US Expats Living in Hong Kong Need To Declare their Offshore Assets
For Americans currently in Hong Kong, time is running out to take advantage of an IRS program that offers some relief for those who haven't been declaring their foreign assets.
Recently, the IRS announced that it will begin to wind down the 2014 Offshore Voluntary Disclosure Program, which allows for US taxpayers with assets out of the country to avoid criminal prosecution for not reporting foreign accounts.
With the program concluding on September 28, affected individuals in Hong Kong should examine their assets to ensure they are compliant with US tax requirements.
Who is at Risk?
The people who are most risk are US citizens and US green card holders currently living in Hong Kong. Also, parents who have children in the US to whom they have made gifts are at risk.
The IRS remains actively engaged in identifying those with undisclosed foreign financial accounts and assets.
This information is available to the IRS under tax treaties, through submissions by whistle blowers, and from other sources and will become more available under the FATCA and Foreign Financial Asset Reporting.
Criminal Charges those in Hong Kong May Face for not Participating in OVDP
If you choose not to participate in OVDP, and are audited by the IRS, you may be subject to criminal charges. This includes possible criminal charges include tax evasion (IRC § 7201), filing a false return (IRC § 7206(1)) and failure to file an income tax return (IRC § 7203). Willfully failing to file an FBAR and willfully filing a false FBAR are both violations that are subject to criminal penalties under 31 U.S.C. § 5322. Additional possible criminal charges include conspiracy to defraud the government with respect to claims (18 U.S.C. § 286) and conspiracy to commit offense or to defraud the United States (18 U.S.C. § 371).
A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000. A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000. Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000. A person convicted of conspiracy to defraud the government with respect to claims is subject to a prison term of up to not more than 10 years or a fine of up to $250,000. A person convicted of conspiracy to commit offense or to defraud the United States is subject to a prison term of not more than five years and a fine of up to $250,000.
We Help US Expats in Hong Kong and all over the world get in Compliance with the IRS
If you have not been reporting your foreign assets to the IRS, it's imperative that you take action quickly. Please contact our office to schedule a free, confidential consultation to discuss your personal tax situation.