Filing US Back Taxes from Thailand

[slapout]

They have 10 years to collect, AS OF, the date of ASSESSMENT.

figure that out.

you can be audited for 2012, they can assess in 2014, and they have until 2024 to dog your ass

There is a big difference between filing a false tax return and not filing/paying tax for a tax year. The wannabe experts can throw out theories all they want, but read, know, or in my case have actual experience (same as op asked about) in tax law/dealing with IRS.

[Scarpolo]

They have 10 years to collect, AS OF, the date of ASSESSMENT.

figure that out.

you can be audited for 2012, they can assess in 2014, and they have until 2024 to dog your ass

There is a big difference between filing a false tax return and not filing/paying tax for a tax year. The wannabe experts can throw out theories all they want, but read, know, or in my case have actual experience (same as op asked about) in tax law/dealing with IRS.

if you are replying to my report above, thats my understanding. 10 years

I make no distinctions of filing requirements as it doesnt affect me. I Live in the states

[donniereadit]

They have involved formulas that determine whether you owe or not, taking past history, inheritances many more things in the computer. They may even have access to passport records, not sure.

There are also 'amnesty periods' where you can back file and pay what you owe penalty free.

It's better to just file. Even though the chances of an audit are extremely low, garnishment and passport problems even lower, it's really the mental payoff that you know it's one less thing to worry about. The slight chance you may find that US bank account frozen while overseas of the US immigration saying something every time is just not worth it.

That's what it sounds like you are dealing with here. It will only get worse as time goes on. File now and bite the bullet.

[donniereadit]

It's been so long since I've had a jury summons that I wonder if they've refined the system. My voting is based on my US address, but they have my address here and always mail my ballot to me here in Thailand. I wonder if they know now not to bother sending me a summons anymore since I have a foreign address also registered. Not heard anything like that, just wondering since it's been maybe 15 or 20 years since my last jury summons.

Who's getting your mail in the US? They could be tearing up the summons without your knowledge.

[lanny]

There is so much misconception and misinformation in this thread that it unbelievable. A little of the advice is OK but most is incorrect and some is BAD.

How do I know? I am a CPA and have had a tax practice for over 30 years. I do not believe I have ever had a year in which I did not work with at lease one non-filer -- I had at least four last year and have two in my inventory of cases now. Before I moved to Bangkok, my practice in the states was heavily loaded with collection and non-filing issues and I dealt with the IRS collectors so often that I was on a first-name basis with every one of the collectors in the local IRS office.

If you have not filed a return (or had the IRS file one for you) there is no statute of limitations. The 3-year statute on assessment of tax starts on the later of the due date or the date actually filed. The 10-year statute on collection starts on the date IRS assesses the tax.

If you do not owe anything, there will be no penalty assessed. Late filing and late payment penalties are calculate as percentages of the balance due. Each penalty can be as much as 25% but even then 25% of $-0- is $-0-.

The fact that a tax professional once worked for the IRS is not necessarily a good recommendation. Many ex-IRS will not openly challenge an IRS position on a controversial issue. Their tendency is to accept IRS evaluations of the rules and regulations. IRS is often wrong in its opinions - that's why there is a separate court system whose only jurisdiction is over cases in which they are the defendant. I don't know the statistics on court issues; I just know that the published opinions of the tax court and the regular court system fill dozens of volumes of records and that IRS does lose many times.

IRS auditors and collectors are NOT evaluated by the amount of tax assessed or collected. This is the law - such statistics cannot be used in salary evaluations. This my be like saying the traffic cop is not evaluated by the number of tickets he issues but it is the LAW.

IRS does not have the manpower and other resources to try to reconstruct 30 years of income (as in the case of the OP) unless there were US sources of income reported to them on W-2s, 1099s, etc. on file that would lead them to believe a tax was due. If there were such reports, IRS is empowered to file a return for the taxpayer (called a Substitute for Return) and assess a tax (this starts the 10-year statute of limitations on collections), in which case they will go back to any open years. Otherwise, their policy is to accept 5 years of returns from non-filers. The reason for non-filing is not ordinarily considered; and then only if there was a hardship beyond taxpayer's control.

