Is a Malaysia EPF Reported on US Tax Return Form 8938?

Is a Malaysia EPF Reported on US Tax Return Form 8938?

Malaysia Employees Provident Fund Reporting for FATCA Form 8938

The United States and Malaysia have not entered a tax treaty — which limits the ability to defer tax on income generated in Malaysia. One very common type of foreign retirement/pension plan for US persons who were previously or currently employed in Malaysia is the Malaysia Employees Provident Fund (or its predecessor). Mandatory Provident Funds and similar types of provident funds are very common types of investment/pension plans in Asian countries such as Singapore (Central Provident Fund) and Hong Kong and India EPFs (Employee Provident Funds). Even though the US taxpayer may not be receiving any distributions or making any contributions currently to the Employees Provident Fund — that does not mean that it will escape reporting to the US government. A common question our International Tax Law Specialist Team receives is whether or not the Employees Provident Fund (EPF) is reportable on the US tax return form 8938?

Malaysia Employees Provident Fund Reporting on Form 8938

The Employees Provident Fund is required to be reported on form 8938. If a Taxpayer meets the threshold for having to report specified foreign financial assets, then the EPF is reported on Form 8938. It is understandable tax US Taxpayers get confused as to whether or not they have to report the EPF when they are either not making contributions or not receiving distributions from their foreign pension plan.

US Tax of EPF  vs Reporting

It is important for US tax filers to keep in mind that there is a distinction between paying tax on EPF versus reporting the asset. In any year that the taxpayer meets the threshold filing requirements for having to report form 8938 – and FBAR as the EPF is also reported on the FBAR – they would have to include their Malaysia EPF on form 8938.

*Since there is no tax treaty between the US and Malaysia– contributions to an EPF are generally not tax-deferred under US Tax Law and accrued growth within the fund is taxable, even if it is not distributed.

Form 8938/FATCA IRS Amnesty Programs

The Form 8938/FATCA Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.

Some of the more common programs include:

• • • Voluntary Disclosure Program (VDP or “New” OVDP)

    • Streamlined Domestic Offshore Procedures

    • Streamlined Foreign Offshore Procedures

    • Delinquency Procedures

    • Reasonable Cause

Can I Just Start Filing Form 8938 This Year Instead?

No, unless the current year is the first year you had a Form 8938 Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as a Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.

Our Form 8938/FATCA Lawyers Represent Clients Worldwide

Our International Tax Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure. 

Contact our firm today for assistance.