The IRS has provided info to clarify the tax responsibilities of U.S. citizens and dual citizens living abroad in response to concerns from expatriates about penalties that might be levied on their unpaid taxes and undeclared bank accounts.
The IRS posted the information on its Web site Friday to address worries from Americans living abroad that they would be subject to heavy penalties they had never been aware of until recently
The Foreign Account Tax Compliance Act, or FATCA, which was included as part of the HIRE Act last year, requires foreign financial institutions to report directly to the IRS information about the financial accounts held by U.S taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. Taxpayers who don’t report the information on foreign bank account reporting forms could be subject to heavy penalties. Expatriate groups such as American Citizens Abroad have expressed concerns about being penalized for having retained their U.S. citizenship.