As our world and its economy become more and more globally connected, it has become increasingly common for American taxpayers to hold money and other investment and business assets in foreign countries often utilizing offshore bank or financial accounts & offshore business entities. Many people are unaware of the additional U.S. income tax and information reporting requirements that come with holding business or investment assets overseas rather as opposed to the often-familiar domestic income tax and information reporting requirements. Furthermore, there may also be reporting requirements to the tax authority of the nation in which the assets are located. Failure to make proper U.S. foreign source income tax and foreign information reporting as required by law can lead to serious and often draconian civil fines, criminal tax evasion and foreign information reporting failure prosecution in egregious cases where there was willful noncompliance.
Much of the ability of the IRS and foreign tax authorities to enforce these laws, however, comes from international tax treaties involving information sharing agreements between the U.S. and foreign counties to share taxpayer data and information about who holds accounts in domestic and foreign banks and financial institutions. The experienced dual licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing have been closely following the ratification of a deal between the U.S. and Singapore regarding the sharing of information under FATCA, a U.S. law which targets non-compliance with tax laws by U.S. taxpayers using overseas accounts.
What is FATCA?
The Foreign Account Tax Compliance Act, or FATCA, requires that U.S. taxpayers with a certain amount of assets in foreign or offshore bank or financial accounts report their foreign holdings to the IRS each year. The form where this must be reported if you meet the qualifying levels is called Form 8938. This can be a complicated process and should not be done without first consulting with an experienced dual licensed Tax Attorney and CPA like those at the Tax Law Offices of David W. Klasing.
The qualifying levels for FATCA largely depend on which marital status you claim on your returns. The threshold amounts are raised for foreign residents, however. If you are married filing separate income tax returns, the thresholds are $50,000 or more on the last day of the tax year or more than $75,000 at any time during the tax year. For married persons filing jointly, you must report under FATCA if you have $100,000 in offshore assets on the last day of the year or $150,000 at any time during the year. For unmarried persons, you must report if you have $50,000 in offshore assets on the last day of the year or $75,000 at any time during the year.
What is the New FATCA Deal with Singapore?
Because FATCA by its nature involves investigations into holdings in foreign bank and financial accounts, successful implementation of its provisions requires cooperation with foreign tax and regulatory authorities. As such, the U.S. commonly makes deals and treaties with other nations regarding FATCA enforcement. This is especially vital in financial and banking centers like Singapore. The U.S. and Singapore first came to a non-reciprocal agreement called The Singapore-US Foreign Account Tax Compliance Act (FATCA) Model 1 Intergovernmental Agreement (IGA) and Regulations, which was entered into force on 18 March 2015. This created a streamlined process for Singaporean financial institutions to share information with the IRS and other American institutions to facilitate compliance with FATCA by American taxpayers with Singaporean bank or financial accounts.
On 13 November 2018, the U.S. and Singapore signed a new version of the Intergovernmental Agreement (IGA). On August 8, 2020, Singapore’s tax ministry ratified the agreement and it set to go into effect and supersede the prior IGA on January 1, 2021. The biggest difference in the new version is that it is now a reciprocal agreement. This means that now, in addition to Singaporean financial institutions sharing information regarding potential FATCA violations with the U.S., some U.S. financial institutions will also be required to share information relating to certain financial accounts held by Singapore residents.
As such, the new rules generally only affect reporting institutions like banks, rather than individual taxpayers. However, many U.S. taxpayers with assets in Singaporean bank or financial accounts may be unaware of their reporting requirements under FATCA and the existing IGA that has created a close working relationship between U.S. tax authorities and South Korean banks and financial institutions. If you are a taxpayer who has not properly reported under FATCA, there are ways to bring you back into compliance, including potentially amending your tax returns or filing for a voluntary disclosure program. If you believe this might benefit you, reach out to our skilled dual tax attorneys and CPAs at the Tax Law Offices of David W. Klasing so we can take a look at the particulars of your situation and give you the most accurate, up-to-date advice.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply.
It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.
Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!
