How should I respond to a violation of the overseas financial account reporting obligation?

Hello. The overseas financial account reporting obligation is a system under the 'Act on International Tax Coordination'.

If the total balance of overseas financial accounts as of the end of each year exceeds 500 million won, there is an obligation to report to the National Tax Service by June of the following year.

If you fail to report or under-report overseas financial account information within the reporting deadline, a penalty will be imposed based on the following criteria within a limit of 20% of the unreported (under-reported) amount.

If the unreported (under-reported) amount exceeds 5 billion won, the personal information of the violator (including the representative in the case of a corporation), such as name, age, occupation, address, and amount of violation, may be disclosed.

In addition, notification disposition or criminal punishment (imprisonment of up to 2 years or a fine of 13% or more and 20% or less of the unreported/under-reported amount) may be imposed.

As in your situation, when the overseas financial account reporting obligation is violated, it is important to immediately organize the facts and faithfully explain them upon contact from the National Tax Service.

By submitting materials proving that there was no intent, that the source of funds is legitimate, and that there was no purpose of tax avoidance, you can lower the level of punishment.

As such matters are complex involving international taxation, foreign exchange transactions, and tax investigation response, it is good to establish a response strategy with a financial and tax specialist attorney.