Some taxpayers who are dual citizens of the United States and a foreign country may have failed to file United States federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), despite being required to do so. Whether these taxpayers were aware of their filing obligations or not, it is highly recommended they attempt to comply with the law with the help of a trusted professional. Freed Maxick’s International tax team has a great deal of experience working with clients of all citizenship types and can help navigate through these complex matters, helping you come into proper compliance.
Failure to File FBAR
There can be very severe penalties assessed for the failure to file FBARs and/or tax returns. Fortunately, the IRS has made several programs available for taxpayers to use in order to come into compliance which can minimize or even eliminate their potential penalties. It is important to note that while these programs do not have set expiration dates, the IRS can close these programs down at any time. Additionally, once the IRS contacts a taxpayer or if the taxpayer comes under audit or investigation, these programs are no longer available for use. Therefore, it is of utmost importance for taxpayers to take advantage of these programs as soon as possible to become compliant on all of their U.S. filing requirements.
With the implementation of FATCA, the IRS is obtaining more and more information from other countries on taxpayers and their foreign financial accounts. They are using this and other types of information to seek out non-compliant taxpayers. Now more than ever it is important to take the steps necessary to become compliant with U.S. tax filing and reporting obligations voluntarily by utilizing the various IRS disclosure programs available.
The IRS will continue to step up enforcement of penalties related to non-filing. The options and outcomes available for taxpayers are much more tolerable for those who come forward voluntarily as opposed to those who are not in compliance as they take the risk each day that they are going to be contacted and penalized by the IRS.
For more detailed information from the IRS check out the: IRS Fact Sheet (FS-2011-13) on Information for US Citizens, Dual Citizens Residing Outside the U.S