United States citizens and residents[i] are subject to federal income tax on their worldwide income. For example, even if a United States citizen permanently relocates to a foreign country, he or she will generally continue to have income tax reporting obligations in the United States. And, in many cases, because of this newfound nexus between the United States citizen and the foreign country, that person will also have newfound United States reporting obligations (such as FBARs).
Perhaps more commonly, United States reporting obligations arise in these situations when the United States person establishes a retirement account in a foreign jurisdiction. As discussed more fully below, many of the issues surrounding the proper reporting of foreign retirement accounts remain murky and unresolved. Because harmless mistakes can result in significant penalties for failing to file information returns, taxpayers with foreign retirement accounts should take actions to ensure that the accounts are properly disclosed for United States reporting purposes.
IRS Guidance and the 2018 GAO Report.