Are You an International Tax Dodger? By John Mohr of CFO2GO, s.r.o.

John Mohr of CFO2GO, s.r.o. provides some sound advice for US Expats and taxes.....

Are you a US citizen who lives and works abroad? Are you a foreign citizen who worked, invested or traded in the US? Are you an American who controls a s.r.o.? Are you filing and paying your US taxes? If the answer is no, you might consider “catching up” and becoming tax-compliant.

The IRS is stepping up its programs to improve international voluntary compliance with US tax laws. The latest effort is its Service wide Approach to International Tax Administration.

How Does the IRS Learn About Taxpayers’ Foreign Income and Transactions?

The US has signed 60 bilateral tax treaties and more than 20 Tax Information Exchange Agreements (TIEA) with other countries. These agreements support the exchange of information between signatories and support cross-border civil and criminal investigations. Information is exchanged both on specific request and through spontaneous and automatic exchanges.

The IRS Service wide Approach to International Tax Administration seeks to utilize existing information exchange tools more effectively.

Didn’t File Your Tax Returns?

Taxpayers should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Payment plans may be available if the full amount cannot be paid at the time of filing.

The IRS may employ a number of enforcement actions with taxpayers that fail or refuse to file returns or do not respond to an IRS request. Additional penalties and/or criminal prosecution are a distinct possibility for those who do not cooperate. Voluntary disclosure is according to the IRS one of the most significant factors in the decision not to refer a specific case for criminal prosecution.

How Will IRS Measure the International Tax Compliance?

The IRS created the National Research Program (NRP) to measure payment, filing and reporting compliance and other data needed to develop its strategic plans. The IRS has included a segment of the international taxpayer base in its current individual NRP.

This NRP study is the first of a continuing series of annual individual studies that will use a multi-year rolling methodology, beginning with tax year 2006. The IRS is including 2006 returns of individual international taxpayers in the NRP for the first time in 2008. Results of the study will support annual updates to compliance estimates and assist the IRS to develop more efficient programs.

CFO2GO is a specialist in outsourced accounting services. It also assists executives and entrepreneurs and their businesses to fulfill their US and Czech tax and accounting reporting obligations. CFO2GO also provides extensive interim financial management and statutory governance to small and medium-sized businesses.

The comments in this article are not intended to constitute an opinion regarding any specific tax issues because additional tax issues may exist that could affect the tax treatment of the tax issues addressed in this memo. This memorandum does not consider or reach a conclusion with respect to those additional issues and was not written and cannot be used for the purpose of avoiding penalties under US code section 6662(d).

For further information, please refer to our web site at www.cfo2goeurope.com or contact John Mohr on at john.mohr at cfo2goeurope dot com

Written by John W. Mohr of CFO2GO
Date: 07.10.2008