Attaching a letter of explanation to a return is a waste of time. Returns are processed initially by low-level employees who do not have time or cause to read them. Subsequent reviews are of computerized images which do not contain any such attachments. It is better to wait for a contact by IRS and to make your explanation in reply. At least, that way, you know it will be read.

In it's annual budget request, IRS stresses the ratio between the total tax it collects and the amount of the budget requested. As a result, it must believe it can collect more than it will cost to pursue an issue. It will not commit time and effort to matters that appear to small to justify the cost.

Lawyers have an old saying that, "An attorney who represents himself has a fool for a client." This would be just a valid if it referred to a taxpayer. When complicated issues and/or substantial sums of money are involved, it is important that the person presenting the case knows the rules (written and unwritten) and makes the case objectively. Generally, taxpayers are emotionally involved about the money that this is impossible. Better to have an intermediary who is not personally involved and can deal with the collectors dispassionately.

Actually, the collectors prefer to deal with professionals in most cases because they know the facts will be presented in an orderly manner, will not contain a lot of irrelevant material, and they will not have to spend time explaining procedural matters or arguing with the taxpayer. During the training program for collectors, they are taught how to maintain control of a conversation - giving them a distinct advantage over the average taxpayer.

Finally, a CPA is probably a better representative (unless there are questions of fraud, in which case a qualified CPA would probably recommend consulting legal counsel.) At the collector level, they are probably more accustomed to dealing with accountants than lawyers and the issues are usually more of an accounting than a legal nature. Also, CPA fees are often lower than attorneys.

Edited April 6, 2014 by lanny

[Dannyboy6]

There is so much misconception and misinformation in this thread that it unbelievable. A little of the advice is OK but most is incorrect and some is BAD.

How do I know? I am a CPA and have had a tax practice for over 30 years. I do not believe I have ever had a year in which I did not work with at lease one non-filer -- I had at least four last year and have two in my inventory of cases now. Before I moved to Bangkok, my practice in the states was heavily loaded with collection and non-filing issues and I dealt with the IRS collectors so often that I was on a first-name basis with every one of the collectors in the local IRS office.

If you have not filed a return (or had the IRS file one for you) there is no statute of limitations. The 3-year statute on assessment of tax starts on the later of the due date or the date actually filed. The 10-year statute on collection starts on the date IRS assesses the tax.

If you do not owe anything, there will be no penalty assessed. Late filing and late payment penalties are calculate as percentages of the balance due. Each penalty can be as much as 25% but even then 25% of $-0- is $-0-.

The fact that a tax professional once worked for the IRS is not necessarily a good recommendation. Many ex-IRS will not openly challenge an IRS position on a controversial issue. Their tendency is to accept IRS evaluations of the rules and regulations. IRS is often wrong in its opinions - that's why there is a separate court system whose only jurisdiction is over cases in which they are the defendant. I don't know the statistics on court issues; I just know that the published opinions of the tax court and the regular court system fill dozens of volumes of records and that IRS does lose many times.

IRS auditors and collectors are NOT evaluated by the amount of tax assessed or collected. This is the law - such statistics cannot be used in salary evaluations. This my be like saying the traffic cop is not evaluated by the number of tickets he issues but it is the LAW.

IRS does not have the manpower and other resources to try to reconstruct 30 years of income (as in the case of the OP) unless there were US sources of income reported to them on W-2s, 1099s, etc. on file that would lead them to believe a tax was due. If there were such reports, IRS is empowered to file a return for the taxpayer (called a Substitute for Return) and assess a tax (this starts the 10-year statute of limitations on collections), in which case they will go back to any open years. Otherwise, their policy is to accept 5 years of returns from non-filers. The reason for non-filing is not ordinarily considered; and then only if there was a hardship beyond taxpayer's control.

