June IRS deadlines approaching for offshore accountholders - Part 1

Offshore Accounts Just about every U.S. citizen dreads April 15. But for expatriates, other deadlines are disliked even more: June 15 (annual income tax filing deadline) and June 30 (deadline for filing FBAR, a report on foreign accounts). The State Department estimates 8.7 million Americans live abroad (not counting military members), yet fewer than a million ex-pats file with the IRS the forms required for those holding foreign accounts.

The Wall Street Journal notes that even if you cut the 8.7 million in half by not counting children and those ex-pats without sufficient funds to meet the reporting threshold, you are still looking at several million Americans who could be in violation of tax law. Some in violation of the law might be considering whether it is worth or not to retain U.S. citizenship. Others are wondering how to bring themselves and heirs into compliance without breaking the bank or attempting to learn every nuance of complicated IRS regulations.

The Journal notes that things have changed in recent years. The IRS and Justice Department are actively pursuing American citizens who fail to file required foreign account reports. And because the government has gotten 165,000 foreign firms to agree to turn over financial information on account holders, the dangers of failing to file are greater than ever.

For some people, the failure to file is unintentional -- they're unaware such regulations even exist. For others, they fear the complications of years of avoiding taxes and so they continue to avoid filing. In either situation, it makes sense to discuss your circumstances with a tax attorney who knows the evolution of the law, new requirements, and perhaps most important, how to negotiate with the IRS, including the negotiation of non-prosecution agreements.  

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