Offshore Tax Cheating Again on IRS’s 2019 “Dirty Dozen” List of Tax Scams
The IRS has just published its annual list of twelve tax scams that taxpayers may encounter during this year’s tax season. The list generally consists of two types of tax scams – one involving attempts by scam artists to cheat taxpayers, and the other involving attempts by taxpayers to cheat the IRS.
The Dirty Dozen Tax Scams
The full list of 2019 tax scams is as follows:
- Phishing schemes (fake emails or websites looking to steal personal information)
- Phone Scams
- Identity Theft
- Return Preparer Fraud
- Fake Charities
- Inflated Refund Claims
- Excessive Claims for Business Credits
- Falsely Padding Deductions on Returns
- Falsifying Income, Fake Forms 1099
- Abusive Tax Shelters
- Frivolous Tax Arguments
- Offshore Tax Avoidance
Offshore Tax Avoidance
Of particular relevance for U.S. expats is the last tax scam on the “dirty dozen” list – offshore tax avoidance. This scam has made the list for several years and remains a top priority for the IRS in 2019.
On the IRS page dedicated this year to the offshore tax avoidance scheme, the IRS puts significant emphasis on the amnesty programs available for taxpayers who want to come into compliance with the IRS, stating that “taxpayers who have failed to properly report their offshore investments or pay tax on these investments’ income, to come forward. Since the circumstances of taxpayers vary widely, the IRS offers several options for addressing the noncompliance.”
The IRS adds, “While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant fines, as well as the possibility of criminal prosecution.”
The Takeaway for U.S. Expats
Currently, an estimated 9 million U.S. citizens are living abroad. A growing number of expats have begun to realize that their U.S. tax compliance obligations did not end upon their change in residency.
Constant changes to the voluntary disclosure programs (including the recent closing of the OVDP) should come as a stark warning that these programs may come to a complete end at some point in the not-so-distant future.
For now, the Streamlined Procedures remain a great option for coming clean with the IRS. Several other amnesty options are also available, depending on your situation. Each option has its advantages and disadvantages, and choosing the best way forward requires a careful analysis of your particular facts and circumstances.
Our experts at Expat Tax Professionals are available to help discuss your options and guide you through each step of the disclosure process.
By Joshua Ashman, CPA & Nathan Mintz, Esq.