What the New IRS Criminal Investigation Report Signals for Expats in 2026
Increased Enforcement Is Not Just for High-Profile Cases
Each year, the IRS Criminal Investigation division releases a report outlining enforcement priorities, trends, and areas of focus. The most recent findings point to a continued emphasis on international compliance, foreign financial transparency, and cross-border reporting. For U.S. citizens living abroad, this signals that expat tax enforcement remains a priority heading into 2026.
While criminal investigations typically target willful violations, the ripple effects often impact everyday taxpayers. Increased scrutiny leads to more data matching, expanded information sharing, and a lower tolerance for incomplete or inaccurate filings. Expats who assume enforcement only affects large corporations or ultra-wealthy individuals may be overlooking real risk.
Why Expats Are on the IRS Radar
The U.S. tax system is based on citizenship, not residency. This creates inherent complexity for Americans living overseas, especially those with foreign bank accounts, investments, or business interests. IRS Criminal Investigation reports consistently highlight offshore activity as a key enforcement area, not because expats are doing something wrong, but because foreign accounts present more opportunity for noncompliance.
Financial institutions worldwide continue to share data under FATCA agreements. As reporting becomes more automated, discrepancies between foreign account data and U.S. tax filings are easier for the IRS to identify. Even unintentional mistakes can trigger audits, penalties, or follow-up inquiries.
FBAR and FATCA Remain High-Risk Areas
Foreign bank account reporting continues to be a major focus in enforcement trends. The IRS uses FBAR filings and FATCA disclosures to identify underreported income and undisclosed assets. Missing or incorrect filings, even without intent, can result in significant penalties.
The Criminal Investigation report reinforces that failure to disclose foreign accounts remains one of the most common compliance issues. For expats, this means accurate reporting matters just as much as filing the tax return itself. Filing late or incomplete forms increases exposure, especially as data-sharing improves.
What This Means for Expats in 2026
For expats, the message is clear. Filing correctly is no longer optional or low risk. The IRS is relying more heavily on technology, data analytics, and international cooperation to identify issues. This reduces the margin for error and increases the importance of proactive compliance.
Expats who are behind on filings, unsure about past reporting, or confused about foreign account requirements should address these issues sooner rather than later. The IRS continues to offer compliance pathways designed for non-willful taxpayers, but eligibility often depends on timing and accuracy.
How Expats Can Reduce Risk Moving Forward
The most effective way to reduce risk is to understand filing requirements and ensure all reporting is accurate and complete. This includes U.S. tax returns, foreign income reporting, FBAR filings, and any additional disclosures required based on individual circumstances.
Working with professionals who focus specifically on expat tax matters can help identify gaps, correct past issues, and maintain compliance going forward. As enforcement trends evolve, having clear guidance becomes increasingly valuable.
Final Takeaway for U.S. Citizens Abroad
The latest IRS Criminal Investigation report does not mean expats should panic, but it does reinforce the importance of taking U.S. tax obligations seriously. Increased enforcement, improved data sharing, and continued focus on offshore activity signal that compliance matters more than ever in 2026.
For U.S. citizens living abroad, staying informed and filing correctly is the best way to avoid unnecessary stress, penalties, or long-term issues.
