Taiwan Signs FATCA Agreement with U.S.
For the last two years, Taiwan has been operating in accordance with FATCA (Foreign Account Tax Compliance Act) by way of an “Agreement in Substance.” Technically, this means while Taiwan would agree to enforce FATCA, it was not bound to do so.
As of December 22, 2016, Taiwan signed a FATCA Agreement with the United States. Furthermore, Government agencies in Taiwan have indicated that they were getting frustrated by US taxpayers who reside in Taiwan and not properly complying with U.S. Tax Law.
Taiwan has represented that it wants to help promote compliance of IRS Tax Law by any Taiwanese Citizen or Resident who also has a U.S. Foreign Bank Account reporting requirement.
Many U.S. Account Holders (U.S. Citizens, Legal Permanent Residents, Visa Holders) who reside in Taiwan have mistakenly or intentionally misrepresented their status when they initially opened their Taiwanese account.
As result, many of these individuals are not in compliance with U.S. Tax Law. Taiwan does not want to be known as a Tax Haven, and therefore will seek out Tax Evaders to report them to the IRS. Moreover, Taiwan also benefits from the agreement, because the agreement is reciprocal, and the United States will also provide relevant information to Taiwan.
Taiwan is making it known that if you reside in Taiwan and have not properly complied with US tax law, the Taiwanese Government will seek you out, and report your personal information to the United States.
U.S. Legal Permanent Residents (Green-Card Holders) Beware!
The formalization of the FATCA Agreement will cause a major headache for Taiwanese citizens who are also U.S. Citizens, Legal Permanent Residents, or Visa Holders and have not updated the Taiwanese banks of their U.S. status. Whether a U.S Citizen, Legal Permanent Resident, or certain Visa Holders reside in the U.S., Taiwan, or a third-party country does not matter when it comes to Foreign Bank Account Reporting; they are still required to inform the foreign bank as to their US status (aka U.S. Status does not automatically change for U.S. Citizens or Legal Permanent Residents no matter where they live)
Thus, even though a person may be a Taiwanese citizen, and a U.S. green card holder and maintains accounts in Taiwan, with respect to IRS Tax Law, the Taiwanese Account is considered to be a “Foreign Account” and must be reported on an annual FBAR and FATCA Form 8983 (if the respective threshold requirements are met)
The failure to file these forms may result in the bank freezing, suspending or even canceling your account and forfeiting your funds. In addition, now that the Taiwanese government has signed the FATCA agreement, they will be taking greater measures in order to ensure compliance with US tax law.
Taiwan has made it known that it intends on providing personal information to the IRS, so it is imperative that if you have significant amounts of money in Taiwan and are not yet in compliance, that you speak with an experienced IRS Voluntary Disclosure Lawyer in order to get into compliance quickly and safely.
When Do I Need to Use Voluntary Disclosure?
Voluntary Disclosure is for individuals, estates, and businesses who are out of compliance with the IRS and the Department of Treasury. What does that mean? It means that if you are required to file a U.S. tax return and you don’t do so timely, then you are out of compliance.
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Contact our firm today for assistance with getting compliant.