What happens if you just don't pay taxes?

[lynn19]

Hello,

Let's say my friend is British but lives in the U.S. He has a bank account but is undocumented, and has never paid taxes in the US nor in the UK. It's likely the IRS and HMRC (UK's IRS) do not know he exists.

If he sets up a corporation in Hong Kong and pays himself a salary to his US account, but does not ever file a tax return to the IRS, what would happen? Could the US bank ask if he is filing a return? Could the Hong Kong bank notify the IRS, even tho he has never dealt with them ever? Could they notify the UK? What would they do since he's not even living there?

Please no judgement here. He and I think it'd be stupid to pay taxes to a country in which he's not even allowed to be, have a social security, health insurance and other basic human rights. He is working on getting a green card and is willing to pay taxes once his foundation here is solid.
In the meantime your help would be appreciated.

 

[Gediminas]

Yes, the banks might ask about taxes.

Your friend could potentially be facing fines, or jail (at worst).

It's better to be smart and optimize your tax situation, instead if evading that.

 

[Dasboot]

Totally depends on what goverment that thinks they own you!

In Norway it used to be no problem whatsoever, and it might continue to be relatively easy to be off the radar for a few more years - but I do fear some scheme along the same lines as the US have in a decade or so, where they might send you a HUGE tax bill & then withdraw your passport if its not paid...

That happens NOW to a lot of people trying to get out of the grip of the IRS, I do not envy anyone that situation for sure.

Its far better to file something. The past two years I've been moving readily taxed assets out of Norway, but even though that is no problem I've put part of it (from family) up as a loan on my tax report - that way its easy to explain how I've made it through around 18 months without any regular income that they can see.

 

[kkein]

Totally depends on what goverment that thinks they own you!

In Norway it used to be no problem whatsoever, and it might continue to be relatively easy to be off the radar for a few more years - but I do fear some scheme along the same lines as the US have in a decade or so, where they might send you a HUGE tax bill & then withdraw your passport if its not paid...

What do you mean? could you say a bit more on what situation used to be no problem in Norway?

 

[Dasboot]

What do you mean? could you say a bit more on what situation used to be no problem in Norway?

Reporting very low or no income. Still doable, but I guess they might eventually at least send a letter requesting info on how you make ends meet.

Had a friend who basically kept cutting all possible corners for a decade, he got this letter and simply replied that he had lots of girlfriends who took care of him haha...

I'll be reporting close to zero for a year or two now myself, after that I've got no idea - will use this forum + some others to check how far the digital gulag construction has come when that problem arrives

 

[waykooksaram]

Taxes are now based on tax residency and likely the US will claim he is a US tax resident even if he is in the US illegally. They could flag him for suspicious transactions and request information regarding the source of his money and his world wide income. The US taxes global income so it is a risky situation your friend is in.

The is highly unlikely the US will share information with the UK.