The United States is one of only two countries in the world that continues to assess tax against its citizens after they have moved from the country and have no U.S. income. On account of the considerable complexity and counterintuitive nature of this policy, American expats commonly overlook these continued requirements. While no longer a situation to be taken lightly, many options are still available to anyone needing to catch up on U.S. tax filing requirements. Our team of experienced international tax attorneys will analyze your situation and help you determine the best path forward.
Streamlined Filing Compliance Procedures
The streamlined compliance programs allow U.S. taxpayers who have honestly overlooked their U.S. tax return and foreign account reporting obligations to get back into compliance by filing the prior three years of returns and six years of foreign account reports. Participation may be a solid solution for many American expats but offers no protection from criminal prosecution and will not be an option in many instances. Only individuals who are determined by the IRS to have not acted willfully will be accepted through these procedures and a detailed statement of explanation must be prepared with the submission.
If living overseas for at least one year, utilizing these procedures will result in tax and interest being calculated but no penalties are assessed. U.S.-based Americans with offshore assets can also qualify but are subject to a reduced 5% penalty, calculated on the value of their undisclosed assets, in addition to taxes and interest.
Our team has assisted countless American expats in catching up with their U.S. tax and foreign account reporting obligations by utilizing the Streamlined Filing Compliance Procedures. We will work with you to determine whether this program is the right option for you.
Offshore Voluntary Disclosure Program
The Offshore Voluntary Disclosure Program (OVDP) obligates participating taxpayers to submit eight years of delinquent tax returns and foreign information reports. Substantial (though predictable) penalties are assessed against participants but protection against criminal prosecution is afforded.
While the considerable penalties that will be assessed through this program will often result in an excessively harsh outcome for an American expat who has been living and working overseas, it may still be a valid option for those who have had prior compliance issues, face large U.S. tax liabilities, or have utilized abusive tax planning strategies to conceal income sources overseas.
If you have more serious concerns, our team can help you weigh your options and prepare your submission through the Offshore Voluntary Disclosure Program.
Delinquent Tax Returns and FBARs
For certain U.S. taxpayers, the formality and eligibility requirements of the Streamlined Procedures or Offshore Voluntary Disclosure Program eliminate these as viable solutions. If confronted with such a situation, we can assist you with developing a voluntary disclosure strategy that fits the specific set of circumstances. Know that if formal programs offered by the IRS do not appear suitable in your situation, you still have options. Our experienced tax attorneys can help.
With decades of experience resolving complicated international tax matters and developing compliance strategies for American expatriates, Expat Legal Services Group will be the tax advocate you need back home.