Tax Help for Persons Living and Working Abroad

Many people have heard that holding assets overseas – in foreign bank accounts, stocks, or in tangible assets – is somehow inherently wrong and perhaps illegal. Stereotypes of wealthy Americans sheltering income from taxation in Swiss bank accounts may be based on a few high-profile cases, but the reality is that most foreign assets and accounts are held by people who have no tax-avoidance motive at all. Foreign aid workers, exchange students, diplomats, and researchers – all living and working in the United States legally – are likely to have one or more accounts overseas.

Problems with Offshore Asset Disclosures

Problems can arise when U.S. citizens or other “tax residents” fail to disclose these foreign accounts to the United States government. Tax residents usually include holders of United States visas (other than student visas) who are substantially present in the United States for more than two years as well as all persons admitted for permanent residency. Whether due to negligence, not knowing about the reporting requirements, or not fully understanding the tax residency rules, failure to report foreign assets as required can lead to imposition of significant civil monetary penalties. In addition, criminal prosecution can also result from the failure to report foreign assets on the appropriate forms.

Recently, the IRS has opened several voluntary disclosure programs to allow taxpayers with unreported foreign assets to come into compliance with their filing obligations. These programs offer several benefits but are a one-size-fits-all option that may not be appropriate for everyone with unreported offshore assets. Our attorneys are experienced at representing clients with unreported offshore assets, and can provide solid guidance as to the most appropriate method to disclose such assets.