While it may seem like you are "off the radar," the IRS has significantly increased its ability to track expats. Filing now is about proactive protection rather than waiting for a problem to arise.
The Statute of Limitations: If you never file, the clock never starts. The IRS can technically audit or bill you for a year from a decade ago at any point in the future. Filing a return generally "closes the door" on that year after three years.
Banks are Reporting You: Under the FATCA law, foreign banks share account information of U.S. citizens with the IRS. Many Dutch banks now even ask customers for their SSN simply to keep an account open. If the IRS sees bank activity but no tax return, it eventually triggers an automated flag.
You Have Reporting Duties Too: Separate from your tax return, U.S. citizens whose foreign accounts exceed $10,000 combined must file an annual FBAR. Penalties for missed FBARs are often far higher than any actual tax owed, which makes this the most important piece to put right.
Passport Security: The IRS can notify the State Department of "seriously delinquent" tax debt (currently around $65,000, adjusted each year), which can lead to your passport being revoked or denied. After 10 years of non-filing, accrued interest and penalties can easily push a debt over that threshold.
Amnesty is Available: The Streamlined Filing procedure allows you to catch up without penalties if your failure to file was unintentional. It involves three years of tax returns, six years of FBARs, and one signed statement. These programs can be cancelled by the IRS at any time; if they find you first, you lose the right to use them and will face heavy fines.
You May Even Be Owed Money: Many expat parents qualify for refundable Child Tax Credit payments. However, refunds expire three years after the filing deadline, so each year of waiting can mean money permanently lost.
The Bottom Line: It is much cheaper and safer to come forward voluntarily while amnesty programs exist than to wait for the IRS to find you. Most expats who catch up discover they owe $0 in actual taxes and simply gain peace of mind. Taxbrella can handle the entire Streamlined procedure from start to finish; book a free consultation to get started.