What Will Happen If You Do Not File Your US Taxes?

By: Pete
Date posted: 10.27.2011 (1:00 am) | Write a Comment  (0 Comments)

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One of the main concerns for most expats that are thinking about reporting their revenues, assets and paying any taxes if required (not the case for most that pay taxes in countries such as Canada) is what will happen to those who do not end up paying. In an ideal world, there would be a clear answer to that question but it’s unfortunately not the case.

Fact is that it is illegal for US citizens to not declare their worldwide revenues and assets and pay taxes if applicable. However, the IRS will not go after every individual that is acting illegally. The main questions then become:

-What can be done to US citizens breaking these laws?
-What are the odds that such a person would actually get caught?

There are very few cases of citizens being prosecuted unless they committed a fraud by avoiding paying taxes. However, the IRS seems determined to increasingly go after such citizens and it’s unclear how that will be done but given the fact that the US government is trying increasingly hard to reduce deficits, I think it’s easy to imagine that the IRS will be going after such illegal actions much more forcefully.

There is a lot of speculation regarding how that would be done but clearly, any such citizen visiting the US could be subject to additional questions and perhaps investigation.

As far as what happens to those that get caught, the range is very extensive depending on the severity but steep financial penalties and even jail time are very much within reach of the IRS. The other thing to remember is that not everyone will be prosecuted equally and some will without any doubt be dealt very tough sentences, as examples and to drive other expats to file taxes.

Are You Willing To Take The Chance?

I guess it becomes a personal decision at some point. Are you willing to take the chance of one day having legal issues that could send you in jail or set you back financially? To me, it’s a no brainer because getting back in line is actually very much possible and while it will initially take me a lot of time, I do not expect to be spending dozens of hours every year filing taxes. I expect the first year to require a lot more time and energy but the following ones will be more or less the same thing with different numbers.

I would love to hear your thoughts on this, especially if you are even considering postponing this much longer. I am not in the best position of course as I have been postponing this process for years but I’m done doing that and ready to get into compliance.

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