Other Types of Offshore Voluntary Disclosure Programs
- Quiet Disclosure
- Delinquent FBAR
- Offshore Voluntary Disclosure
- Streamlined Disclosure
- What to do if interested in a Program
If You Believe You May Have Failed to Properly Report Assets in Singaporean Bank of Financial Accounts, Reach Out to Our Battle-Tested Tax Lawyers Right Away
Under the reciprocal Intergovernmental Agreement (IGA) between South Korea and the U.S., financial institutions in both countries are required to share information with tax authorities regarding potential violations of FATCA. Due to the close nature of this relationship, this is an area where FATCA violations are often caught and charged. As such, if you believe that you may not have made accurate or complete FATCA reports regarding bank accounts in Singapore or another foreign nation, you should reach out to a skilled dual licensed Tax Lawyer and CPA like those at the Tax Law Offices of David W. Klasing right away to try to mitigate any damage that has already been done. To set up a consultation, call us today at (800) 681-1295.
Questions and Answers about Offshore Voluntary Disclosure Initiative (OVDI)
- Why hire David W. Klasing to represent me in an audit
- 2011 Offshore Voluntary Disclosure Initiative FAQ
- Key Features of Initiative
- Eligibility For This Initiative
- 2011 OVDI Process
- Calculating The Offshore Penalty
- Statute of Limitations
- FBAR Questions
- Taxpayer Representatives
- Case Resolution
- What not to do!
- What to do!
- FBAR Reporting and Expired Voluntary Disclosure Program
- How the Law Offices of David W. Klasing Can Help
- Bank account overseas I didn’t report on my income tax
- Do I have to maintain information on overseas bank accounts
Questions and Answers about FBAR Compliance and Disclosure
- Potential charges for not participating in the 2014 OVDP
- How many tax returns will I amend for my FBAR filing?
- FBAR Voluntary Disclosure program end
- Can I make a voluntary disclosure after the deadline?
- Can I use IRS Voluntary Disclosure if I Can’t Pay?
- Potential reporting requirements and civil penalties
- What Happens if You Don’t Disclose Foreign Accounts
- Criminal charges if you refuse voluntary disclosure
- Characteristics of FBAR voluntary disclosures
- What is required to make a valid voluntary disclosure?
- 2012 Offshore Voluntary Disclosure Initiative Objectives
- What is an FBAR?
- Filed amended returns without making a Voluntary Disclosure
- Undisclosed foreign accounts: What exchange rate to use
- Why did the IRS announce the 2012 OVDI at this time?
- Should I consider making an offshore voluntary disclosure?
- Why to consider making a Voluntary Disclosure
- 2012 OVDI program vs. the voluntary disclosure practice
- Foreign bank account asset reporting/filing requirements
Questions and Answers About Foreign Tax Audits
- Does the Fifth Amendment apply to foreign accounts?
- How is evidence cultivated from foreign sources?
- How is tax loss determined?
- How might an FBAR audit be resolved?
- Is a penalty assessment ripe for judicial review?
- Overview of an administrative criminal investigation
- What is the process of an FBAR referral?
- Statute of Limitations raised during a FBAR audit?
- Precautions to be taken in the pre-audit phase
- Recent international tax and reporting prosecutions
- Foreign account, entity and investment prosecution
- Who collects restitution and penalties?
- International tax investigations are an IRS high priority
Questions and Answers on Unfiled Back Taxes
- What are the common issues that non-filers face?
- Risk of audit after filing delinquent prior year returns
- Can substitute return deficiency be discharge in bankruptcy
- Substitute return modified by subsequent delinquent return?
- Do I file every delinquent return for each missing year?
- How does the IRS identify non-filers?
- How important is it to the government that I didn’t file?
- Delinquent tax return criminal prosecution likelihood
- Will I get a refund on a delinquent tax year?
- What happens after enforcement action has begun?
- Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
- Why do people drop out of the tax system?
- What happens after the IRS identifies me as a non-filer?
- IRS has not previously filed substitute returns
- Tax attorney representation when re-entering tax system
- How will the government force me to file returns?
- What penalties can IRS impose on delinquent tax filings?
- What should I do to re-enter the tax system?
- Can Law Office of David W. Klasing help me re-enter system?
- Will tax collection taken by authorities affect my credit
- I concealed bank accounts from the government
- Forgetting or failing to file tax return
Questions and Answers for Criminal Tax Representation
- When tax defense counsel parallels tax crime investigation
- Guilty of tax obstruction by backdating documents?
- To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
- Help! The Document I Gave the IRS Had False Information
- Tax crime aiding or assisting false return IRC §7206(2)
- What is the crime known as tax obstruction § 7212?
- What is the difference between tax perjury and tax evasion?
- What is the tax crime commonly known as tax perjury?
