— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) November 14, 2015
The above tweet references a comment I made at the Wall Street Journal on February 23, 2015.
John Richardson wrote:
This is a good list of the most common forms (but only “some”) that are required by Americans abroad. To round out the article a bit, it is worth noting that the penalties for failure to file many of these forms start at $10,000 (subject to reasonable cause exemptions). It’s also worth noting that the failure to file some of these forms means that your tax return is NOT considered “filed” until the form is filed. In this case the stature of limitations for audits runs forever.
Americans abroad need to be VERY careful. In many cases, in spite of best intentions, mistakes are made. Often these mistakes are the result of failing to file one or more information returns. Furthermore, the IRS does not make it easy to correct the mistakes once they have been made.
It’s hardly a surprise that with this unreasonable and unjustifiable burden that many Americans abroad are now renouncing their U.S. citizenship. Renuncations are NOT about taxes (in many cases Americans abroad don’t actually owe any taxes). Renuncations are about the compliance burden and the threats of penalties which is very expensive and anxiety inducing.
Tax filing for Americans abroad is a frightening experience because of the number of “unknown unknowns”.
Those hiring a tax preparer should understand that there are different kinds of preparers.
Lawyers (too expensive)
CPAs (as long as they specialize in International Tax they are a good choice but will be expensive)
Enrolled Agents (less expensive than CPAs are in most cases just as good)
Tax preparers (no specific qualifications).
Understand what kind of person you are hiring to prepare your returns.
Finally, the complexity and forms required with certain kinds of activities (small business corporations) and (investments) put severe restrictions on the citizens of the “Land of the Free”.
These rules are extremely unjust. It’s easy to live as an American abroad. What is very difficult is to live as a “U.S. tax compliant” American abroad.