The United States has a citizenship-based system of taxation, meaning it taxes its citizens regardless of whether or not they live in the United States or have income from US sources. As the US has become more aggressive in its attempts to collect data on US citizens with accounts and assets overseas, some individuals are learning that they have had US tax obligations for years despite seemingly no ties to the country.
If you are born abroad and one or both of your parents is a US citizen, you are also bestowed US citizenship. While for many, this is a coveted right, it gives rise to the situation where someone grows up without ever setting foot in the US, yet once they start earning income as an adult, they become subject to the same US tax reporting requirements (including foreign income and asset reporting) as all US citizens. Furthermore, since most developed nations do not tax their citizens based on citizenship (but rather, residency), it may never occur to the individual to even consider this despite knowing that they hold dual citizenship in the US and their home country.
Many of these so-called “Accidental Americans” became aware of their situation after the implementation of FATCA in 2014. At this time, or in the years following, they may have received a FATCA Letter from their non-US bank stating that their account information would now be reported to the IRS. After a little bit of research, they become aware of not only their potential outstanding tax liability, but also the astronomical civil penalties or criminal liability they are potentially subject to as a result of years or decades of being unknowingly non-compliant.
We are experienced working with these individuals who wish to rectify their situation. We can discuss your options with you and assist you in resolving them in a timely manner. Additionally, through our close association with Lanphier LLP, a full service CPA firm of which Dennis Lanphier is also a partner, we are also able to assist you with preparing the applicable tax returns necessary to complete this disclosure process.
Contact our firm today to discuss your Offshore Disclosure issues and how we can assist you.