- What is a Klein Conspiracy?
- Increased possibility of civil action in IRS investigation
- Am I Guilty of Tax Evasion if the Law is Vague?
- What happens if the IRS thinks I committed tax crimes?
- What are ways to defend against a tax evasion charge?
- Difference between criminal tax evasion and civil tax fraud
- What accounting method does the IRS use for tax fraud
- Can I Change Accounting Method to the Accrual Method
- What is the willfulness requirement for tax evasion?
- I didn’t know I committed tax fraud. Can I get off?
- Concealed assets from IRS. Can I avoid tax evasion charges
- How government proves I willfully engaged in tax evasion
- What is the venue or court where a tax crime case is heard?
- Must the IRS prove tax crimes beyond a reasonable doubt?
- Is it a crime to make false statements to the IRS?
- Will the IRS overlook my tax evasion if it’s minor?
- Failed to tell IRS about my nominee account
- Audit risk with cash based business transactions
- How to defend a client charged with tax evasion
- Is it tax evasion if I didn’t file income tax return?
- Government says I attempted to evade my taxes. Now what?
- I forgot to pay my taxes or estimated tax. Is this a crime?
- Government proof I “willfully” failed to pay taxes
- 5 Ways to Respond to Tax Evasion Charges
- Being audited after using a tax professional
- Rules for what an IRS agent can do while investigating me
- How tax preparers, attorneys and accountants are punished
- How the IRS selects tax crime lead for investigation
- How does the IRS prosecute suspected tax crimes?
- Does IRS reward informant leads for suspected tax crimes?
- How the government proves deficiency in a tax evasion case
- Do prior tax crimes factor into new IRS tax convictions?
- Requesting conference before investigative report is done
- Requesting conference after IRS Special Agent Report
- What are my rights during an IRS criminal investigation?
- Avoid prosecution for tax crime with voluntary disclosure?
- Defense tactics that make it hard for to prove willfulness
- How a tax attorney can stop your criminal tax case?
- What can you generally tell me about tax crimes?
- Continuing filing requirement with investigation pending
- Federal criminal code crimes that apply to tax issues
- Penalty for making, subscribing, and filing a false return
- CID special agent’s report for criminal prosecution
- What is the discovery process in a criminal tax case?
- What the IRS includes in indictment for tax case
- What is the hardest element of a tax crime to prove?
- IRS methods of gathering evidence to prove tax crime
- What does a grand jury do in IRS tax crime prosecution?
- Failure to keep records or supply information
- Failure to make a return, supply information, or pay tax
- What is attempting to evade payment of taxes?
- What is income tax evasion and how is it punished?
- What is attempted income tax evasion?
- What is the crime of failure to pay tax? What is punishment
- Crime of making or subscribing false return or document
- Criminal Investigation Division investigation tactics
- Tax crimes related to employment tax forms and trust funds
- Tactics to defend or mitigate IRS criminal tax charges
- How the IRS generates leads about suspected tax crimes
- What is the crime ”evasion of assessment” of tax?
- Specific examples of “attempting” to evade tax assessment
- What is the so-called Spies evasion doctrine?
- Does overstating deductions constitute tax evasion?
- Is it tax evasion if my W-4 contains false statements?
- IRC §7201 attempt to evade vs. common-law crime of attempt
- What are the penalties for Spies tax evasion?
- How government proves a taxpayer attempted tax fraud
- What is a tax that was “due and owing.”
- What is evasion of assessment for tax liability?
- Is evasion of assessment different from evasion of payment
- Does the IRS have a dollar threshold for tax fraud?
- What is the IRS burden of proof for tax fraud convictions?
- Are Tax Laws Constitutional?
- What is the source of law that defines tax evasion?
- Does section 7201 create two distinct criminal offenses?
- Does tax evasion definition include partnership LLC
- What if I helped someone else evade taxes?
- Is it illegal to overstate deductions on my tax return?
- Is it illegal to conceal bank accounts from the IRS?
- Do later losses justify prior deductions?
- Common reasons the IRS and DOJ start investigations
- What is the Mens Rea component of tax crimes?
- What is a proffer agreement and what are the risks?
- Why to have an attorney to review a proffer agreement
- Why enter into a proffer agreement?
- Limited use immunity from proffer agreements
- Difference between civil and criminal fraud allegations
We Are Here for You
Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.
In addition to our main office in Irvine, the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.
Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client.
