Getting your US clients tax compliant – is this the final opportunity?

The next FATCA reporting deadline for financial institutions in the UK is 31 May 2017, with the information reported then to be exchanged with the IRS on or before 30 September 2017. Find out now what you should be doing to ensure your clients are compliant before this deadline.
To help tackle the $395bn of US tax revenue that is estimated to be uncollected every year from tax evasion, all non-US financial institutions are required to report to the US Internal Revenue Service (IRS) the names, addresses, and account balances of their US clients under the US Foreign Account Tax Compliance Act (FATCA). The next FATCA reporting deadline for financial institutions in the UK is just under two months away on 31 May 2017. Any US citizen or Green Card holder residing in the UK who is not up to date with their US tax filings should be thinking of at least starting the process of getting compliant before this deadline.

The current Streamlined Filing Compliance Procedures allow delinquent US taxpayers to get compliant with their Federal taxes by filing the last three late US tax returns and last six late Foreign Bank Account Reports (FBARs) with either no, or reduced, penalties – provided the non-filing can be shown to be non-willful. 48,000 US taxpayers have so far made use of this program. As President Trump gets his administration under way and with tax reform on the agenda for 2017, there is however uncertainty beyond next year on whether this tax amnesty will continue to exist in its current beneficial form.

It is still common for us to be contacted by “accidental Americans” - those who were either born in the US, or born outside the US and have inherited US citizenship through a parent, but otherwise have no connection with the US and who now find that they have outstanding US tax filing obligations. This disclosure facility is an ideal program for such individuals residing outside the US to get back into the system with minimal stress.

It is crucial that those affected take advantage of this amnesty program immediately. Either before the IRS initiates a civil or criminal examination in respect of information they hold on file from foreign financial institutions, which would preclude a US taxpayer from participating in such a voluntary disclosure, or before the Streamlined Procedures are withdrawn. Now is the time for delinquent US taxpayers to get compliant with their individual US taxes.

How we can help
Our team have significant experience in bringing US taxpayers up to date with their US tax reporting and can advise on the IRS definition of ‘non-willful conduct’, which broadly includes negligence, inadvertence and a good faith misunderstanding of the requirements of the law. We can help a US taxpayer make sense of their US tax situation and ensure that they are fully compliant and correctly structured.

If you have US clients that are affected, or are unsure how best to proceed, please contact us here.
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