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Many American Living Abroad Their Whole Live Are Receiving a Scary IRS Compliance Letter

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Many American Living Abroad Their Whole Live Are Receiving a Scary IRS Compliance Letter

 

Many American have recently discovered that they have U.S. tax compliance obligations even though they may be living outside the country and may not even have Social Security Number. This notification may have come in the form of a IRS letter delivered by a foreign bank that has custody of their money.  In the letter the IRS threatens to freeze their funds unless they provide proof of U.S. tax compliance.  This compliance come in the form of US filed returns.  This means that many American that believed they had no filing requirement and having to update their understanding of the US filing requirements.

 

If you are a U.S. citizen or resident alien living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States. Your income, filing status, and age generally determine whether you must file a return. Generally, you must file a return if your gross income from worldwide sources is at least the amount shown for your filing status in the Filing Requirements table in Chapter 1 of Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.

 

US ID Number

Many of those who have received this letter are not in possession of a US ID Number.  For many of these individuals obtaining a Social Security number, even if you have all the required documents, may be a challenging.   

 

Obtaining an ITIN

The Application for an ITIN can be submitted by mail to the IRS along with the completed tax returns. This is the easy and speedy solution. Unfortunately, individuals eligible for a Social Security number are not eligible for ITIN - a tax ID for the foreigners. This option does not work for the US citizens by birth.

 

Obtaining an IRSN

An IRSN is a nine-digit number issued by the IRS to persons who file a return or make a payment without providing a Social Security Number or ITIN.   This method has one huge downside - this method may make the tax filer ineligible for amnesty for the FBAR penalties via the Streamlined Program.

 

https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures-for-u-s-taxpayers-residing-outside-the-united-states-frequently-asked-questions-and-answers

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