As the US IRS cracks down on tax avoidance overseas with FATCA, the number of Treasury-licenced tax advisers with addresses outside of the US has jumped about 50% since 2016 according to figures from the agency.
Taxpayers increasingly needing that assistance include Americans living abroad, or US expatriates. Expats are required to file a US return, even if they don't owe any US tax because they can claim credits for taxes they've paid overseas—among other benefits, according to Bloomberg. Accidental Americans trying to deal with FATCA are another reason behind this increasing need for financial advice.
The FATCA international tax code was designed to stop Americans stashing money abroad to evade tax. It forces banks worldwide to start revealing, via national tax agencies, information on clients with links to America. And it spawned the Common Reporting Standard, whereby over 100 countries swap data with each other to discourage cross-border tax dodging.
Unlike most countries, the United States levies income taxes based on citizenship rather than residency. Accidental Americans have US citizenship because they were born in the country but don't identify with that nationality because they have mainly lived abroad.
But many Americans living overseas have found it has also caused problems for them. Banks have warned that they could be forced to close accounts belonging to US citizens because of ongoing difficulties with FATCA.
The majority of active foreign-based enrolled agents reside in India, the UK, Canada, China, South Korea and Japan, according to the data. In total their numbers - which include US and non-US citizens - have surged from 2,078 in 2016 to 3,083 as of late September 2019.
"There's an unmet need abroad," Jeff Trinca, vice president of Van Scoyoc Associates in Washington, told Bloomberg Tax. Trinca is a member of the National Association of Enrolled Agents.
Enrolled agents are licensed by the Treasury Department to represent taxpayers before the IRS at all administrative levels—examination, collection and appeals. They can also file tax returns on behalf of their clients.
Tax authorities around the world are warning expats to own up to offshore tax avoidance as a new international data sharing network is switched on to full capacity.