The closure may be extended through October 21st, if necessary.

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 Articles, Baja Norte

It’s Time to Write That Will

If you are like me, you don’t really want to dwell on death and dying. But it’s September, and in Mexico that means it is the month to draw up your Last Will and Testament, Mexican style. “Mes Del Testamento” or “Testament Month” is the chance to have your Mexican will created with a cost reduction of about 50%, or more.

Expats living in Baja should know that your American (or Canadian) Last Will and Testament does you no good if you happen to pass away while in Mexico. Now, if you don’t own your home and don’t have a lot of personal property, you probably don’t have a lot of need for a Mexican will. However, if married, this document will come in handy if and when the surviving spouse wants to sell a house, car, or other property.

There are several types of wills, but the “Open Public Will” suffices for most people. These wills can be simple and straightforward or inclusive of many clauses (Simultaneous Death Clause, No Contest Clause, etc.) depending on your individual situation.

There are several differences between wills in the US and Mexico. In Mexico, one must retain a notario (notary) to complete the Last Will and Testament. Obtain a form from the notario and fill it out completely. If you do not know Spanish, have someone knowledgeable help you. Take the completed form and two identical handwritten copies of your will. No photocopies allowed. The will must be signed and dated to conform to the Baja California Civil Code. In some cases you may be required to have your Mexican will translated into Spanish by a court-approved translator.

You must also bring an official ID with photograph and signature, and two color copies front and back. Acceptable IDs are a driver’s license (Mexican or country of origin), a Mexican voter’s card, valid passport, and/or permanent or temporary Mexican residency card. You must bring two witnesses with their official photo ID’s and two color copies as well. The notario will translate your will into Spanish and have it signed by you and your witnesses if you have not already done so.

The rules of will-making vary from state to state, so if you own property in two different states you will probably be required to have two separate Mexican wills drawn up. The cost varies by state and by the individual notario, depending on several factors, including the amount of property involved and the number of people involved. In September all notarios reduce their rates, but as of this writing, rates had not been set.

There is a list of licensed notarios at https://www.NotariadoMexicano.org.mx. Click on “Directorio” at the top of the page; click “notarios”, then select Baja California, and choose a notario from any of the cities listed. There are two registered notarios in Rosarito, Mr. Luis Armando Durazo and Ms. Ana Cecilia Thomas.

It is important to know that in Mexico there is no “right of survivorship” as there is in the US, so it is extremely important to have a will for each spouse handled by the notario. If the couple has children, said children are the direct heirs of all properties and the spouse very well could legally end up with nothing if not so stated in the will.

Certain assets such as your life insurance, bank account funds, owned home, and Fideicomiso may already have their dispensations to beneficiaries and legally transferable, but other personal property such as cars, boats, coins, jewelry, and stamp collections are all up for grabs unless their dispensation is officially recorded by the notario in your Mexican will. It is also wise to cross-reference your “country of origin” wills and any of the items listed above in your Mexican will to avoid any confusion among heirs.

Without a will registered in the national database, the government will divide your property among surviving heirs,  not including your spouse.

So get your elements and witnesses together. Remember, there are many others with the idea to cash in on this annual event, so a phone call to a local notario is a must. There is a lot of information online to help you with your preparation. Google “Mexican wills” and check out the information most relevant to your situation.

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 Articles, Baja Norte, Charities, Tijuana

Plans to Renovate Binational Park on the Border Launched

BY JACKIE BARSHAK

“Build That Park” organizers launched a 12-month long public education and design development campaign to raise awareness and solicit input for a proposed bi-national park along the Mexican/U.S. border, where California meets Baja along the Pacific.

Hugging the boundary of the wall in Tijuana, the site is home to Friendship Park and the binational garden of native plants, which serves as a gathering site for a community advocating unrestricted access to both sides of the border. To the north, on the very southwestern corner of the U.S., 1.5 miles south of San Diego, a wildlife refuge inside Border Field State Park forms the perimeter to the other side of the border wall. On these and other expanded sites, including the bull ring to the south in Tijuana, chief architect James Brown envisions a park embodying values of peace, friendship, cooperation and security.

During the year-long design phase, input will be solicited from stakeholders, community activists, artists, designers, grassroots organizers and first nations people. Engagement with the public is key to formulating conceptual design plans that will be unveiled on August 18, 2021, the day marking the 50th anniversary of Friendship Park.

Building parks in cities sharing frontiers has historical precedent. At the US/Canada border crossing, green lawns and flowering gardens of Peace Arch Park, straddling British Columbia and Washington State, gives rise to a dramatic white arch, a symbol of peace, honoring the peace treaty that ended the War of 1812. On the Mexican border, the white stone border marker in Tijuana’s Friendship Park stands as a monument to the end of the 1848 U.S. Mexican war and the signing of The Treaty of Guadalupe Hidalgo. “The terms of that treaty have relevance to building a park on the border today”, said James Brown, “reciprocal benefit, cooperation and security for both countries outlined in that historical treaty are the values guiding the new park design”.

The design process will draw on a peoples’ history and the collection of personal stories woven into a visionary plan for the park. There will be international competitions for the design of vertical gardens, outdoor event spaces, interpretive centers with conference rooms, trolley terminals and pedestrian walkways, among other structures proposed in the building plans.

Spanning the two frontiers, the binational garden will encompass an expanded area, with greater opportunities to link shared ecosystems divided today by artificial political boundaries. Binational cooperation of the landscape will enhance control of exotic invasive plants and restoration of native flora. “After 15 years of working in the garden”, said Daniel Watman, founder of the binational garden, “and dreaming that some day the garden would outgrow the walls and end militarization, I’m ecstatic about the prospect of expanding native flora across barriers to bring people together and form collaborations that will improve the region we share”.

The fate of two countries sharing a border are linked. A binational park on the Mexico/U.S. border can serve as a model and living symbol of peace between the two nations, exemplifying what can be achieved through cooperation and collaboration.

Visit www.buildthatpark.org for more information about the project and to learn how you can help.

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