If you are one of the many expats who doesn’t always stay up to date on the latest tax and filing obligations, you’re not alone! Fortunately, that’s where we come in. It’s our job to keep you abreast of the latest expat tax regulations. And when it comes to late filing, it pays to be ‘in the know’.
The IRS has recognized the worldwide problem of delinquent tax filers. In fact, in 2014 the US launched FATCA, the Foreign Account Tax Compliance Act, which forces individuals to report their foreign assets if they exceed certain thresholds. This was originally created to encourage tax evaders to come out of hiding, but the IRS also recognized that in order to do that, it was important to create programs under which one could file.
Streamlined Filing

The new Streamlined Filing Procedures were created to help innocent taxpayers become compliant on their US taxes. This is the program for many expats, especially those who didn’t realize they still had filing obligations.

Under the Streamlined Procedures, individuals must file three years of Federal Tax Returns and six years of FBARs (Foreign Bank Account Reports). But the best part? The IRS has waived the late filing and FBAR penalties for those whose lack of filing was non-willful—meaning, there was no intentional effort to hide money.

You cannot file under this program if you have received a delinquency letter from the IRS or are under investigation, but that applies to very few expats. There is currently no end date to this program—which means it could end at any time—so late filers are encouraged to file as soon as possible to take advantage.

Offshore Voluntary Disclosure

The IRS also marked changes to their Offshore Voluntary Disclosure Program (OVDP). This once temporary program has been extended until further notice. The OVDP is designed to allow individuals hiding money in offshore accounts to come forward, pay a (hefty) fine but avoid criminal prosecution.

Although the original intentions of the IRS’s efforts to collect unpaid taxes were good, a lot of expats have been caught in the crossfire of the new rules. Many expats had legitimate overseas savings and failed to report them to the Treasury Department simply because they didn’t know they had to.

But OVDP is not for this audience! OVDP is a better choice for those purposely hiding assets from the IRS to come forward, legitimize their foreign assets, pay reduced penalties and evade criminal prosecution.

Before applying for either program, however, we strongly suggest you contact an expat tax professional to see which fits your particular situation. Few expats will need to file under OVDP—but if you do, it is important to fully understand what you are agreeing to, as the penalties under this program are huge.

Greenback Expat Tax Services specializes in tax preparation for Americans living abroad. Our team of CPAs and IRS Enrolled Agents have decades of experience with US expat taxes. We offer transparent, flat fee pricing and a hassle-free process designed to save you time and money. To learn more about how to catch up on your US expat taxes, contact us today.