What are the Singapore CPF FATCA Filing & Reporting Requirements

What are the Singapore CPF FATCA Reporting Requirements

What are the Singapore CPF FATCA Reporting Requirements

What are the Singapore CPF FATCA Reporting Requirements: When it comes to reporting the Singaporean CPF to the Internal Revenue Service, it is important to understand the different components. Most important, since it is considered a foreign pension — it is reportable to the IRS and FinCEN on multiple international information reporting forms. First, the CPF would be considered a Foreign Financial Account — and disclosed on the annual FBAR (FinCEN Form 114). In addition, the CPF would also qualify as foreign pension and included on form 8938 as a specified foreign financial asset. Finally, any income associated with the CPF — even if it is merely accrued and not distributed — is generally taxable and included as income on the tax return.*

*There are times when the CPF is also reportable on Form 8621.

CPF (Pension Plans) and FATCA

When it comes to the CPF, the reporting can be a bit confusing — and unnecessarily complicated. That is because the CPF is mandatory in Singapore and generally not taxable as it grows/accumulates income. As a result (and until taxpayers begin receiving distributions), for many US Taxpayers with CPF — it is out of sight out of mind — especially if the Taxpayer resides in the United States and does not work for a Singaporean employer — and therefore not making any contributions to the CPF.

As provided in the Instructions of Form 8938

• • • Interests in Foreign Pension Plans and Foreign Deferred Compensation Plans

    • Report in Part VI your interest in the foreign pension plan or foreign deferred compensation plan. Do not separately report the assets held by the plan.

      See Valuing Interests in Foreign Estates, Foreign Pension Plans, and Foreign Deferred Compensation Plans, later.

Singapore CPF FATCA Reporting Values

The CPF is typically considered to be a foreign pension for US tax treatment purposes.

As provided by the IRS:

• • • If you have an interest in a foreign estate, foreign pension plan, or foreign deferred compensation plan, the maximum value of your interest is the fair market value of your beneficial interest in the assets of the estate, pension plan, or deferred compensation plan as of the last day of the tax year.

    • If you do not know or have reason to know based on readily accessible information the fair market value as of the last day of the tax year, the maximum value is the fair market value, determined as of the last day of the tax year, of the cash and other property distributed during the tax year to you as a beneficiary or participant.

    • If you received no distributions during the tax year and do not know or have reason to know based on readily accessible information the fair market value of your interest as of the last day of the tax year, use a value of zero as the maximum value of the asset

Penalties for Late or Unfiled FATCA Reporting

As further provided by the IRS:

• • • • • You may be subject to penalties if you fail to timely file a correct Form 8938 or if you have an understatement of tax relating to an undisclosed specified foreign financial asset.

        • Failure-To-File Penalty

          • If you are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date (including extensions), you may be subject to a penalty of $10,000. Continuing

        • Failure To File

          • If you do not file a correct and complete Form 8938 within 90 days after the IRS mails you a notice of the failure to file, you may be subject to an additional penalty of $10,000 for each 30-day period (or part of a period) during which you continue to fail to file Form 8938 after the 90-day period has expired. The maximum additional penalty for a continuing failure to file Form 8938 is $50,000.

        • Married Taxpayers Filing a Joint Income Tax Return

          • If you are married and you and your spouse file a joint income tax return, the failure to file penalties apply as if you and your spouse were a single person. Your and your spouse’s liability for all penalties is joint and several.

        • Presumption of Maximum Value

          • If the IRS determines that you have an interest in one or more specified foreign financial assets and asks you for information about the value of any asset, but you do not provide enough information for the IRS to determine the value of the asset, you are presumed to own specified foreign financial assets with a value of more than the reporting threshold that applies to you. See Determining the Total Value of Your Specified Foreign Financial Assets, earlier. In such case, you are subject to the failure-to-file penalties if you do not file Form 8938.

        • Reasonable Cause Exception

          • No penalty will be imposed if you fail to file Form 8938 or to disclose one or more specified foreign financial assets on Form 8938 and the failure is due to reasonable cause and not to willful neglect. You must affirmatively show the facts that support a reasonable cause claim. The determination of whether a failure to disclose a specified foreign financial asset on Form 8938 was due to reasonable cause and not due to willful neglect will be determined on a case-by-case basis, taking into account all pertinent facts and circumstances.

        • Effect of foreign jurisdiction laws

          • The fact that a foreign jurisdiction would impose a civil or criminal penalty on you if you disclose the required information is not reasonable cause.

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