U.S. Expats: How to Handle Delinquent Expat Tax Returns
U.S. Taxpayers, who have not filed U.S. tax returns each year, are considered delinquent and can face potential civil and criminal penalties from the Internal Revenue Service (IRS).
U.S. citizens and residents living abroad are still required to annually file a U.S. tax return and pay taxes on their worldwide income.

Penalties arise from a failure to file a return in a timely manner and/or failure to file a Foreign Bank Account Report (FBAR) via Form TDF 90-22 (required if at any time during the year the balance in your foreign bank account was $10,000 or more).
It’s also important for U.S. expats to understand the relatively new FATCA law. Under this law, foreign banks will now be required to provide the IRS with information regarding financial accounts held by U.S. citizens. This means that U.S. expats who have not been filing tax returns and/or reporting foreign bank accounts are at an increased risk of being audited by the IRS.
Options to Avoid Severe Financial Penalties and Criminal Prosecution
Offshore Voluntary Disclosure Program (OVDP)
The IRS considers a voluntary disclosure occurs when the communication is truthful, timely, complete, and when:
- The taxpayer shows willingness to cooperate (and does in fact cooperate) in determining his or her correct tax liability.
- The taxpayer makes good faith arrangements with the IRS to pay in full, the tax, interest, and any penalties determined by the IRS.
Is it is important to note that if the IRS is conducting an audit or examination, the taxpayer will not have the option to
participate in the OVDP.
Reasonable Cause Defense
- Taxpayer has limited education.
- Whether the taxpayer received prior penalties.
- Recent changes in the tax forms (or law) that could not reasonably be expected to be known by the taxpayer.
- The complexity of the tax or compliance issue.
Hear from relieved
Taxpayers who trusted Verni Tax Law
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