As you U.S. tax compliance for “U.S. persons” living outside the United States is very difficult. The reason is that most (if not all of your activities) are considered to be either “foreign” and/or “offshore”. San Francisco tax lawyer Robert Wood recently write a couple of posts that illustrate how the fact of living outside the United States can actually extend the number statures of limitations for an audit. I draw your attention to:

Problem 4 #Americansabroad who fail to declare $5000 of foreign income is that the IRS has 6 years (not 3) to audit http://t.co/JUsFkCzjoK

— US Taxation Abroad (@TaxationAbroad) April 7, 2014

and

Problem 4 #Americansabroad who carry on business through a corp and don't file Form 5471 is IRS can audit forever http://t.co/6gLLf2nld5

— US Taxation Abroad (@TaxationAbroad) April 7, 2014

The  gist of the posts is explained in the tweets. That said, I recommend reading both of Mr. Wood’s posts/articles. Although they are not written specifically for Americans abroad, they do illustrate how punitive the U.S. Internal Revenue Code is when applied to Americans abroad.

Why so punitive?

The answer is that U.S. tax law is punishes things that “foreign”.

The problem?

For Americans abroad their lives are foreign.

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