The Internal Revenue Service or IRS is notoriously aggressive when it comes to enforcing compliance with US tax law — even on an international scale. Regardless of the fact that you now work or reside in France, as a US person you are still required to report your global income and foreign assets to the federal government. If you evade your responsibilities as a US taxpayer, you risk exposing yourself to debilitating fines, years of prison time, and long-term damage to your career, your professional reputation, and your financial health.
Certified Public Accountant Ted Kleinman has more than 20 years of practical experience working with clients of all nationalities and occupations, and specializes in matters of international tax policy. If you’re a US expatriate living in France, Ted Kleinman is prepared to assist whether you need help making a disclosure, have questions about unfiled returns from previous years, or you simply want a CPA to review your tax documentation for credits and deductions.
To arrange for a private consultation with Ted, call US Tax Help today at (800) 810-9312.
FBAR Filing Requirements
The United States is one of the only countries in the world to tax nonresident citizens on their worldwide income. While this requirement is somewhat unusual from an international perspective, its provisions remain firm — and the penalties for noncompliance can be severe.
If you fail to report income earned in France to the US government, not only do you risk the imposition of enormous civil penalties, but even more worryingly, the very real possibility of a criminal investigation conducted by the IRS. If the IRS uncovers evidence of potential tax fraud or tax evasion, it may refer your case to the Department of Justice or the U.S. Attorney for prosecution. The IRS reports prosecuting approximately 3,000 cases per year on average, or about eight new cases per day.
In short, it is critically important to comply with all reporting requirements which apply to you, including filing an FBAR (Report of Foreign Bank and Financial Accounts). You must file an FBAR if both of the following statements apply to you:
- You are a US person with either (1) signature authority over, or (2) a financial interest in, any foreign bank account held outside the United States.
- The value of your foreign accounts exceeded $10,000, at any point in time during the year to be reported.
In the past, taxpayers could file an FBAR by using Form TD F 90-22.1. However, the IRS has updated its submission procedures. Filers must now use the BSA E-Filing System, which utilizes an online form titled FinCEN Report 114.
The IRS’ Offshore Voluntary Disclosure Program (OVDP)
Provided the IRS has not already initiated a criminal investigation into your financial activity, you may be eligible to participate in a special, recently introduced program called the OVDP, or Offshore Voluntary Disclosure Program. By participating in the OVDP, you gain the opportunity to disclose your offshore accounts while avoiding criminal liability. Needless to say, this makes the OVDP very appealing to many taxpayers wishing to come back into compliance with federal tax laws.
However, it remains important to consult with an experienced CPA before you make a major financial decision such as electing to join the OVDP. There are several different types of OVDP programs, one of which may be more advantageous to you depending on your financial and legal situation.
For example, many taxpayers rush into an offering known as the Streamlined OVDP, operating on the assumption that because this version of the program is “streamlined” it must therefore be more convenient. However, to many taxpayers’ dismay, the streamlined version of the OVDP neither limits civil liability nor offers protection against the possibility of criminal prosecution. There are scenarios in which choosing the streamlined OVDP makes financial sense, but it is important to discuss your financial objectives in depth with an experienced CPA to determine which course of action will best resolve your compliance issues while protecting your best interests.
If you delay and miss the deadline, or if the IRS launches a criminal investigation, you will lose your chance to participate in the OVDP and to seize other valuable opportunities. If you’re concerned about matters of tax compliance, the time to act is now — before it’s already too late. To arrange for your confidential consultation, call Ted at US Tax Help right away at (800) 810-9312.