Attaching a letter of explanation to a return is a waste of time. Returns are processed initially by low-level employees who do not have time or cause to read them. Subsequent reviews are of computerized images which do not contain any such attachments. It is better to wait for a contact by IRS and to make your explanation in reply. At least, that way, you know it will be read.

In it's annual budget request, IRS stresses the ratio between the total tax it collects and the amount of the budget requested. As a result, it must believe it can collect more than it will cost to pursue an issue. It will not commit time and effort to matters that appear to small to justify the cost.

Lawyers have an old saying that, "An attorney who represents himself has a fool for a client." This would be just a valid if it referred to a taxpayer. When complicated issues and/or substantial sums of money are involved, it is important that the person presenting the case knows the rules (written and unwritten) and makes the case objectively. Generally, taxpayers are emotionally involved about the money that this is impossible. Better to have an intermediary who is not personally involved and can deal with the collectors dispassionately.

Actually, the collectors prefer to deal with professionals in most cases because they know the facts will be presented in an orderly manner, will not contain a lot of irrelevant material, and they will not have to spend time explaining procedural matters or arguing with the taxpayer. During the training program for collectors, they are taught how to maintain control of a conversation - giving them a distinct advantage over the average taxpayer.

Finally, a CPA is probably a better representative (unless there are questions of fraud, in which case a qualified CPA would probably recommend consulting legal counsel.) At the collector level, they are probably more accustomed to dealing with accountants than lawyers and the issues are usually more of an accounting than a legal nature. Also, CPA fees are often lower than attorneys.

. Thank You, Lanny

[RichardLee]

I bet the problem you are having is renewing a passport that just expired at the Embassy.

No, I have never had a problem renewing my passport, and it won't be up for renewal again anyway for some years, I'm not having a "problem" of any kind. I just think this is something I need to get sorted out before I move back to the US in a couple of years -- if I do move back, as that is not certain yet, just likely.

Again, I want to emphasize that while I have been required to file for almost all of these years (the first couple I really was on a showstring budget and would not have made enough even to have been required to file), I would never have made enough to have had to pay any taxes, so if I owe anything it would just be fines for not filing. And again thanks for the info, especially the website and PMs. I definitely have some avenues to explore now.

[Scarpolo]

I bet the problem you are having is renewing a passport that just expired at the Embassy.

No, I have never had a problem renewing my passport, and it won't be up for renewal again anyway for some years, I'm not having a "problem" of any kind. I just think this is something I need to get sorted out before I move back to the US in a couple of years -- if I do move back, as that is not certain yet, just likely.

Again, I want to emphasize that while I have been required to file for almost all of these years (the first couple I really was on a showstring budget and would not have made enough even to have been required to file), I would never have made enough to have had to pay any taxes, so if I owe anything it would just be fines for not filing. And again thanks for the info, especially the website and PMs. I definitely have some avenues to explore now.

Am pretty sure that if you didnt owe money, filing wasn't necessary, but I don't know the rules for overseas living,

I am stateside, and have a room full of paperwork to bring to the accountant tomorrow.

I do look forward to these days being over, once and for all

[RichardLee]

It's been so long since I've had a jury summons that I wonder if they've refined the system. My voting is based on my US address, but they have my address here and always mail my ballot to me here in Thailand. I wonder if they know now not to bother sending me a summons anymore since I have a foreign address also registered. Not heard anything like that, just wondering since it's been maybe 15 or 20 years since my last jury summons.

Who's getting your mail in the US? They could be tearing up the summons without your knowledge.

My "home" address in the US is that of a relative. Suffice it to say I would be very surprised if this relative were tearing up any jury summons.

At any rate, I know other expats who have lived here for years and vote based on their old address in the US. Said addresses have no connection to them anymore -- someone else is living there whom they don't know and have never met. How jury summons are handled in that event, I don't know. But my understanding is you can still vote based on your last known address in the US. I've never heard of an American here being denied the vote.

[RichardLee]

I bet the problem you are having is renewing a passport that just expired at the Embassy.

