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Survey shows US expats increasing anger over federal tax reporting
| Published: | 6 Jun at 6 PM |
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The proportion of US-born expats living overseas who resent being forced to pay federal taxes is increasing, with 20 per cent of respondents considering renouncing their citizenship as a result.
The survey by a major US expat tax services firm notes some nine million US citizens are living and working overseas, with all still having to submit to the IRS’s federal tax reporting laws. Over 3,800 US expats took part in the study, with 68 per cent of respondents stating they should not be forced to submit tax returns once they’ve left the country. Last December’s Trump tax reform bill lowered tax rates overall for big business and wealthy taxpayers, but offered no relief to expats apart from the fact their tax rates would also fall. In addition, US expats with small businesses overseas were dragged into the dreaded repatriation tax.
In addition, a considerable number of US expats are still angry about the effect of FATCA on their financial lives, with a majority of overseas banks closing their doors to their American account holders for fear of getting caught up in stringent US government penalties for making even the smallest, unintentional mistake. The survey also gave a glimpse into American expats’ attitudes towards the IRS, with 6.8 per cent of respondents not filing their annual returns, 29.6 per cent owing money to the taxman, 50.8 per cent paying up as required and 12,8 per cent receiving refunds. Some 20.6 per cent admitted to worry and fear at the thought of preparing their annual tax returns.
Just over six per cent of expats admitted they were either unsure or not familiar with the Foreign Bank Account Report, known as FBAR, with extrapolating this result meaning some half a million US expats are failing to comply with the IRS’s rules and leaving themselves open to prosecution. Penalties for non-deliberate violations include fines of up to $12,459, with wilful violations attracting either 50 per cent of an account’s balance or a fine of up to $124,588, whichever is the larger amount. Given that 20.7 per cent of survey respondents said they had no idea what FATCA is, the IRS could be looking at a windfall in the not too distant future.
The survey by a major US expat tax services firm notes some nine million US citizens are living and working overseas, with all still having to submit to the IRS’s federal tax reporting laws. Over 3,800 US expats took part in the study, with 68 per cent of respondents stating they should not be forced to submit tax returns once they’ve left the country. Last December’s Trump tax reform bill lowered tax rates overall for big business and wealthy taxpayers, but offered no relief to expats apart from the fact their tax rates would also fall. In addition, US expats with small businesses overseas were dragged into the dreaded repatriation tax.
In addition, a considerable number of US expats are still angry about the effect of FATCA on their financial lives, with a majority of overseas banks closing their doors to their American account holders for fear of getting caught up in stringent US government penalties for making even the smallest, unintentional mistake. The survey also gave a glimpse into American expats’ attitudes towards the IRS, with 6.8 per cent of respondents not filing their annual returns, 29.6 per cent owing money to the taxman, 50.8 per cent paying up as required and 12,8 per cent receiving refunds. Some 20.6 per cent admitted to worry and fear at the thought of preparing their annual tax returns.
Just over six per cent of expats admitted they were either unsure or not familiar with the Foreign Bank Account Report, known as FBAR, with extrapolating this result meaning some half a million US expats are failing to comply with the IRS’s rules and leaving themselves open to prosecution. Penalties for non-deliberate violations include fines of up to $12,459, with wilful violations attracting either 50 per cent of an account’s balance or a fine of up to $124,588, whichever is the larger amount. Given that 20.7 per cent of survey respondents said they had no idea what FATCA is, the IRS could be looking at a windfall in the not too distant future.
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