In light of the global development and implementation of information-sharing legislation (for instance, FATCA which mandates financial entities to disclose details about US account holders to the IRS), maintaining accurate and current tax affairs has become increasingly crucial.

Over the last ten years, the IRS has heightened its scrutiny of US citizens residing abroad, enforcing strict adherence to tax returns and information returns filing, along with accurate declaration of all foreign accounts and assets. Consequently, numerous individuals are realising that their filings are not up-to-date, prompting them to contemplate voluntary disclosure.

The Implications of Not Filing Your Tax Returns

Neglecting to declare a foreign bank account or failing to file US tax returns can lead to severe repercussions, possibly necessitating a voluntary disclosure.

Fortunately, Xerxes Associates LLP is adept at guiding clients through their voluntary disclosure alternatives, encompassing streamlined compliance procedures and voluntary disclosure programmes.

If you identify as a US person – which includes citizens, Green Card holders, and those meeting the substantial presence criterion – possess a non-US bank account either in the UK or another nation, and haven’t filed a FBAR or US tax return, it’s probable that there are filing requisites you have overlooked. Moreover, companies and trusts are subject to additional reporting requirements.

Navigating Late Tax Return Filings

At Xerxes Associates LLP, we excel in assisting individuals who haven’t previously filed the necessary US tax and information returns. We empathise with the potential distress and anxiety stemming from unintentional errors and the hefty fines levied for late submissions. Allow us to support you in this endeavour.

We are always open to conducting a preliminary discussion concerning voluntary disclosure, analysing your specific circumstances and exploring the potential solutions, without any commitment from your side.

Being dual UK and US practitioners based in the UK, we are well-versed with the intricacies of UK taxation and can adeptly assist you with the necessary disclosures.

IRS Streamlined Foreign Offshore Procedures

In 2014, the IRS broadened the scope of the streamlined filing compliance procedure, facilitating overseas Americans to submit overdue US tax returns, a scheme initially launched in 2012. This initiative permits delinquent taxpayers abroad to come into compliance without facing penalties and additional charges, with a more inclusive eligibility criteria and the abolishment of all penalties linked to late filings or payments.

For the majority of individuals reaching out to us, this streamlined procedure tends to be the preferred pathway. This IRS-approved procedure is generally accessible to all taxpayers, provided they haven’t been under any prior or ongoing civil or criminal investigation by the IRS, and can affirm their non-wilful actions. It’s vital to acknowledge that the IRS may cease this procedure at any moment.

We welcome the opportunity to review your case and determine the likelihood of your eligibility for the streamlined procedure, and to discuss potential waivers concerning penalties and necessary filings.

Voluntary Disclosure Process

Individuals uncertain of their non-wilful omissions and hence, possibly ineligible for the streamlined procedure, the IRS still offers a voluntary disclosure pathway.

Since the closure of the previous offshore voluntary disclosure programme in September 2018, the current approach grants more latitude to IRS agents in determining suitable civil penalties. This now encompasses a potential 75% tax liability penalty for tax returns and civil penalties for deliberate failure to file FBARs, although exemptions might be applicable in extreme cases.

Engaging in voluntary disclosure necessitates an initial criminal pre-clearance with the IRS Criminal Investigations, followed by submission of returns and agreement on taxes and penalties with the IRS Large Business & International division.

This method might seem more punitive, but IRS agent discretion allows for penalty mitigation under specific circumstances. In all scenarios, it presumes complete cooperation from the taxpayer and a mutual agreement with the IRS regarding taxes and penalties.

Expert Assistance with Late Filing Services

Understanding the strain of lagging in your US tax commitments, we at Xerxes Associates LLP are equipped with the expertise to help US expats become up-to-date with their filings. For further information on your obligations or assistance in determining the most suitable options, contact us today or submit an enquiry online.

Contact us via www.xerxesllp.com or fill out our contact form to discuss your expat tax situation with us.