Common individual US International Tax Issues

Unfiled returns

If you didn’t know you were supposed to file a US return while living and working abroad, you’re not alone. This is a very common issue that can be remedied.

Unfiled FBAR Forms and penalties

There is a law that forces all “foreign” bank accounts and financial assets over $10,000 to be reported to the US Treasury, with a penalty of up to 50% of the account value (for each year!) for failure to file. This is the dreaded FBAR form. We are experienced in winning FBAR appeals, but perhaps even better, we make FBAR appeals unnecessary by winning at the audit level.


Yet another, quite frankly, terrible law – the Foreign Account Tax Compliance Act (FATCA). The law requires that Foreign Financial Institutions and certain other non-financial foreign entities report on the foreign assets held by their U.S. account holders or be subject to penalties.

Some people have closed bank accounts because they received a FATCA letter, not realizing they needed to make a disclosure and are now panicked about what to do. Others find business is difficult to do around the world because of FATCA.

Other IRS Reporting Requirements

There are many onerous international tax reporting requirements. We’ll sum up by saying that there are numerous other IRS International reporting forms that need to be submitted that most taxpayers don’t even know exist. If you fail to file these forms, there are extremely high penalties that can be assessed. Some examples are:

  • Form 5471 – Information Return of U.S. Persons With Respect to Certain Foreign Corporations
  • Form 926 – Filing Requirement for U. S. Transferors of Property to a Foreign Corporation
  • Form 8865 – Return of U.S. Persons With Respect to Certain Foreign Partnerships
  • Form 3520A/3520 – Certain foreign pensions and trusts and gifts require one or both forms.
  • Form 5472 – Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

Poorly prepared voluntary disclosures, poorly represented clients

About half of our new clients already have some sort of representative working on their case. After a little bit of research, many people find that what they were told might not be right, or that what has been submitted on their behalf may not be the highest quality work. Some of our clients feel that they were forced into a Full Offshore Voluntary Disclosure Program (OVDP) by a previous advisor, even though a Streamlined Program may have been more appropriate. Some were convinced that they had no choice but to pay a 27.5% or 50% Offshore Penalty.

What should you do next if you are worried about your offshore assets and foreign income?

The IRS has made it clear that they are looking for tax returns and incorrect voluntary disclosures with technical errors to scrutinize. They are looking at taxpayers as targets for quotas, and not as actual people.

It is extremely important to make sure you hire a team that has experience and success with international issues. We take over offshore disclosures and foreign bank account audits routinely from other tax firms. We are who other attorneys and CPA’s hire. We are who IRS employees hire after they make the same mistakes you might have made.

We have clients all around the globe, and while every case is unique, your issues — no matter how complicated — are probably things we have seen before and have dealt with successfully. With over 10 years of experience, we’ve developed a process. It works.

Contact us to set up your free, confidential consultation. Call us at 888-727-8796 or email info@irsmedic.com.

We invite you to review success stories and case studies of clients of ours.