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Phuket Gazette Business: US tax regime to scrutinize taxpayer bank accounts

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Phuket Gazette Business: US tax regime to scrutinize taxpayer bank accounts | The Thaiger
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PHUKET: In light of the ‘federal fiscal fiasco’ in Washington DC – to the tune of nearly 17 trillion dollars – the American government is looking to expand its worldwide tax base.

As such, US citizens and green card holders conducting, contracting or controlling business operations in or from countries outside the US, including Thailand, need to ensure consistency and transparency when complying with the latest reporting requirements.

“They’re [the US Internal Revenue Service (IRS)] going after undisclosed, offshore bank and securities accounts,” says John Andes, a US CPA and Thai-American partner with the Bangkok-based accounting firm KMPG Phoomchai Tax Ltd.

Speaking at a US tax update seminar sponsored by Phuket Chapter of the American Chamber of Commerce (AMCHAM) at the Holiday Inn, Patong on March 8, Mr Andes reiterated that all American citizens, regardless of their domicile or residency status, are required to file US income tax returns, report worldwide income and disclose certain information about foreign investments annually.

In addition to increased scrutiny by the IRS for individual income reporting, the Department of Treasury is also putting the onus on foreign banks to disclose certain information about non-US financial accounts held by Americans.

“More stringent reporting requirements and enforcement by the IRS came about after the IRS discovered large sums of unreported money by US account holders in Swiss bank accounts,” explains John.

In last week’s “You can run, but you can’t hide” article, Mr Andes identified two primary options for Americans residing overseas to consider when trying to reduce their US tax obligations – electing a Foreign Earned Income (FEI) exclusion, and claiming a foreign tax credit.

In addition to filing taxes with the IRS, US citizens and resident aliens with financial assets outside of the US and its territories, may also need to file the Foreign Bank Account Reporting (FBAR), using form TD F 90-22.1.

This form must be received by the US Department of Treasury no later than June 30, and there are no extensions possible.

“The FBAR is required for US citizens or resident aliens who had a financing interest over one or more foreign bank and financial accounts, in aggregate, amounting to or more than US$10,000 at any time during the year.”

Mr Andes explained that “having a financing interest in an account” means that the US citizen (or resident alien) was the owner, individual or jointly, or simply had signatory authority over the account, even if he did not control or own the respective funds.

Reportable accounts include bank accounts, insurance policies with a cash surrender value, securities, securities derivatives, or other financial instrument and mutual fund accounts.

Meanwhile, bonds, notes and stock certificates held directly by the person are not FBAR reportable.

The IRS is increasing enforcement of this reporting requirement.

“There are significant civil penalties imposed if it is determined that there was willful failure to file. These can be up to $100,000 or 50% of the aggregate balance in accounts.”

“There are also potential criminal penalties, which can amount to $500,000 and/or five years of jail time.”

US taxpayers who are living abroad on the general tax filing deadline of April 15 get an automatic extension of two months to file.

The taxpayer can file for an additional four month extension (total six months, or by October), using form 4868.

If, however, the taxpayer has an amount owing to the IRS, he must pay that amount by April 15. The extension is only an extension to file, not to pay.

Next week, we’ll conclude with advice and updates about foreign assets and investments.

— Steven Layne

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

Continue Reading

Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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