American expats fear a crackdown by the US Internal Revenue Service (IRS) if they fail to declare their offshore cash and investments under the controversial FATCA laws.
The Foreign Account Tax Compliance Act (FATCA) was backed by former President Barack Obama and required banks to tell the IRS about the offshore holdings of US expats.
But few expats bothered to make a filing and the IRS offered an amnesty under the streamlined filing process, which allowed expats to backdate filings.
The IRS would accept three years of filings and tax payments while writing off previous undeclared years and promising no legal action.
No decision on repeal from Trump
However, with new President Donald Trump in The White House, expats and their advisers are unsure how to complete this year’s tax filings which were due on April 18.
Although the Republicans had pledged to repeal FATCA, Trump has yet to mention the tax act and has not included any changes in his tax policy.
Expats tax advisers are also unsure if the streamlined amnesty is still in force.
As a result, thousands of the estimated 8 million US expats worldwide have decided to make extra filings this year.
In the UK, one adviser, Alastair Bambridge, says the number of US expats seeking a settlement under the streamlined process was up 400% compared with last year.
Expats worried about tax bills
“Despite the generosity of the amnesty it offers, for years the uptake of the Streamlined Filing Process among Britain’s 200,000 US expats was relatively modest. Yet in the first three months of 2017 we handled an average of four applications a day from UK-based Americans keen to use it to settle with the US tax authorities. By contrast, in the first quarter of 2016 we saw an average of just one a day,” he said
The campaign is lobbying politicians and the Trump administration to confirm FATCA will be scrapped.
The IRS says FATCA has seen $10 billion of lost tax recovered from more than 100,000 taxpayers.