I’ve heard that US tax filing and asset reporting can be a headache. What happens if my client just ignores it? How will the IRS ever know?

We hear this question all the time! While it is possible that the IRS may never find out, ignoring the US requirements comes with very high risk.

Governments around the world are sharing more and more information on their residents and taxpayers. The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) already lay the foundation for such sharing. In addition, the IRS has begun using data analytics to identify possible cases of non-reporting.

Individuals who don’t file US tax returns and informational reports already may face large fines ($10,000-$100,000) per form required in their tax returns. If the IRS determines that the individual was aware of the requirements and did not file, then the consequences are even worse. These “willful” non-filers are not able to claim reduced penalties under the IRS amnesty programs. In addition, they may face criminal charges. Plus, the statute of limitations remains open, so it doesn’t matter how many years go by—the IRS can still look at old cases and levy penalties. These certainly aren’t risks that we would recommend any client take!