The Internal Revenue Service (IRS) has collected $10 billion dollars from 100,000 taxpayers, reports the The Huffington Post.
The US tax authorities were able to collect this massive amount of money thanks to the Offshore Voluntary Compliance Program (OVDP) and the Streamlined Filing Compliance Procedure. These procedures allow taxpayers with undeclared income and assets outside of United States to get into compliance before the US tax authorities finds them.
This is because the US is the only developed country in the world where tax duty is based on citizenship rather than where you live or work. Therefore: even if U.S. citizens leave the country to live elsewhere, they may have tax filing obligations. In many cases, U.S. citizens do not realise they need to file tax returns. In addition there is even a large group that has no idea that the U.S. considers them citizens. They’re so called “Accidental Americans”.
With this massive amount of taxes collected, it is safe to assume that the IRS will continue to look for US persons who need to file tax returns. Foreign Account Tax Compliance Act (FATCA) enables the US tax authorities to access international banking information. So consequently it is getting harder to hide from US tax obligation. The IRS and foreign banks have been sharing financial information since the implementation of the FATCA agreement.
The Streamlined Filing Compliance Procedure is targeted at “Accidental Americans” or people who did not understand that they needed to file. This includes people who moved to another country when they were very young. Or were born in the U.S. but have spent their entire life elsewhere. They were not failing to report accounts but were just unaware they had tax filing obligations.
The IRS collected $450 million in taxes, interest and penalties from the Streamlined Filing Compliance Procedure. And this does not include the money spent by U.S. persons preparing the necessary paperwork to get into compliance. It would be hard to believe that the IRS is going to stop requiring people to file their taxes.
If you are a US person living abroad and not filing U.S. tax, you cannot rely on US tax authorities not finding you. In conclusion: You should investigate your tax obligation and understand if you need to get into compliance.
‘The IRS has decided to pursue collecting from U.S. citizens. Based on the success to-date, the search for non-filers will continue for the foreseeable future,’ writes Tax Expert Cleo Hamel from the Huffington Post.
Americans Overseas helps Americans living abroad to become US tax compliant in an organised way and avoid unnecessary double taxation. Based on your personal situation, we introduce you to the appropriate US tax advisor in our AOS network. They will make you a tailor-made offer to help with your tax filings. Free of charge and free of any obligations.
Contact us for more information