Many expats end up with a bit of savings while living outside the US.  In addition, moving around to different countries and working for many different companies can leave expats feeling left out (or at least confused) when it comes to pension plans and social security benefits.

The Internal Revenue Service is initiating enforcement action involving more than 100 U.S. taxpayers to ensure proper income reporting and tax payment in connection with accounts in Liechtenstein. 

WASHINGTON - In an update of an annual consumer alert, the Internal Revenue Service urged taxpayers to avoid falling victim to one of the "Dirty Dozen" tax scams and a variety of other schemes.

U.S. persons who venture offshore for better investment opportunities are also subjected to more complex and costly tax accounting. In some cases, the added costs of accounting for foreign investment transactions can wipe out the gains in a small or modest size account and can greatly reduce the rate of return on larger accounts.

Foreign persons often find it difficult to understand the concern of U.S. taxpayers and tax professionals regarding tax evasion because the U.S. is reputed to be one of the few major countries in the world where tax evasion is a criminal felony. In many or most other countries it is a misdemeanor and tax evasion is commonplace.

One of the most common reasons for investing outside the U.S. is to have access to foreign investments. In addition, those who seek asset protection through foreign entities will need to consider investing some of their assets offshore.  However, there are numerous special tax rules in the U.S. tax law that are intended to deter U.S. investors from venturing outside the U.S.

For those who have waited until now to decide what to do with old-time offshore secret accounts, is the "handwriting on the wall?" Is it time to declare the previously secret income and pay the taxes, plus interest and penalties?

Sometimes financial secrecy and privacy can be achieved with the same device, but most of the time, the use of some asset protection entities will reduce your privacy and create more exposure of your financial affairs. Most of the lawyers who actually do a lot of asset protection work advocate full disclosure to the various tax agencies and any other regulatory agencies.

As far as the U.S. tax law is concerned, U.S. citizens and permanent residents are required to report any income from foreign bank accounts. The fact that the income is not reported to the IRS on an information return does not alter the legal duty of the U.S. citizen/resident.