US nationals (and green card holders) must each year file a US income tax return and comply with the obligation to disclose bank accounts, held outside the US. In this way, the US tax system is quite unique as the tax filing obligation is not only based on fiscal residency, but also on the nationality of the tax payer.
This obligation also affects US nationals, who are living abroad, many of whom have never even set foot on US territory.
As tax authorities around the globe are stepping up international compliance efforts the Internal Revenue Service (IRS) reminds U.S. taxpayers with undisclosed offshore accounts that they should come into full compliance with their federal tax obligations.
Under the Foreign Account Tax Compliance Act (FATCA) and the network of inter-governmental agreements (IGAs) between the U.S. and partner jurisdictions, automatic third-party account reporting is fully operational. As the IRS continues to receive more information on foreign accounts, people’s ability to avoid detection becomes harder and harder. The IRS urges those people with international tax issues to come forward to meet their tax obligations.
Recent data show 55,800 taxpayers, who have come into the Offshore Voluntary Disclosure Program (OVDP), to resolve their US tax obligations, paying more than $9.9 billion in taxes, interest and penalties since 2009. OVDP offers taxpayers with undisclosed income from foreign financial accounts and assets an opportunity to get current with their US tax obligations. The program encourages taxpayers to voluntarily disclose foreign financial accounts and assets now rather than risk detection by the IRS at a later date and face more severe penalties and even criminal prosecution.
In addition, 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions, paying approximately $450 million in taxes, interest and penalties.
A separate process exists for taxpayers who have paid their income taxes but omitted certain other information returns, such as the Report of Foreign Bank and Financial Accounts (FBAR).
Source: IRS Newswire