The IRS has declared filing three years back taxes is adequate for most US expat tax filers who are delinquent. Also, there shall be no penalties for late FBARs (Foreign Bank Account Reports) from those who were unaware of the requirement to file. This brings a clarity and welcome relief to many American expatriates who in the past may have been reluctant to file US income taxes because there was no assurance that they would not be further harassed (or assessed exorbitant penalties and fees) because they simply didn't know - or they didn't trust the potential outcome if they did attempt to come forward and become compliant with US tax laws.

In 1916 the U.S. government passed a law that required U.S. citizens living abroad (expatriates) to file a U.S. tax return. For many years the law's provisions were largely ignored, but not anymore. The Obama administration has a $400 billion hole in the budget that it needs to fill, and it believes it can raise 25 percent of that amount by cracking down on offshore tax abuse. To that end, the president has increased the IRS's budget by $128 million and authorized the hiring of 800 new IRS agents to track down people with money overseas and prosecute those who have not been paying taxes. U.S. citizens living abroad are now under the microscope. If you live abroad or are thinking about moving abroad to live, work, or retire, you will need to know:

From our 30+ years of experience with American expat taxes, we have found that failing to file US tax returns for a number of years is actually quite a common situation. With the excitement of a move abroad, coupled with all the changes that such a move brings, the last thing on most people's minds is filing their taxes.