Search This Blog

February 27, 2016

US Expatriate Tax Return IRS Statute of Limitations on IRS Action Against Taxpayers

IRS Statute of Limitations for US expatriates living abroad.

1. Fail to file a return for any tax year that one is due on your worldwide income?  The statute of limitations nevers runs out to assess taxes for that year.  The IRS can come after you 10 years from now and assess taxes if you never filed the required return or forms.

2. Fail to pay taxes on past filed returns or assessed by the IRS?  The normal statute of limitations is 10 years from the date of assessment and filing a tax lien (that may be a later date from the date you filed the return) to collect tax. However, if you leave the country or the tax is assessed while you are outside the USA, that statue of limitations is put on hold until you return to the USA when it starts to run again. WHEN YOU OWE TAXES AND ARE OUTSIDE THE USA THE STATUTE OF LIMITATIONS TO COLLECT THOSE TAXES NEVER RUNS OUT.

3. Failed to file Foreign Bank Account Reporting Forms (FBAR or now form 114)?  The statute of limitations to assess penalties for failing to file is 6 years from the due date of each years forms.

4. 3 years from date return is filed is normal statute of limitations for assessing additional taxes on your filed return. 6 years from date return filed your return if you omitted 25 percent or more of gross income.

5. The statute never runs out if you fail to file forms 5471, 8938 8865, or 3520 --3520A. The penalties for not including these forms with your return can be $10,000 or more.

6. Criminal Tax Evasion - the statute for possible criminal prosecution is most often 6 years, but there are exceptions.

7. The statute of limitations for IRS action for civil fraud (this means assessment of  the 75% civil fraud  monetary penalty against a taxpayer) is indefinite and never runs out.  Therefore if you cheat on your tax return you are never safe.

8. If you owe $50,000 or more the IRS can have your passport taken away when you enter the US.

As a Tax Attorney, you can talk with us without fear of anything you say being used against you due to the rule of  "attorney - client privilege."

Read more at or email us with questions at

February 22, 2016


Have tax questions or problems?  You have a 38% chance the IRS will help. They have now admitted that only 38% of the phone calls to them last year were answered. The rest must have been left on indefinite hold.  It will likely be worse this year due to budget cuts and the IRS having to deal with all of the new ACA health care taxes, etc.

What to do?  Go to for to find lots of answers. If you need specific help with your situation email us at and a mini consultation can be set up by phone, skype or ? to answer your questions and help you plot the best course of action.

February 13, 2016

Watch Out for IRS Scams and alleged IRS Con Men - Emails and Telephone Calls

Scams using the IRS as a lure continue. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.
Be wary if you get an out-of-the-blue phone call or automated message from someone who claims to be from the IRS. Sometimes they say you owe money and must pay right away. Other times they say you are owed a refund and ask for your bank account information over the phone. Don’t fall for it. Here are several tips that will help you avoid becoming a scam victim.
The real IRS will NOT:
  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
  • Demand tax payment and not allow you to question or appeal the amount you owe.
  • Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
  • Ask for your credit or debit card numbers over the phone.
  • Threaten to bring in local police or other agencies to arrest you without paying.
  • Threaten you with a lawsuit.
If you don’t owe taxes or have no reason to think that you do:
  • Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
  • You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on Please add "IRS Telephone Scam" to the comments of your report.
If you think you may owe taxes:
  • Ask for a call back number and an employee badge number.
  • Call the IRS at 800-829-1040. IRS employees can help you.
In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real.  The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.
If you get a ‘phishing’ email, the IRS offers this advice:
  • Don’t reply to the message.
  • Don’t give out your personal or financial information.
  • Forward the email to Then delete it.
  • Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.
More information on how to report phishing or phone scams is available on
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on
Additional IRS Resources:
IRS YouTube Videos:
IRS Podcasts:

February 9, 2016

Foreign Earned Income Exclusion (form 2555) for Pilots, Airline Crews and Sailors

Many US expatriates live abroad and work for international airlines or shipping companies.  If their planes and ships spend a lot of time traveling in International Waters (parts of the Ocean which do not belong to a country) when they attempt to claim the foreign earned income exclusion ($100,800) for their wages on their tax return they will have a surprise if they are audited.  It is probable they may get audited because the IRS makes them targets for audits when they show themselves as pilots, sailors, etc.

