February 2019 JD Supra
Tax News Update for U.S. Taxpayers living Abroad was published by JD Supra on 2/5/19.
- The IRS ability to deny or revoke the Passports of Taxpayers with “seriously delinquent tax debt greater than $50,000” is a distressing problem currently being encountered by U.S. Taxpayers.
- The IRS is authorized to certify a Taxpayer’s seriously delinquent federal income tax debt to the State Department for the purpose of denying a U.S. Taxpayer’s passport application and/or revoking a U. S. Taxpayer’s current passport.
- Taxpayers may not learn the IRS has certified their tax debts until after certification.
- US Taxpayers living abroad might not be aware that they owe money to the IRS and are at risk of losing their passports due to not timely receiving IRS tax correspondence.
- The National Taxpayer Advocate estimates that approximately 270,000 Taxpayers meet the criteria for a seriously delinquent tax debt.
- Voluntary Disclosure
- On September 28, 2018, the IRS closed the Offshore Voluntary Disclosure Program (OVDP).
- Certain Taxpayers with unfiled returns and unreported income can still come into compliance via the Streamlined Filing Compliance Procedures (SFCP). While it is still currently available, this program could be discontinued (like the OVDP) at any time.
- IRS is coordinating its efforts within the IRS Criminal and Civil Divisions for Taxpayers whose conduct is willful or fraudulent and which could result in tax and tax-related criminal acts being charged.
- The SFCP is designed to assist Taxpayers with coming into compliance, and willingly remedy their past mistakes. Its purpose is to provide Taxpayers with an option for becoming compliant and to remain compliant after the process.
- IRS is running an aggressive FATCA Filing Accuracy Campaign.
- This compliance campaign addresses Foreign Financial Institution (FFI) reporting and related Foreign Financial Assets reporting held by their U.S. account holders and substantial U.S. owners under FATCA.
- IRS will terminate the FATCA status of a non-compliant entity.
- IRS has four years of FATCA information in its vault.
- IRS electronically matches (cross-checks) FATCA forms to identify U.S. Taxpayers that are not making required disclosures to the IRS through not filing or underreporting as well as FFIs that are not reporting their U.S. account holders through its cross-check process.
- Beginning January 2018, U.S. Shareholders must report their Global Intangible Low-Taxed Income (GILTI).
- A U.S. Shareholder of any Controlled Foreign Corporation (CFC) is required to include its pro rata share of GILTI in its annual reportable Gross Income.
- The GILTI tax is imposed on the 10% or greater U.S. Shareholders by value or vote of a CFC.
- GILTI tax includes income not included under the prior tax regimes