The IRS is tightening its grip upon international or Foreign Bank Account Reporting (FBAR) and related taxation information, and as a result US expatriates face even more complex tax related risks and challenges. The IRS has established a much broader integration into the information of international banking and taxation authorities, and beginning July 1, 2014 the risk of exposure for US expatriates substantially broadens. Several of our clients have already received letters from their foreign banks relating to the closing of their accounts. Our expatriate clients used to enjoy the allure of working abroad and some of the perceived tax advantages provided under federal tax exclusions for portions of income earned in a foreign country. Recent changes in IRS access to foreign banking information from the Swiss and other former “safe havens” has forced many US expats to reconsider their investment and taxation strategies. Expats need to understand the specific reporting requirements of the “Foreign Bank Account Reporting” or FBAR and the impact of new relationships established between the IRS and foreign banks and foreign tax authorities. An expat must give serious consideration to the implications of FATCA (Foreign Account Tax Compliance Act), and whether income and assets that were previously shielded may become immediate sources of exposure to taxation, penalties, interest or criminal liability. Have you received a letter from your foreign banker indicating closure of your account. If so, contact us today for a free initial consultation.
