Yes, the IRS can pursue U.S. citizens overseas, though how they do it and how effective they are can vary. Here’s a clear breakdown:
1. U.S. Citizens are Taxed on Worldwide Income
- If you are a U.S. citizen or green card holder, you must report your worldwide income, no matter where you live.
- This includes wages, rental income, investment income, and foreign property income.
2. Reporting Foreign Assets
- You may also need to file forms like FBAR (FinCEN Form 114) or FATCA (Form 8938) if you hold foreign bank accounts or property above certain thresholds.
- Failing to report can lead to hefty fines—sometimes tens of thousands per year.
3. How the IRS Can “Chase” You Abroad
- International agreements: The IRS can share info with foreign tax authorities through treaties and the OECD’s Common Reporting Standard.
- Collection through U.S. assets: Even if you live abroad, the IRS can seize property or money in the U.S.
- Foreign bank accounts: Some foreign banks cooperate with the U.S., especially in countries with FATCA agreements.
- Legal action abroad: Direct enforcement in a foreign country is tricky. Most countries won’t enforce U.S. tax laws on their residents, but the IRS can still apply pressure indirectly.
4. Practical Reality
- Many Americans living abroad do get audited or fined for non-compliance, especially if they have U.S.-based assets or banks.
- For those hiding millions overseas, the IRS has successfully pursued and settled cases—sometimes even via criminal charges for tax evasion.
Bottom line: Living abroad doesn’t make you invisible to the IRS. If you have U.S. ties—like bank accounts, investments, or property—they can still reach you.
The real risk is financial and legal consequences, not necessarily a U.S. marshal showing up on your doorstep in another country.
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