Missing US Tax and FBAR filing and owe IRS More than $52,000 in tax liabilities?
We all agree that a US Citizen living and working abroad losing their US Passport will be the worst nightmare ever. US Passport is one of the top passports that gives you access to over 184 countries free of travel no visa. US expat losing your passport can not only limit your travel but also limit your ability to work, invest or even rent. Recently IRS announced that over 400,000 US Citizens (link to be added) living abroad are at risk to lose their US passport.
Fixing America’s Surface Transportation (FAST) Act, require IRS to inform the US Department of States of all US taxpayers that owes tax liabilities of $52,000 or more. The law also requires the US Department of State to deny and/or renewal the US Citizen passport in case of such seriously delinquent US tax liabilities. If the US expat taxpayer have a valid passport, once you visit the US you will have limited ability to travel outside the US before solving your US tax liabilities.
Once you clear the US tax liabilities by either paid in full or made arrangement such as a payment plan, the IRS will reverse the revoke certification within 30 days.
A US expat with a serious tax delinquent will receive a letter informing them of the impending referral to the State Department. Now the question is how easy you get the IRS mail while you live in a foreign address? Big chance that you will fly back to the US and discover that your passport is a t risk to be revoked.
Tax Actions recommend using our IRS Tax Analysis Report tools annually to ensure that you are in US tax compliance with the IRS as well as no tax liabilities and or filed liens against you while living and working abroad. As most of US expats when they relocate outside US for working or investment purpose, they are not aware that the US Tax and FBAR filing requirement still applicable, see your passport instruction page letter D.
“D. U.S. TAXES – All US citizens working and residing abroad are required to file and report on their worldwide income. Consult IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.” US Passport.
So as a result of the above clear Internal Revenue Code – IRC, as a US citizen you are requires to be in tax compliance unless you choose to renounce your US citizenship.
Even US expat who does not have tax liabilities as their foreign earned income exclusion is higher than their current foreign earned income must file annual US Tax Return including form 2555.
Just a reminder the IRS is offering you a solution for all missing US Tax Returns as well as FBAR, the solutions is Streamlined Procedure SLP. SLP covers three years of delinquent US Tax Returns and 6 years of delinquent FBAR. As you are aware of the IRS initiated and terminated amnesty tax programs, please note that the SLP will not last for ever and one day the IRS will terminate it. Please take advantage of a solution that will remove all the civil and criminal penalties of US Tax in compliance.
Want to confirm your IRS Tax Compliance Status? Click here to request your IRS Tax Analysis Report by Tax Actions.