The expiration of the time for the Internal Revenue Service (IRS) to assess tax can bring closure on prior tax and financial reporting positions for taxpayers. We have previously reported and written for the International Tax Journal about tax statutes of limitation both generally and in the international tax context. As a follow-up to those materials, we wanted to alert you that the IRS recently released a Practice Unit providing an overview of statutes of limitation on the assessment of tax. These materials are all good resources and starting points for taxpayers and practitioners with questions on statutes of limitation.
The US government has reported that more than 1,750 people gave up US citizenship in the second quarter of 2017.
Tax practitioners speculate that the increase in expatriations is likely due to ever-increasing tax and financial reporting and compliance requirements. For example, the 2010 Foreign Account Tax Compliance Act requires overseas banks to disclose financial information to the Internal Revenue Service (IRS) about US citizen-owned accounts. US citizens who live overseas must comply with numerous reporting regimes regarding foreign financial assets and their sources of income. Failure to comply comes with steep penalties.
Practice Point: Expatriation from a tax perspective can be a very complicated endeavor. It is essential to consult with a tax professional that understands the rules and can assist in the efficient and effective renouncing of US citizenship.
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