As reported today, some banks in the United Arab Emirates (UAE) have now begun notifying customers that they will be collecting tax-related information from customers starting next year . This has generated some confusion, at least in the UAE, amongst taxpayers about the “Foreign Account Tax Compliance Act” (FATCA) and the “Common Reporting Standard” (CRS). FATCA deals only with the USA, as compared to CRS which deals with countries all over the world.
Some individuals have told me they understand the UAE need not comply with FATCA until next year and they are therefore thinking of not correcting their tax noncompliance until the financial institutions must send their reports. This is incorrect and is apparently the result of confusion between FATCA and CRS. My blog post might be of interest regarding the UAE and FATCA.
A US taxpayer who understands that he should be filing US income tax returns but who simply does not do so because he thinks he has time to play things out, cannot make a certification under penalty of perjury that this tax noncompliance is “non-willful”. Tax noncompliance must be “non-willful” in order for a taxpayer to enter the IRS Streamlined Procedure. You can read more about this requirement here.
Taxpayers should take note that the longer unresolved tax matters drag on without affirmative action being taken, the more difficult it becomes for a tax advisor to effectively handle the case. You only do yourself an injustice by procrastinating since an advisor cannot assist a client in the best way possible when too much time has gone by. With all the publicity surrounding the IRS’ efforts in offshore tax evasion matters and the worldwide implementation of FATCA, time is clearly not on your side and significantly weakens an assertion of “non-willfulness”.
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