IRS ramps up aggressive search for Americans living abroad

Under the US tax system, US persons – citizens, green card holders and residents are required to file annual income tax returns and other informational documents reporting worldwide income.

BREAKING NEWS JANUARY 9, 2012:  THE IRS RE-OPENS OFFSHORE VOLUNTARY DISCLOSURE PROGRAM.  The program is similar to the 2011 OVDI initiative with a few key differences.  This is a good opportunity to get up to date on filings with confidence.  We also have videos and further presentations on Voluntary Disclosure, the Life of an American Abroad and US tax compliance on our blog.

Starting in 2014, foreign financial institutions will be required by the US government under the Foreign Account Tax Compliance Act (FATCA) to report information regarding accounts of US citizens to the IRS.   This law requires foreign financial institutions like your local bank, stock brokers, hedge funds, pension funds, insurance companies, trusts, etc. to report directly to the IRS all their clients who are US persons. The penalties for the institutions that do not cooperate are punitive.  There is no clear idea of what foreign banking institutions will do with their US clients.

It is your obligation to ensure “true and accurate” returns are filed with the IRS in a timely way to avoid exposing yourself to the risks of numerous penalties and, potentially, criminal prosecution.

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   Are you compliant? Are your family members & friends aware?

   Did you know that your American passport states that you must comply with US taxes under the “While in the foreign country” header? It’s a little known fact; yet being unaware isn’t a valid justification to the IRS. 
Sharing this information with friends and family could help them avoid penalties and become more tax efficient. Send them the link to this page through the Email a Friend form on the right.

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   Who does this apply to?

   All US persons; Citizens, green card holders and residents living in or outside the United States are required to report their worldwide income on an annual basis. 
Download our informational document for more information on who qualifies as a US person.


   Applying for expatriation? To complete your expatriation process, you are required to submit returns for the past 5 years.


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   Why should I file my tax return?

   Filing your tax return is a responsibility you should not ignore. Failing to submit a tax return can have serious consequences, including a possible criminal investigation.


   The IRS is increasingly likely to find non-compliant taxpayers, as it now receives information from other countries regarding the activities of American persons abroad. 


   Further, from 2014, foreign banks will become increasingly likely to hand over data on its American clientele as they will otherwise be liable for large penalties through the new FATCA legislation.

   
With the objective of catching 90% of delinquent individuals this year, the IRS sends a strong message to the 6 million US taxpayers residing abroad who may not yet have complied with their US income tax obligations.


   Act today by contacting US Tax below and sharing this document with friends, family and colleagues who may benefit from this information.

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   What should I be filing?

   • An annual US tax return reporting your income from all worldwide sources.
   • Informational reports detailing benefits in non-US corporations, trusts, partnerships and various other entities.
   • US persons may also be required to file an annual report with the US Treasury detailing their ownership and/or signing authority in non-US financial accounts.
   • State issues will also need to be considered.

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   How do I get up to date with my filings?

   If you have not met your tax and “offshore” filing obligations, you are legally obliged to bring your filing obligations up to date, and the only question should be the manner in which you choose to do this. There are two main ways of becoming compliant. These are:

   • Formal disclosure
   • Informal disclosure

   Need to find out more? US Tax have produced an informational document to help guide you through the IRS' requirements and the various ways you can file your tax return to maximize your tax efficiency and avoid facing significant penalties and possible prosecution.
Ready to file your tax return? Get in touch for a confidential discussion and put your tax records in order now.

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   My life circumstances have changed recently through marriage, divorce or inheritance. Do I need to report this?

   If you have received assets in the form of property, income or other applicable benefit anywhere in the world, you will need to report this to the IRS. We can help you ascertain how you can report these receipts or disposals in the most tax-efficient way.

Download a PDF overview

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