It is estimated that over nine million US citizen currently live abroad; but, according to the most recent figures, only 204,009 (2.2%) of them have reported having foreign accounts, said accountancy firm Bambridge Accountants New York.
The 18 March 2020 marks a decade since the Foreign Account Tax Compliance Act (Fatca) came into force.
It requires Americans living overseas to disclose any bank account, investment and pension they hold abroad and that has at least $10,000 (£8,233, €9,036) in it.
According to the accountancy firm, only 73% of those who did report made a separate filing to the US Treasury on top of the one to the Internal Revenue Service (IRS), as required under Fatca.
Failing to comply can see penalties start at $12,921 for the Treasury and $10,000 for the IRS.
Foreign financial institutions are obligated to share US expats’ informtion with the American taxman as well.
The figures support a 2018 Treasury report which states that “despite spending nearly $380m, the IRS is still not prepared to enforce compliance with [Fatca]”.
The US Government Accountability Office (GAO) criticised the reporting requirements because having to file to both the IRS and the Treasury indicated “potential unnecessary duplication”.
Alistair Bambridge, partner at Bambridge Accountants, said: “US expats can struggle with taxes – the law is complex – [and] introducing the added level of reporting your foreign assets twice seems to have missed most Americans living overseas.
“Many US expats are unaware they need to report all their financial accounts outside the US back to the US Treasury each year.
“These accounts are reported using the Foreign Bank Account Reporting (FBAR – FinCEN 114).
“Although it is intrusive, there is nothing to pay as long as the FBAR forms are filed – if not, the penalties can be severe,” he added.