No, I have never had a problem renewing my passport, and it won't be up for renewal again anyway for some years, I'm not having a "problem" of any kind. I just think this is something I need to get sorted out before I move back to the US in a couple of years -- if I do move back, as that is not certain yet, just likely.

Again, I want to emphasize that while I have been required to file for almost all of these years (the first couple I really was on a showstring budget and would not have made enough even to have been required to file), I would never have made enough to have had to pay any taxes, so if I owe anything it would just be fines for not filing. And again thanks for the info, especially the website and PMs. I definitely have some avenues to explore now.

Am pretty sure that if you didnt owe money, filing wasn't necessary ...

No, that's not true. There is a minimum amount made that you have to file just so they can see, and that amount is pretty low. You'd have to be living very much like a Thai to stay below that. Then there is a minimum amount made that is much, much higher than that where you do have to pay, and I have never reached that amount.

[thailiketoo]

I bet the problem you are having is renewing a passport that just expired at the Embassy.

No, I have never had a problem renewing my passport, and it won't be up for renewal again anyway for some years, I'm not having a "problem" of any kind. I just think this is something I need to get sorted out before I move back to the US in a couple of years -- if I do move back, as that is not certain yet, just likely.

Again, I want to emphasize that while I have been required to file for almost all of these years (the first couple I really was on a showstring budget and would not have made enough even to have been required to file), I would never have made enough to have had to pay any taxes, so if I owe anything it would just be fines for not filing. And again thanks for the info, especially the website and PMs. I definitely have some avenues to explore now.

Am pretty sure that if you didnt owe money, filing wasn't necessary ...

No, that's not true. There is a minimum amount made that you have to file just so they can see, and that amount is pretty low. You'd have to be living very much like a Thai to stay below that. Then there is a minimum amount made that is much, much higher than that where you do have to pay, and I have never reached that amount.

If the only income you received during 2013 was your social security, your benefits generally are not taxable and you probably do not have to file a return. If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable.

• $25,000 if you are single, head of household, or qualifying widow(er),

• $25,000 if you are married filing separately and lived apart from your spouse for all of 2013,

Edited April 8, 2014 by thailiketoo

[Doggieman]

I am glad I found this informative thread.

My circumstances are similar to that of the OP, except that I don't have any plan to return to the US.

I am 51 and have lived here for 24 years, mostly teaching and writing, much of it "off the books".

Although I hate to think about it at all, I do worry what will happen if, at some point in the future, I inherit some money stateside.

However, I recently accepted a teaching position (28,000bhat/mo) at the university level and they told me I needed to open an account at the local Bangkok Bank.

When I got there they told me I had to file some sort of form with the US government under the new reporting rules.

The staff seemed as uncomfortable with it as I was.

At first I ticked the box 'not a US resident for tax purposes', which is what I consider myself since I haven't had any assets or reported income there in a quarter century. But in the end I couldn't open the account without giving them my Social Security number, which I couldn't even remember but later found scrawled somewhere in my passport.

I guess my plan now is to start filing in 2014 now that they will have this info. I don't worry if it will trigger an 'audit' as there is really nothing to see.

I am hoping to 'come clean' with them in this way so that they won't screw me at some point in the future.

Just wondering if any of the experts think this is a sensible approach.

[ESDinBKK]

Depends: there is a minimum amount of earned income for which you must file; perhaps, lets say, $3,000/year. If you had not earned that you are ok not to file-period. IRS has triggers such as employer 1099 filings, W2, etc.

If you earned up to roughly $85,000/year but remained abroad for at least 330 days, you don't have to pay taxes on the first 85k, but you must file, and you must do social security withholding. so, no income, no worry.

While IRS does have access to VISA MC to determine spending patterns, if there is no audit or trigger, whats to worry?

