IRS, Dubai & Singapore – Next up for Criminal Offshore Investigations
- 1 Why is the IRS going after Dubai?
- 2 Why is the IRS going after the Singapore?
- 3 Non-Compliance with U.S. Tax Law
- 4 What Can You Do?
- 5 4 Types of IRS Voluntary Disclosure Programs
IRS, Dubai & Singapore (2019) – Next up for Criminal Offshore Investigations
IRS, Dubai (UAE) and Singapore (2019): The IRS may now turn its focus on non-compliance of tax & reporting of accounts, assets, and income in the UAE and Singapore.
Due to expansive non-compliance of offshore tax and criminal tax activity in the UAE and Singapore, the IRS is considering expanding its presence, and allocating already limited resources to these countries.
As reported in Bloomberg Tax:
“They are ripe for U.S. presence. They’re a hub for international activity, and we can make a big impact there saving U.S. taxpayer dollars,” said R. Damon Rowe, director of international operations at CI.
Why is the IRS going after Dubai?
Dubai is a great place to conduct business. We represent numerous clients in Dubai, and when it come to the Dubai, there are a lot of “benefits,” which at first glance seem pretty great.
Summary of UAE Tax Rules
- No Bilateral Tax Agreement
- No Totalization Agreement
- No Taxes on Income
- No reporting
The problem with these benefits, is that from the IRS perspective it generally lends itself to people not reporting information that they otherwise have to report.
The UAE and the United states do have a FATCA Agreement.
U.S. Taxes Due
And, even though there is no bilateral tax agreement, U.S. persons who earned income in the UAE still have to include it in their U.S. tax return.
There is no totalization agreement with the UAE, which means there is no exemption or exclusion on social security tax.
As a result, the IRS is aware there are plenty of U.S. persons who have earned income, operate businesses, or otherwise maintain assets in the UAE – and have not properly brought themselves into U.S. tax compliance.
Why is the IRS going after the Singapore?
Like the UAE, Singapore is also a business hub.
In fact, Singapore was named as one of the top three countries in the entire world to conduct business. There is generally no tax on investment income, and there is no bilateral tax treaty with Singapore.
But, unlike the UAE, individuals residing in Singapore or otherwise have a Singaporean employer may have an ongoing reporting and tax requirement, thanks to having a CPF.
CPF (Central Provident Fund)
A CPF is a mandatory retirement fund. Its existence can lead to problems, since it requires ongoing compliance with the U.S.
We have helped hundreds of clients with investments and assets in Singapore and like the UAE, there are similar common issues, including:
- Taxpayer has a CPF and has not reported the fund on their U.S. tax return.
- Taxpayer has not reported accrued, but non-distributed CPF Income.
- Taxpayer has not included tax-free interest or dividends from Singapore on their U.S. tax return (which is taxable in the U.S.)
- The Taxpayer has an interest or ownership in Unit Funds (UOB Trusts) which has not been reported.
- A Taxpayer has an AIA life insurance policy which was not included with their US taxes, FBAR and FATCA.
Non-Compliance with U.S. Tax Law
Whether it is because you did not you had to report foreign accounts, thought you were below the threshold for filing, did not realize non-bank accounts were required to be reported, and/or have other unreported income, accounts, investments or assets – we can help.
What Can You Do?
Presuming the money was from legal sources, your best options are either the Traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
4 Types of IRS Voluntary Disclosure Programs
There are typically four types of IRS Voluntary Disclosure programs, and they include:
- Traditional (IRM) IRS Voluntary Disclosure Program
- Streamlined Domestic Offshore Procedures (SDOP)
- Streamlined Foreign Offshore Procedures (SFOP)
- Reasonable Cause (RC)
Contact Us Today; Let us Help You.
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver, and has also earned the prestigious Enrolled Agent credential. Mr. Golding is also a Board Certified Tax Law Specialist Attorney (A designation earned by Less than 1% of Attorneys nationwide.)
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