US citizens in rush for offshore tax advice
By Sundeep Tucker in Hong Kong and Vanessa Houlder in London
Published: September 8 2009 22:08 | Last updated: September 8 2009 22:08
US citizens around the world are scrambling for tax advice ahead of a filing deadline, fearful that they may face prosecution after the US government’s crackdown on undeclared offshore assets.
Lawyers and tax advisers from London to Hong Kong have had a surge in inquiries from expatriate Americans worried about whether they have correctly declared offshore assets ahead of the September 23 deadline.
Darlene Hart, chief executive of US Tax & Financial Services, an advisory firm in London and Switzerland, said: “My phone is ringing off the hook.
“There is a tremendous amount of interest.”
She said inquiries had increased 10-fold since the UBS settlement last month.
Concerns have been fuelled by the Swiss government’s decision to reveal the names of 4,450 wealthy Americans who hold offshore accounts at UBS, the country’s biggest bank.
The US Internal Revenue Service said that the deal underscored the US government’s determination to clamp down on tax evasion.
A Senate committee has estimated that the parking of assets offshore costs the US $100bn in lost taxes each year.
New IRS guidelines for individuals with untaxed offshore assets were announced on March 23.
By coming forward voluntarily, many taxpayers who are not already being investigated by the IRS can cap their liability at six years of back taxes, interest and penalties – and avoid possible criminal prosecution.
Suzanne Reisman, a London-based US private client lawyer, said the IRS deadline was particularly relevant for Americans living in low-tax jurisdictions - such as Singapore and Hong Kong - in Asia.
Americans living in Britain and other relatively high-tax countries were less likely to owe the IRS money, although those who had neglected to file returns were urged to get their affairs in order.She estimated “tens of thousands” of Americans living abroad had inadvertently fallen foul of the rules.
Jay Krause of Withers Worldwide, a law firm with offices in Hong Kong, London, Geneva and the US said: “The interest varies by location. We are getting take-up in all of our offices. The most significant is Switzerland.”
Asia is home to large numbers of people subject to US taxes, including passport and “green card” holders. Around 60,000 US passport holders live in Hong Kong, 15,000 in Singapore and 8,000 in Malaysia, with many more based in countries including Japan, India and Australia.
It is suspected that some Americans have previously not declared to the IRS their personal or business accounts in low-tax centres such as Hong Kong and Singapore.
Hong Kong and Singapore have indicated a willingness to implement exchange of information agreements with other countries governing offshore accounts, according to Withers.
“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,” warned Kurt Rademacher, a Hong Kong-based partner at Withers.
The company said Americans who did not declare their entire worldwide income to US authorities faced a “significantly” higher chance of being prosecuted.
“We have had a substantial increase in calls in recent weeks from Americans seeking advice on their offshore assets, including a number of new clients,” Mr Rademacher said.
Berin Chan, a tax partner at PwC in Hong Kong, said his firm had also received many more calls from US taxpayers about what assets to declare.
Additional reporting by Joanna Chung in New York
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