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Recommendation 01023-006

Leveraging U.S. Embassies and Consulates for Overseas IRS Services

This recommendation was responded with non-adoption by the IRS with the following response explanation.  The detailed rebuttal to the non-adoption is provided below.

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Recommendation Information

Background, research, and analysis

The VITA and TCE programs allow for certification in the following areas: Basic, Advanced (Standard Program), Foreign Students, Military and International. However, there are limited programs that offer virtual services and/or International Service.

The IRS recognizes international taxpayers as an underserved community (Taxpayer First Act To Congress, January 2021, Page 63 https://www.irs.gov/pub/irs-pdf/p5426.pdf). Low-income and elderly international taxpayers are especially disadvantaged and require additional support.

Contrary to widespread belief, most of the international taxpayer population are civilian US citizens, not military. 171,736 military personnel were permanently stationed abroad in 2022 (Source: https://usafacts.org/state-of-the-union/defense/). The State Department estimates there are 9 million American citizens living outside of the United States (Source: https://travel.state.gov/content/dam/travel/CA-By-the-Number-2020.pdf).

Based on 2020 IRS filing year data, 68% (527,840) of returns filed from abroad had an AGI of $50,000 or under. This data also counters the widespread belief that Americans abroad are high net worth individuals, when the data confirms AGI for international taxpayers is very much in line with AGI for stateside taxpayers. We do not know the age of these individuals so we cannot say how many would qualify for TCE, but all these returns could have qualified for VITA. This is a large segment of the population that would benefit from enhanced VITA, TCE, and LITC program support.

Although many international military bases have an H&R Block on base (see https://www.hrblock.com/tax-offices/international/# for the full list) all bases require military clearance or ID to access H&R Block services. Historically, some of these bases also provided VITA services but VITA services no longer exist even on military bases abroad, making it difficult for both low-income civilians and military abroad to access tax prep assistance.

Given there are no VITA, TCE, LITC, or TAS based outside of the United States available to service international taxpayers, these individuals have limited to no resources available to them to maintain or meet their tax filing obligation.

With the recent injection of funding from the Inflation Reduction Act, much of that funding has already been spent to enhance customer service, therefore it makes sense to further enhance the VITA, TCE, and LITC programs especially for this underserved community.

This is to enhance TAS RECOMMENDATION #10-1 Develop a comprehensive customer service strategy for both U.S. citizens and resident aliens abroad and foreign individuals with U.S. tax obligations and TAS RECOMMENDATION #10-2 Explore ways to partner with the U.S. Department of State to make tax information available through State Department platforms and to provide tax customer service at U.S. embassies and consulates from the Taxpayer Advocate’s 2022 Report to Congress, both of which have already been adopted by the IRS and are ongoing.

Benefits and barriers, including impacts of the proposed change

A key benefit to assist this underserved community would help further address issues of communication, education, transparency, and trust with the low-income and elderly international taxpayer population.

A positive impact would be a decrease in the international compliance gap.

One potential barrier could be the difficulty in justifying non-coding services being outsourced overseas, but it is possible to provide services through local partners who have knowledge of local taxes, which can better serve the community.

Summary and conclusion

The SPC believes that activating a virtual program for International taxpayers will not only support those that qualify for the service but also to educate taxpayers on the changes and impact to their specific tax scenarios. These recommendations also address the Taxpayer Bill of Rights (TBOR) Access to a Quality Service.

Recommendation

Discuss with the US State Department about offering office space at Embassies and Consulates to enable VITA, TCE, and LITC sites to offer face-to-face services for international taxpayers.

Justification

This is to enhance TAS RECOMMENDATION #10-1 Develop a comprehensive customer service strategy for both U.S. citizens and resident aliens abroad and foreign individuals with U.S. tax obligations and TAS RECOMMENDATION #10-2 Explore ways to partner with the U.S. Department of State to make tax information available through State Department platforms and to provide tax customer service at U.S. embassies and consulates from the Taxpayer Advocate’s 2022 Report to Congress, both of which have already been adopted by the IRS and are ongoing. As part of the IRS’ commitment to offer in-person services for international taxpayers and work with the US State Department, exploring office space at Embassies and Consulates around the world should be a top priority to meet these key objectives and commitments.

