Trending: Taxpayers residing outside U.S. questioned at U.S. border regarding back taxes

Hey American Olim -- Remember the phrase, "No one expects the Spanish Inquisition"?



Well, no one expects to be questioned at the US border when flying to the US for a simcha or visit...by the IRS,  about back taxes.

This month's, "Journal of Accountancy" has a rather scary article about this very issue. First and last paragraphs are the key:

Taxpayers traveling to the United States with unpaid U.S. tax assessments can be detained at the border, questioned, and flagged for follow-up enforcement. If a taxpayer has an unpaid tax liability and is subject to a resulting Notice of Federal Tax Lien, the IRS may submit identifying taxpayer information to the Treasury Enforcement Communications System (TECS), a database maintained by the Department of Homeland Security (DHS).

The database allows the DHS to identify taxpayers with unpaid tax assessments who are traveling to the United States (Internal Revenue Manual (IRM), §5.1.12.26).

...

A taxpayer who resides outside the United States may not be aware of outstanding federal tax liabilities if the address on record for the taxpayer is outdated or otherwise incorrect. Consequently, tax advisers with clients who reside outside the United States should ensure that the correct address for the taxpayer is used on the client’s returns and, if the client no longer is required to file U.S. returns, that the IRS still is able to contact the taxpayer about previously filed returns. Taxpayers should be advised that a failure to keep the IRS apprised of a change in mailing address may result in an unwelcome—and potentially embarrassing—surprise when the taxpayer seeks to enter the United States.

This could apply even if you DON'T owe money, but the IRS thinks you owe money, audited you (without your knowledge if they couldn't contact you), and then...while trying to visit...

So, make sure you file regularly, and make sure they have an address listed for you, which will actually reach you.

Remember the IRS motto: "We're not happy, till you're not happy..."

Follow the Muqata on Twitter.

Wherever I am, my blog turns towards Eretz Yisrael טובה הארץ מאד מאד

IRS & FBAR: Time to panic [yet?]

Good News for US Citizens living in Israel -- the IRS has extended the FBAR Voluntary Disclosure Amnesty Program from September 23 to October 15, 2009.

Of course you filed the FBAR form for the past 7 years, right? And you declared Earned Israeli Interest on your bank account and keren hishtalmut, right? Or perhaps that savings plan where you squirreled away a few shekel a month hoping you'll have something to pay for your kids' weddings...you declared that as well, right? It may have been pennies worth of interest, but you had to declare it on your 1040.

For a scary article on the subject, the JPost calls in a US Tax Attorney, who paints a rather bleak (perhaps alarmist?) picture.

Applicants to the [voluntary disclosure] program need to hire a tax attorney, as they are in effect taking part in a criminal proceeding, admitting to breaking US law.

Wolf said American-Israelis shouldn't think they're okay simply because they have filed their US tax returns.

"It's irrelevant," he told the Post. "You need to file the American tax return form and report the worldwide taxable income, in addition to filling out the FBAR form in which you declare your accounts around the world," he said, referring to the US Treasury Department's Form 90-22.1, "Report of Foreign Bank and Financial Accounts."

"You have to get your name into the program before the deadline," stressed Wolf. "It might be all legitimate - but you need a US tax attorney to register you and your activities for the past six years with the voluntary disclosure program. It's serious, and it's a criminal offense, period."

Is this more than a Tax Attorney trying to drum up business?


Earn El Al tickets to Israel and other rewards with the HAS Advantage Credit Card!

Wherever I am, my blog turns towards Eretz Yisrael טובה הארץ מאד מאד