IRS Softening on Americans Living Overseas

Last updated on June 9, 2023

The IRS has been consistently and aggressively pursuing tax evaders across the world through Foreign Account Tax Compliance Act (FATCA). Under FATCA, the U.S. made agreements with various countries to improve transparency in the financial transactions of U.S. taxpayers overseas. Every year solely due to tax evasion, the U.S. government lost billions of dollars of revenue.

After the implementation of FATCA, the IRS has successfully been able to curb tax evasion, but due to its strict compliance factors and heavy penalty for non-compliance, many Americans living overseas faced problems with compliance. Some even renounced their U.S. citizenship due to the stringent complying requirements.

Now, the IRS is considering relaxing its reporting requirements so that Americans living overseas can comfortably fulfill their U.S. tax duties. The IRS has promised to overhaul its voluntary disclosure program or amnesty program. John Koskinen, the new IRS commissioner, said that the agency is “well aware that there are many U.S. citizens who have resided abroad for many years, perhaps even the vast majority of their lives,” and promised relaxations under the amnesty program in “the very near future.”

To Americans living overseas, this may be a great relief. Millions of American who have dual citizenship can now hope to comfortably manage their U.S. taxes after the IRS brings about changes in the amnesty program.