What happens if I haven't filed US taxes in years?

If you have not filed US taxes in several years, you are not alone — many expats are unaware of their ongoing US tax obligations. The good news is that the IRS offers specific programs to help delinquent filers catch up without facing the harshest penalties, provided the failure to file was non-willful (meaning it was not intentional tax evasion).

The primary program for catching up is the Streamlined Filing Compliance Procedures, which is specifically designed for taxpayers who have been non-compliant due to ignorance of their filing obligations rather than intentional avoidance. Under this program, you need to file the last 3 years of federal tax returns and the last 6 years of FBARs (Foreign Bank Account Reports). For taxpayers living abroad, all penalties are waived entirely. For US-based taxpayers, there is a 5% miscellaneous offshore penalty on the highest aggregate balance of foreign financial assets.

If your situation involves willful non-compliance or more complex issues, the IRS Voluntary Disclosure Practice may be more appropriate. This program involves greater disclosure requirements and typically higher penalties, but it provides protection against criminal prosecution.

The consequences of continued non-filing can be severe. The IRS can assess a failure-to-file penalty of 5% per month up to 25% of unpaid taxes, plus failure-to-pay penalties, plus interest. For unfiled FBARs, penalties can reach $16,536 per violation per year for non-willful violations, and up to the greater of $165,353 or 50% of account balances for willful violations. In extreme cases, the IRS can revoke your passport under the FAST Act if your seriously delinquent tax debt exceeds $62,000.

We strongly recommend taking action sooner rather than later. The Streamlined Procedures offer a generous path back to compliance, but they could be modified or eliminated at any time. Contact us for a confidential assessment of your situation.