I ran amiss in a similar way and am still wrapping it all up for un-filed years. However, I did not do the withholding for self employ. You indicate that is not your issue, great. for you, its no income no file? No problem

US Thailand also have arrangements covered on the Treaty of Amity, or such. This and related govern such things as residence litmus tests, reciprocity for earners in relative countries, and access to social security reciprocally. You seem to be worried about this enough NOW that suggests there is more going on.

Does this foreign exclusion apply if all my income came from CSRS retirement, ssa, and stock sales? I always thought it meant those folks working outside the country for US company. I tried to claim that in the 80's while working for the government in the PI, and was told it didn't apply to fed employees.

Sent from my iPad using Thaivisa Connect Thailand mobile app

[arjunadawn]

Depends: there is a minimum amount of earned income for which you must file; perhaps, lets say, $3,000/year. If you had not earned that you are ok not to file-period. IRS has triggers such as employer 1099 filings, W2, etc.

If you earned up to roughly $85,000/year but remained abroad for at least 330 days, you don't have to pay taxes on the first 85k, but you must file, and you must do social security withholding. so, no income, no worry.

While IRS does have access to VISA MC to determine spending patterns, if there is no audit or trigger, whats to worry?

I ran amiss in a similar way and am still wrapping it all up for un-filed years. However, I did not do the withholding for self employ. You indicate that is not your issue, great. for you, its no income no file? No problem

US Thailand also have arrangements covered on the Treaty of Amity, or such. This and related govern such things as residence litmus tests, reciprocity for earners in relative countries, and access to social security reciprocally. You seem to be worried about this enough NOW that suggests there is more going on.

Does this foreign exclusion apply if all my income came from CSRS retirement, ssa, and stock sales? I always thought it meant those folks working outside the country for US company. I tried to claim that in the 80's while working for the government in the PI, and was told it didn't apply to fed employees.

Sent from my iPad using Thaivisa Connect Thailand mobile app

I regret I don't know the answer. I only recalled the info in my post because it was so recent for me. I recall a buddy in DXb telling me he had to file even though all his income was from a non us company. I don't know about the other sources you've mentioned. Good luck.

[BudRight]

You do know that when you return you will have to signup for Obummer care there in your screwed it is over priced rents in the states a rat infested house is going to cost 1000 bucks a month and depending in which state your go state taxes and if you think your going to work think again they get wetbacks to work cheaper and at even 55 damn near impossible to get job better off here. Just collect your SS and die gracefully here. The States have changed.

I am very impressed. You managed, in just one run on sentence;

1. Insult the president.

2. Spread misinformation about the ACA (the OP won't need to buy it for a variety of reasons. He should be eligible for medicaid, for a start).

3. Hurl a racist insult against Hispanic people.

4. Give bad advice as the OP likely has contributed almost nothing to SS.

Wow, just wow.

[Doggieman]

I am curious to know:

If the new requirement of having to give your Social Security number when opening a bank account is being followed by every bank?

Will the banks also contact pre-existing account holders and demand they fill out the document? And what if they refuse?

[JimGant]

Am pretty sure that if you didnt owe money, filing wasn't necessary ...

No, that's not true. There is a minimum amount made that you have to file just so they can see, and that amount is pretty low. You'd have to be living very much like a Thai to stay below that. Then there is a minimum amount made that is much, much higher than that where you do have to pay, and I have never reached that amount.

I guess the OP never got finalized info when this thread went to sleep a few months back.....

Not sure why he thinks he needed to file -- if no taxes were owed -- because he doesn't. Living and working overseas drives no special filing requirement (unless you want to use the Foreign Earned Income Exclusion, whereby you ARE required to file to receive this credit, even in situations where no tax is owed). As he said he never made enough to owe taxes, I presume he ran the numbers to know this fact, i.e., Gross income less standard deduction, less personal exemption(s) = zero, or negative number. Sounds like knowledge of the FEIE might have triggered believing he was required to file -- even tho' his tax liability was zip.

[JimGant]

Does this foreign exclusion apply if all my income came from CSRS retirement, ssa, and stock sales? I always thought it meant those folks working outside the country for US company. I tried to claim that in the 80's while working for the government in the PI, and was told it didn't apply to fed employees.

