Green Card holders and US citizens with undeclared offshore assets have until Sept 23 to come clean
By SIOW LI SEN 09 September 2009
(SINGAPORE) Thousands of American taxpayers in Asia are facing a Sept 23 deadline to disclose their undeclared offshore assets as the US government steps up its drive against non-compliance.
The number affected - including US citizens and Green Card holders, past and present - could be huge.
‘I think most people in the tax community believe that the United States Internal Revenue Service (IRS) is going to focus on the international space more heavily in future - as they have been of late,’ said Kurt Rademacher, partner at Withers Hong Kong, a law firm for the very wealthy.
‘Therefore, thousands of US taxpayers residing in Asia may face investigation,’ he said.
‘Not only non-filers may be investigated, but also those who have filed returns,’ he added.
In the latter case, the IRS would be looking for (among various items) inadvertent or intentional misstatements - including omissions of income from non-US financial accounts, Mr. Rademacher said.
Asia probably has more than 100,000 people who are subject to US taxes, and they are not just US citizens; Green Card holders and even those holding expired Green Cards are subject to US taxes on worldwide income - the same as citizens.
‘Allowing a US Green Card to expire does not necessarily result in an individual no longer having to pay US tax in certain circumstances,’ said Dennis McEvoy, executive director of tax services, KPMG Singapore.
There are about 60,000 US passport holders in Hong Kong, 15,000 in Singapore and 7,000-8,000 in Malaysia, Withers estimates, based on those who register at US embassies.
The US government has been ramping up efforts to go after undeclared offshore assets of US taxpayers, including hiring an additional 800 dedicated agents and transferring a number of other agents from corporate and tax treaty departments to work on these files.
‘This initiative is further evidence that the Obama administration is taking very seriously the loss of tax revenues through offshore tax evasion, and that the US government will be working vigorously to obtain information with respect to non-US accounts owned by US persons living abroad,’ said David Sandison, tax partner, PricewaterhouseCoopers Services LLP.
On March 23, the IRS issued new guidelines for voluntary disclosure, valid for six months, a sort of amnesty which standardised the tax and penalty regime for those who came forward.
The six-month amnesty, which expires on Sept 23, caps liability at six years of back taxes, interest and standardised penalties.
Crucially, those who come forward voluntarily can avoid the risk of criminal prosecution.
Mr. Rademacher said his firm ‘has a number of people throughout the region contacting us on this’.
‘US taxpayers in Asia should understand that, if they have undeclared offshore accounts, their chances of being prosecuted by the US government will increase significantly after the Sept 23 deadline passes,’ he said.
In addition to the financial penalties they may face, those who have not complied also risk being arrested on entry when they visit the US.
‘This doesn’t just mean no more holidays in the United States; it could prevent people from visiting children or other relatives in the US, or receiving urgent medical treatment,’ Mr. Rademacher said.
He also points to increased cooperation between the US government and countries around the world on such matters and a greater likelihood of non-compliant individuals being identified and prosecuted.
The recent agreement by private bank UBS to hand over details of 4,400 American account holders to the Swiss government, which in turn is expected to hand over those names to the IRS, is a direct result of the increased focus on this issue by the US and a number of European countries.
‘In Asia, both Singapore and Hong Kong have indicated a willingness to implement exchange of information (EOI) agreements. Once these agreements enter into force, it will make it far easier for other nations, such as the US, to obtain information on account holders in these jurisdictions,’ said Mr. Rademacher.
Singapore has so far signed six EOI agreements with Belgium, New Zealand, the United Kingdom, Denmark, the Netherlands and Australia.
BT understands that an EOI agreement with the US is in the works.
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The US taxman comes knocking on Asian doors
Green Card holders and US citizens with undeclared offshore assets have until Sept 23 to come clean
By SIOW LI SEN
09 September 2009
(SINGAPORE) Thousands of American taxpayers in Asia are facing a Sept 23 deadline to disclose their undeclared offshore assets as the US government steps up its drive against non-compliance.
The number affected - including US citizens and Green Card holders, past and present - could be huge.
‘I think most people in the tax community believe that the United States Internal Revenue Service (IRS) is going to focus on the international space more heavily in future - as they have been of late,’ said Kurt Rademacher, partner at Withers Hong Kong, a law firm for the very wealthy.
‘Therefore, thousands of US taxpayers residing in Asia may face investigation,’ he said.
‘Not only non-filers may be investigated, but also those who have filed returns,’ he added.
In the latter case, the IRS would be looking for (among various items) inadvertent or intentional misstatements - including omissions of income from non-US financial accounts, Mr. Rademacher said.
Asia probably has more than 100,000 people who are subject to US taxes, and they are not just US citizens; Green Card holders and even those holding expired Green Cards are subject to US taxes on worldwide income - the same as citizens.
‘Allowing a US Green Card to expire does not necessarily result in an individual no longer having to pay US tax in certain circumstances,’ said Dennis McEvoy, executive director of tax services, KPMG Singapore.
There are about 60,000 US passport holders in Hong Kong, 15,000 in Singapore and 7,000-8,000 in Malaysia, Withers estimates, based on those who register at US embassies.
The US government has been ramping up efforts to go after undeclared offshore assets of US taxpayers, including hiring an additional 800 dedicated agents and transferring a number of other agents from corporate and tax treaty departments to work on these files.
‘This initiative is further evidence that the Obama administration is taking very seriously the loss of tax revenues through offshore tax evasion, and that the US government will be working vigorously to obtain information with respect to non-US accounts owned by US persons living abroad,’ said David Sandison, tax partner, PricewaterhouseCoopers Services LLP.
On March 23, the IRS issued new guidelines for voluntary disclosure, valid for six months, a sort of amnesty which standardised the tax and penalty regime for those who came forward.
The six-month amnesty, which expires on Sept 23, caps liability at six years of back taxes, interest and standardised penalties.
Crucially, those who come forward voluntarily can avoid the risk of criminal prosecution.
Mr. Rademacher said his firm ‘has a number of people throughout the region contacting us on this’.
‘US taxpayers in Asia should understand that, if they have undeclared offshore accounts, their chances of being prosecuted by the US government will increase significantly after the Sept 23 deadline passes,’ he said.
In addition to the financial penalties they may face, those who have not complied also risk being arrested on entry when they visit the US.
‘This doesn’t just mean no more holidays in the United States; it could prevent people from visiting children or other relatives in the US, or receiving urgent medical treatment,’ Mr. Rademacher said.
He also points to increased cooperation between the US government and countries around the world on such matters and a greater likelihood of non-compliant individuals being identified and prosecuted.
The recent agreement by private bank UBS to hand over details of 4,400 American account holders to the Swiss government, which in turn is expected to hand over those names to the IRS, is a direct result of the increased focus on this issue by the US and a number of European countries.
‘In Asia, both Singapore and Hong Kong have indicated a willingness to implement exchange of information (EOI) agreements. Once these agreements enter into force, it will make it far easier for other nations, such as the US, to obtain information on account holders in these jurisdictions,’ said Mr. Rademacher.
Singapore has so far signed six EOI agreements with Belgium, New Zealand, the United Kingdom, Denmark, the Netherlands and Australia.
BT understands that an EOI agreement with the US is in the works.
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