Time spend working on planes or ships while traveling across international waters does not count as working in a foreign country. Therefore the money earned while in International Waters is fully taxable the same as if you were living in the USA.  None of it is excludable.

If you are audited by the IRS they will want to see logs, and other proof showing how many hours were earned while over international waters and use those figures to pro-rate any exclusion you may be claiming between work in foreign countries and work over the ocean.  If you are not keeping such records you should since you as the taxpayer have the burden of proof.

Also, it would only be possible if you are a full time pilot or seaman to claim the exclusion for part of your income if you use the bonafide residence test on form 2555.  Need help with an audit or determining the rules that apply to your situation. Email us at and visit our website at  for more information.

February 6, 2016

IRS Filing and Payment Dates for Expatriates

Filing Deadlines

Default rule: April 15. If your “tax home” or “abode” is in the United States your filing deadline is April 15. This is the default rule.Automatic extension: June 15. If your “tax home” or “abode” is outside the United States, your deadline for filing your income tax return is June 15. This is automatic and you do not need to file anything to get it.Normal extension: Use Form 4868 (whether you qualify for the June 15 deadline or not) to make extend the filing deadline to October 15.Extra extension: Another extension is possible for some people — to December 15.Foreign Earned Income Exclusion. For people who need time in order to qualify for the foreign earned income exclusion, Form 2350 allows you to select your own filing deadline to achieve that goal.

Payment Deadlines

Default rule: The tax due on your tax return is payable on or before April 15.Some people: If you qualify for the June 15 extended deadline to file your tax return, you can pay your tax — without late payment penalties — on or before June 15. However, you will owe interest on the tax due, from April 15 until the day you pay the tax. No further extension of the payment due date is possible.

Filing Deadlines

The filing deadline rules are not too difficult to understand — after you ignore the confusing instructions for Form 4868.

Standard Rule: April 15

The standard rule is that you must file your income tax return on or before April 15. IRC § 6072(a).

February 5, 2016


Form 14653 ( used then a taxpayer has not filed for many years forms required to report foreign  assets, bank accounts, foreign corporations, foreign trusts, etc) in which you must explain the reasons you did not willfully fail to file your tax forms reporting foreign assets has now been expanded to request much more information from applicants. Failure to use the new form asking this information may cause problems with your application which needs to be accompanied with last three year incorrect or past due returns and 6 year past  due amended or original FBAR forms (Form 1140  It now requests the following;

1. Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts. 

2 Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs.

3 Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/ management decisions. Provide a complete story about your foreign financial account/asset. If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice.

4  If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts.

If you need help catching up with past unfiled foreign asset reporting forms you may be qualified for the streamlined program.  We can help you come into compliance and reduce or eliminate some very heavy monetary penalties.  Email us at or go to 

February 4, 2016

Dept of Justice to Go After Fbar Criminals

There will be no letup in the federal government's ongoing campaign targeting U.S. taxpayers who hide foreign accounts and attempt to evade U.S. tax obligations, a key Justice Department (DOJ) official said on Jan. 29. In 2016, tax professionals will see "additional civil enforcement actions and ongoing and new criminal investigations and prosecutions," Caroline Ciraolo, acting assistant attorney general for DOJ's Tax Division, told participants at the American Bar Association's Tax Section midyear meeting. According to Ciraolo, taxpayers who have participated in IRS voluntary disclosure programs may be contacted and interviewed by the agency and DOJ as part of their ongoing cooperation. "Taxpayers who filed returns and FBARs [Report of Foreign Bank and Financial Accounts] pursuant to the streamlined filing procedures or the Delinquent International Information Return or FBAR submission procedures should be very concerned if they falsely claimed to have engaged in non-willful conduct or acted with reasonable cause," Ciraolo said. In addition, "financial institutions and individuals who have facilitated the concealment of offshore accounts and the evasion of U.S. tax obligations would be well advised to anticipate an investigation and consider voluntarily disclosing any criminal activity to the department before they become the subject of an investigation," she said. Ciraolo noted that over the past year, her division has bolstered its staffing with the addition of 80 attorneys who are receiving the appropriate training. Ciraolo's complete prepared remarks can be viewed