When Home Taxes Chase You Abroad: Inside the 2025 Taxpayer Advocate Report

January 29, 2026 - Participants include:   Dr. Laura Snyder - @TAPInternation   Dr. Suzanne deTrevile - @SdeTreville   Tim Smyth - @TpSymth01   John Richardson @ExpatriationLaw   Background:   This week the Taxpayer Advocate released its 2025 report. Significantly the report included "Taxpayers Living Abroad" as one of the most serious problem areas encountered by taxpayers. The report is remarkable in its recognition of both the compliance problems and the substantive laws impacting Americans abroad. I highly recommend that you read the report. The report includes:     "In short, the current system imposes unnecessary harm on U.S. taxpayers abroad, discouraging compliance and eroding trust in the fairness of the nation’s tax administration. Unless the IRS takes meaningful steps to improve its services, guidance, and systems for these taxpayers, the frustration and fear experienced by Americans abroad will continue to grow, harming not only them but also the integrity of the tax system as a whole."   The report includes the following description of a hypothetical U.S. citizen abroad: “Sue, a U.S. citizen, has lived and worked in Australia for many years after marrying her Australian husband, Sam. As a dual citizen, Sue pays Australian income taxes on her wages but also remains subject to U.S. tax laws. They have been advised their income is always less than the foreign earned income exclusion. They have joint checking and savings accounts in an Australian bank, and on various paydays the combined balance of their joint accounts exceeds $10,000 USD. Sue participates in an Australian superannuation, a compulsory system for retirement savings. Three years ago, she inherited some stock shares from her Australian aunt, which she keeps in the same brokerage house that maintained her aunt’s account. Sue and Sam have not filed a U.S. income tax return or an FBAR. Sue eventually learns that because she is a U.S. citizen she must also file a U.S. tax return to report her Australian income, with Forms 3520, 3520-A, 8938, and 8621 (depending on the investment in the superannuation). They also must electronically file FinCEN Form 114 (FBAR) using FinCEN’s BSA E-Filing system. If they file tax returns, they may owe U.S. taxes and penalties thereon. They would also be subject to foreign trust penalties for failing to disclose Sue’s Australian pension plan, FATCA and FBAR penalties, and possibly foreign gift penalties for failure to disclose her Australian inheritance that is not subject to tax.” It then goes on to detail the unfairness and impossibility of the situation "Sue" finds herself in. The AI description of this podcast is: "The episode reviews the 2025 Taxpayer Advocate report highlighting severe compliance burdens on U.S. citizens living abroad: confusing rules, limited IRS support, harsh penalties, and the damaging effects on retirement, finances, and citizenship decisions. Speakers explain the report’s key examples—FBAR/FATCA filings, exit tax and pension inequities—and discuss how these problems threaten voluntary compliance and call for systemic reform to separate citizenship from taxation."