A newly re-funded IRS is promising more scrutiny on non-U.S. citizens over taxes. Protecting yourself in this new environment means knowing American tax rules and proactively getting the right help.

Foreign nationals living and working in the U.S. may soon be in the crosshairs of a re-energized Internal Revenue Service.

A representative of the IRS Office of Chief Counsel reportedly told an audience at a recent American Bar Association Tax Section conference that compliance among foreign nationals in the U.S. will be a priority and focus of the IRS.

This comes on the heels of the tax agency getting some $80 billion from the landmark U.S. Inflation Reduction Act signed into law last August. The IRS will receive the money over a decade, with a major portion of the funds earmarked for enforcement (and hiring as many as 87,000 new agents).

That number may be deceptive – heavy attrition in personnel and many past years of underfunding may mean the agency mostly replaces what it’s lost – but the IRS has still pledged sharper scrutiny on rich tax cheats, crypto investors and others to close America’s huge gap in tax collection.

Special problems – and penalties

Common tax-filing errors for non-U.S. citizens don’t always differ from those of American citizen taxpayers, including using an incorrect filing status, incorrectly claiming tax credits or underreporting income. But tax-compliance factors special to non-Americans include:

Taxation of income sources can be more complicated.
Non-U.S. citizens not in compliance with American tax laws face a variety of special penalties. Failing to properly report taxable income could block obtaining immigration status in the United States, for instance, and even lead to deportation.
Tax preparers are unregulated in the United States – no government license is required to practice. Non-citizens often don’t know much about American tax law and are a frequent target of unscrupulous tax preparers.

Non-citizens often don’t know about IRS voluntary disclosure programs to amend returns or correct past filing errors or about IRS payment options for tax debt, including installment plans and, in rare cases, offers in compromise.
If you’re a foreign national living in the U.S., your tax specialist needs to be able to handle these and many other cross-border issues of wealth, income and tax enforcement. If we can help, please let us know.

Have a question? Contact Alicea Castellanos, Global Taxes LLC.