America


American expats flocking to declare foreign assets amid fear of Trump crackdown

by Ray Clancy on April 14, 2017

American expats are concerned that the recently elected President Donald Trump could put an end to a more lenient attitude to tax owed.

Under previous President Barack Obama there was a generous amnesty for American expats who had not previously declared their foreign assets to the US tax authorities.

But now research suggests that Americans are rushing to declare their overseas assets to Washington for the first time amid concerns that Trump will clampdown on the current attitude.

According to figures released by British chartered accountants Bambridge there has been a fourfold increase in the number of American expats in the UK making declarations since the start of the year.

The firm, which specialises in handling the tax affairs of US citizens living in Britain, points out that the US is one of only two countries in the world to make its citizens file an annual tax return wherever they are in the world.

In 2012 the Obama administration introduced a generous amnesty to encourage expats who had failed to do so to come forward. The Streamlined Filing Process, as it is known, allows American expats, even those who have lived abroad undeclared for many years, to sort it out with the US tax authorities with no penalties.

In return for declaring their foreign income and assets for the past three years, previous tax years can be ignored, and paying any US tax they owe, an expat completing the process is exempted from prosecution.

Although the Trump administration has yet to make any official announcement on the policy, it is widely expected that the amnesty could be curtailed or even ended.

UK banks are now obliged to notify US authorities of assets held by American customers, and in February it emerged that America’s Internal Revenue Service has been granted the authority to cancel the passports of expats who owe more than $50,000 in US tax.

‘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 up with the US tax authorities. By contrast, in the first quarter of 2016 we saw an average of just one a day,’ said Alistair Bambridge, senior partner at Bambridge Accountants.

‘The amnesty is only available to Americans who voluntarily contact the IRS to declare their foreign earnings and assets. Those who wait for the US tax authorities to come knocking could face a large fine in addition to any tax bill,’ he explained.

‘Despite Uncle Sam’s famously long reach, it’s thought there could be thousands of Americans living quite legally in the UK and paying UK tax, but who are below the radar of US tax authorities. The growing sense that the net could be closing in on them, and the fear that the amnesty for those who do own up could be withdrawn, is proving a perfect combination of carrot and stick,’ he added.

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