Living Abroad? Are You Compliant With Your U.S. Tax Obligations?

Jan 06 2017

FATCA, the Foreign Account Tax Compliance Act, is fully implemented this year.  This means foreign banks will be reporting to the IRS the bank account details of U.S. persons. For 2016, this will include your name, address, SSN, bank account number, account balance, interest/dividend income received and gross proceeds from the sale of assets (i.e., stocks/funds).  This information will be in the IRS hands on September 30, 2017.  

  "If you are a U.S. individual holding overseas assets, you must report and pay your taxes or we will be increasingly focused on finding you."  Douglas H. Shulman, Commissioner of the Internal Revenue at the AICPA National Conference on Federal Taxation, Washington, D.C., October 26, 2009.


FATCA was implemented in 2010 and the IRS began receiving information on foreign accounts of U.S. persons in 2015.  Significant penalties can result from failing to file income tax and information returns related to foreign assets.  In 2009, the IRS established the Offshore Voluntary Disclosure Program (OVDP) to assist individuals who have not been compliant with their U.S. tax filings. Since then, they have also established the Streamlined Filing Compliance Procedures and various other "amnesty" programs to assist taxpayers with coming back into the U.S. tax system. 


"U.S. taxpayers have been given ample opportunity to come forward, disclose their foreign accounts, and come into compliance...Those individuals and entities who rolled the dice in the hope of remaining anonymous are facing consequences.  The Tax Division remains committed to investigating and prosecuting individual taxpayers with undeclared foreign financial accounts..." Carolyn D. Ciraolo, Acting Assistant Attorney General, Tax Division, February 3, 2016.
At the ACIPA National Conference on Federal Taxation in Washington, D.C. on November 14, 2016, Caroline D. Ciraolo reiterated her position quoted above, indicating that the IRS and Justice Department are finding it increasingly harder to accept taxpayer positions of non-willfulness, given the fact that FATCA has been implemented for 6 years now and the IRS has had a vigorous campaign to educate taxpayers abroad.  It is likely just a matter of time before amnesty programs are no longer available.  

 According to Caroline Ciraolo:
  • If the IRS contacts you before you are compliant, a purely civil tax resolution is no longer certain.  Significant civil penalties are likely.  Criminal charges and penalties may also result.
  • If the Department of Justice contacts you before you are compliant, a purely civil tax resolution is unlikely.  Criminal charges and penalties are likely.

What do I do now?

Need assistance with becoming compliant?  Contact us today for a free consultation. 


©2017 SDC, LLC    www.sdcglobalcpa.com
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult tax, legal and accounting advisors before engaging in any transaction.

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