IRS Response

Non-Adopt

SPEC does not have personnel located in any foreign country. More information is needed on this.

Rebuttal to IRS response

Leveraging U.S. Embassies and Consulates for Overseas IRS Services

The Internal Revenue Service (IRS) can improve tax compliance and taxpayer service among Americans abroad by leveraging existing infrastructure at U.S. embassies and consulates. Other federal agencies already use these posts to deliver services abroad cost-effectively, providing a clear and proven model for expanding IRS outreach in a scalable, secure, and efficient manner.

U.S. Embassies and Consulates already serve as central hubs for a wide range of federal services abroad. More than 27 U.S. government agencies operate out of these facilities, including the Social Security Administration, Department of Homeland Security, Department of Justice, and the Centers for Disease Control and Prevention. These agencies use Embassy infrastructure to provide essential services to U.S. citizens living overseas—everything from Social Security claims to immigration support and public health coordination.

This proves that it’s not only feasible but also cost-effective to deliver federal services through existing Embassy resources. The IRS could adopt a similar approach by partnering with the State Department to offer tax assistance services, such as VITA, TCE, and LITC at these same locations. This wouldn’t require the IRS to permanently station SPEC personnel abroad. Instead, the agency could train Embassy staff or collaborate with local partners, just as other agencies do.

Having one trusted location where U.S. citizens abroad can access multiple government services would make life significantly easier for taxpayers. It would also help build trust and improve compliance, especially among low-income and elderly individuals who may struggle to navigate their tax obligations from overseas.

Existing Government Agency Use of Embassies

Agency Services Provided at Embassies/Consulates Relevance to IRS
Social Security Administration (SSA) Federal Benefits Units (FBUs) assist U.S. retirees and beneficiaries abroad Parallels IRS needs for face-to-face help with forms, deadlines, and benefit coordination
USCIS (Homeland Security) Immigration services, family reunification, refugee processing Shows capability to handle sensitive, case-specific federal services overseas
U.S. Department of State Passport renewals, voting assistance, notarial services Serves overlapping citizen populations abroad with secure infrastructure
Veterans Affairs (VA) Foreign Medical Program support for U.S. veterans Demonstrates long-term service commitment abroad using limited staff
Selective Service System Registration services for Americans abroad Federal coordination using local consular presence
USDA Foreign Agricultural Service Trade missions, food security and policy implementation Shows multi-agency adaptability of embassy resources

 

Cost-Effectiveness and Efficiency

  • Shared Infrastructure: Embassies offer secure facilities, staff, and IT systems already approved for federal use.
  • No New Facilities Needed: Temporary IRS representatives or rotating tax assistance programs can use space on a part-time basis.
  • Remote Integration: Secure digital kiosks, embassy-hosted webinars, or encrypted IRS help desks can be piloted with minimal overhead.
  • Coordination with Consular Staff: Embassy staff already assist Americans with complex administrative processes—training in basic IRS triage is feasible.

Strategic Benefits to the IRS

  • Increases voluntary compliance and reduces enforcement costs.
  • Assists aging or lower-income expats struggling with FATCA, FBAR, or tax return filings.
  • Demonstrates IRS commitment to taxpayer service and aligns with Treasury goals of global financial integrity.
  • Provides better taxpayer education in real time zones without 4 a.m. phone calls or inconsistent online services.

Suggested Pilot Locations

London (UK) • Frankfurt (Germany) • Tokyo (Japan) • Mexico City (Mexico) • Singapore

Multiple U.S. agencies demonstrate that embassy-hosted federal services abroad are both viable and cost-effective. The IRS can adopt similar practices to enhance compliance, improve service delivery, and fulfill its global mission to serve all U.S. taxpayers—wherever they live. 15 Tax Attaches were closed in 2015 due to funding being removed. Currently, there are no TACs, VITA, TCE, or LITC sites abroad or remote services from these programs for international taxpayers.