U.S. government revenue efforts to collect revenues have gotten more aggressive in recent years. In particular the Internal Revenue Service has targeted American citizens and permanent residents living abroad. Many citizens who have been living abroad for extended periods of time ( sometimes their entire lives ) have neglected to file these reports.
While tax on work income is often offset by international tax treaties, the government has come down especially hard on unreported foreign financial accounts. Under U.S. law, any citizen or permanent resident who owns any part of – or has any authority over – a financial account with an aggregate value of more than USD10,000 must report the account to the IRS. This is a surprisingly low barrier – and one frequently overlooked by Americans abroad and their advisors in their countries of residence.
These individuals are required to file a Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1 or FBAR) by June 30 of the succeeding year. Failure to do so may result in significant financial penalties.
As with all such issues, voluntary disclosure is generally viewed more favorably by the IRS than discovery by investigation. If you have any foreign investments – or have signing authority over some type of foreign account – contact AKM today for an evaluation of your situation.