Fear Factors: Dual Nationals and the IRS


What do the recent G20 discussions and the IRS’ enforcement of foreign asset reporting have in common and why should “dual nationals” be concerned? First, a brief definition for purposes of this article. A “dual national” is an individual who has income tax reporting requirements in two or more countries. Such a person includes individuals in the U.S. on work Visas, Green Card holders and individuals who are citizens of the U.S. and another country (by birth, as an example). I am not, in this discussion, including corporate or other business interests in this definition.

According to published reports from the G20 meeting, a total of $14bn in unpaid tax has recently been collected by seven of the G20 members from about 100,000 individuals worldwide from hidden assets (bank accounts) estimated to be worth in excess of $120bn. There remain, according to some estimates, in excess of $1tn in hidden untaxed assets globally. Since 2009 the IRS has offered two voluntary disclosure programs to get U.S. taxpayers to report foreign held financial accounts, the most recent program was the 2011 Offshore Voluntary Disclosure Initiative (OVDI). Many of the participants in the two IRS programs were “dual nationals”, but many more did not enter either program. However, some “dual nationals” are now being forced to come forward because of actions being taken by offshore financial institutions.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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