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We are doing a webinar for regular Americans living abroad. If you haven’t filed U.S. tax returns in years, this 90 minute session is for you. It will help you know the real story about your risks (tax liability and penalties) and your options. Hint: we don’t blindly pimp the Voluntary Disclosure Program.
Ten people only. $100 each. (It’s a test run so you won’t see this price again). August 15, 2013 at 6:00 p.m. – 7:30 p.m. This is August 16, 2013 in the morning for those of you in the Asia-Pacific region. August 16, 2013 at 9:00 a.m. – 10:30 a.m. PDT (16:00 GMT) for those of you in Europe and the Middle East. Sign up at the links.
We get emails and calls. Lots of them, every week. From regular, ordinary Americans living abroad, earning regular, ordinary incomes and living regular, ordinary lives.
They haven’t filed U.S. tax returns, sometimes for decades. Frequently, the cause is bad information. Other times, it is because—despite their best intentions—life got in the way of doing the paperwork. Especially if you’re living in a high-tax country and paying tax and filing tax returns already.
They are afraid. They know they have a problem, but they don’t know what to do about it.
They are afraid of what will happen when they travel to the United States.
Or what will happen when they renew their U.S. passport. The State Department tells the IRS.
Or what will happen when FATCA eventually rolls out and their local bank contacts them—will their accounts be closed?
Usually we get a call after the person has contacted someone else. The advice is “Go to the Voluntary Disclosure Program”. The tax lawyer is unwilling to talk about other options except in a theoretical fashion.
The full financial impact of the Voluntary Disclosure Program starts to dawn on the person. Tens of thousands of dollars in legal and accounting fees to make the IRS happy. Unknown back taxes, interest, and penalties, but it’s probably huge, right? (That’s what fear does for you: magnifies the unknown). Worst of all, a 27.5% slice of your net worth is at risk as a one-time penalty.
This is life-altering. In a bad way.
There are only three ways to clean up a tax mess:
Our firm has advised many, many, many such people. We have cleaned up the messes for those who have chosen to hire us. The Voluntary Disclosure Program is not the only way for an ordinary American abroad to fix IRS problems. In fact, it is quite often the wrong way to do it.
Our experience, when dealing with nonfilers, is that there is an enormous fog of fear that is caused by lack of information. When solving these problems, the first thing to do is get accurate information. What, exactly, are the risks facing you? Then put dollar signs on them.
When you go from “I’m afraid, but I’m not sure of what” to “I’m afraid, and the fear has a known price tag of $________”, you’ll feel better. Sometimes, when we dig through the mess the total financial exposure ends up being pretty small. It’s like switching on the light to scare the bogeyman out of your kid’s bedroom when she’s afraid at night. The next step is obvious.
Other times, the price tag on fixing the tax problem is laughably large. “The IRS thinks I should pay THIS?” Those situations point themselves to appropriate strategies, too.
I was a nonfiler for three years during the late 1980’s. Yes. A tax lawyer. And yes, to say this bothered me is an understatement. What if I was representing a client in an audit and the Revenue Agent ran my social security number through the system and found out I hadn’t filed? I saw lawyers disbarred for failing to file tax returns. Yet I couldn’t get my butt in gear to solve the problem. The recursive cycle of fear and shame had me, and I couldn’t move. Years went by.
It was only when another friend (hi, Sandy) admitted out loud that he too had a nonfiling problem that I summoned the courage to take action. And it was only with the help of a CPA friend (hi, Hal) that I was able to get the tax returns filed—years late. In my case, I owed the IRS $6,000. My “fear of the unknown” had told me it was 50x that amount. Sandy, by the way, was my pacing partner and he got his tax returns filed too. We both felt like we had lost about 30 pounds. We felt fabulous.
That is why I feel such empathy for people who haven’t filed tax returns. I have been there. I have walked through it. You should, too.
Here are some of the things we have seen, again and again. Do any of these apply to you?
The foreign earned income exclusion. I would guess that a majority of people abroad think that if you earn below the threshold amount, you don’t have to file a U.S. tax return. No so. You have to file to claim the exclusion.
This webinar will tell you—from our firm’s experience in advising clients like this—what your risks look like and what your choices are.
The presentation will last about 60 minutes. The remainder of the time (30 minutes) is reserved for questions. We are limiting attendance to 10 people per webinar in order to give time for questions.
This webinar is for someone who hasn’t filed tax returns and wants to. It is for people who consider themselves to be middle class taxpayers (whatever your definition of middle class is). If you’re making squillions of dollars, your tax problems are of a different magnitude and while you’re welcome to listen in, the solutions here will probably not be appropriate for you.
The session on August 16, 2013 at 9:00 a.m. PDT (14:00 GMT) is designed for people in Europe in the Middle East. If we get sufficient interest we will schedule one for people in Asia.
I hope this webinar ends up being useful for you. This is an experiment for us. We simply cannot help everyone who calls. There are too many. But we can share our experience so that you can make a better decision on what to do.
Email Elena Redko, CPA at firstname.lastname@example.org or call the office to talk to her. I will be backpacking in New Mexico with a Boy Scout Troop for two weeks (yes, Philmont), with no email, cell phone, electricity, etc. etc. ☺
Thanks for listening. Talk to you next month.