No. As its title says, "foreign earned income," e.g., wages paid by a foreign employer, or self-employed income while working in a foreign country. Interest, dividends, or wages paid by a US employer don't count.

[beechguy]

Does this foreign exclusion apply if all my income came from CSRS retirement, ssa, and stock sales? I always thought it meant those folks working outside the country for US company. I tried to claim that in the 80's while working for the government in the PI, and was told it didn't apply to fed employees.

No. As its title says, "foreign earned income," e.g., wages paid by a foreign employer, or self-employed income while working in a foreign country. Interest, dividends, or wages paid by a US employer don't count.

Actually, to clarify, one can work for a U.S. employer outside of the U.S. and that salary does qualify.

[JimGant]

Actually, to clarify, one can work for a U.S. employer outside of the U.S. and that salary does qualify.

Good catch. Should have said US Government employer:

For purposes of the foreign earned income exclusion, the foreign housing exclusion, and the foreign housing deduction, foreign earned income does not include any amounts paid by the United States or any of its agencies to its employees. This includes amounts paid from both appropriated and nonappropriated funds.

[JimGant]

I guess my plan now is to start filing in 2014 now that they will have this info. I don't worry if it will trigger an 'audit' as there is really nothing to see.

Why not? Most CPA's recommend filing a tax return, even if no taxes are owed, as this tells the IRS you've thoroughly evaluated your tax situation -- as opposed to a non filing being an oversight.

The chance it would trigger an audit, with no condemning 1099's in the US, is nil. Besides, if they should ever ask "why didn't you file," your completely honest answer is: "I wasn't required to, based on my total worldwide Adjusted Gross Income." (To which the Feds will have no refuting information.)

If the new requirement of having to give your Social Security number when opening a bank account is being followed by every bank? Will the banks also contact pre-existing account holders and demand they fill out the document? And what if they refuse?

Yes, based on reports, all Thai banks are asking for "US person" identification when opening new accounts, and, if positive, for SSN's.

Banks are, per FATCA, not required to canvas pre July 2014 account holders for "US person" connection. However, if you opened your account with a US passport ID number (which most of us US types did), then you should expect a request to furnish your Social Security number to them. (If you refuse, count on your account being closed, as you're now deemed "recalcitrant," and account closing is the easiest path for banks participating with FATCA.)

However, FATCA reporting is not retroactive -- so any and all account activity pre July 2014 (actually, much not until 2015-16) will not be reported to the Feds. So, any historical unreported interest will not show up at Treasury.

But, as your info indicates, such reported interest income, were it to be reported, would not put you over the threshold for needing to file a tax return......not that the Feds, absent any 1099's, would have any other income info in which to establish that threshold.

[thaiman]

However, FATCA reporting is not retroactive -- so any and all account activity pre July 2014 (actually, much not until 2015-16) will not be reported to the Feds. So, any historical unreported interest will not show up at Treasury.

Lets see if this will actually become truth.

[IAMSOBAD]

Best way from many people I have talked to who are former IRS agents is to return to USA and file through a different office. Like instead of Fresno get an east coast mailing address and file in Boston.

If they want more they will tell you. Probably you will never hear from them so keep filing that way unless you have income.

[RichardLee]

Okay, here's a follow-up to my situation. I spoke with several accountants in Bangkok from a list obtainable on the US Embassy website in the American Services section. Got it all cleared up, no problem. The accountants all said pretty much the same thing. Said the standard is to backfile the past seven years no matter how long it's been since you last filed, and if the IRS thinks they need to see more, then they'll ask for earlier ones. Every single accountant said there's been no problem so far with just seeing the past seven years, they've not had anyone yet who had to file more.

So now I'm all square with the IRS. For those of you with helpful suggestions, thank you. For those of you who see Big Gubmint as a threat, hiding under every rock just waiting for a chance to spring out and nab you, well, maybe you need to get a life.