The Fourth of July for the United States of America. On this, the most auspicious of days, those of us living in Bermuda that are US citizens, dual citizens with the US, green card holders, non-resident aliens with relatives in US (and those that wish they had these connections) should take time - five minutes will do - to reflect on what it means to have the right to citizenship of the most dominant country in the world.

For after all, this is the land

• Of individual freedoms, the right to life, liberty and the pursuit of happiness.

• Of golden opportunities where anyone willing to work and overcome tremendous obstacles can become a millionaire.

• With the most innovative creative minds per capita on the globe

• That is still the envy of the world, scorned by some, emulated by even more, but original, above all an original where grown men go berserk over a baseball score (it's a game for goodness sake) and women can own hundreds of pairs of shoes, if they and their credit cards can handle the excitement

• That will sell you anything at a deal for any price, oh that shopping! This is the land of hope that still responds like an ethical gentleman, a democratic champion to the underdog for democracy in the face of tyranny, anarchy, and injustice.

This is the land of last resort, the refuge still - in hard currency US dollars - where investors flee when economies and markets are melting.

This is the land of the free and the home of the brave, America. The land of the inalienable right of the individual to choose, to be heard, to write critically, to dissent, to express an opinion without fear of retribution. We are grateful for this privilege.

In spite of the problems in the United States today, we have much to celebrate along with our new young presidential family. Privilege, no matter how bestowed, comes at a cost.

The price of the privilege of citizenship is called responsibility: casting your vote without coercion, voluntarily paying your fair share of taxes, becoming involved citizens, and for some incredibly brave souls, defending her shores.

There are those who would renounce these privileges. In a democracy, they have a right to that to; if that is their decision, it will be respected. There are also those who do not feel that American laws apply to them, that their citizenship should be free. They evade paying taxes; yet enjoy the same or better privileges than the rest of us.

The United States Internal Revenue Service has been given the mandate to ferret out those tax manipulators and evaders. The Service has realised significant new (previously lost) assets from this mandate and is proceeding aggressively to exploit this advantage, starting with the hiring of a small army of new tax investigators.

The real significance of this new IRS initiative means that the average person in Bermuda with US connections will almost certainly, at some point, be swept up by this very wide broom, simply because of our offshore location.

What does this mean? Many of us operate at various times in various stages of complexity in our offshore lives. Some of us are in multi-national US relationships, or are long-retired US citizens, recent expatriate guest workers, are American property owners, or are US beneficiaries of foreign trusts, and many situations in between.

Some of us are not even sure what nationalities we are or have rights to. Surprising, but very true! A US person is generally defined as, and has a filing obligation if you are:

1. A citizen of the US, born in the US.

2. A citizen of the US, living outside of the US.

3. A green card holder.

4. A US resident under the substantial presence test.

5. A non-resident alien under certain circumstances.

6. And other shades of gray, such that this list is not complete or inclusive.

If you think you fit into any categories above, don't know what you are supposed to do, or have just plain forgotten these responsibilities, the US Internal Revenue Service has made it easy for you to come into compliance.

They have stepped up their compliance activities even further with their VCP (Voluntary Compliance Programme), which ends September 23, 2009.

Under this programme, in certain situations, there will be no penalty for late filing or reporting of various tax forms.

The IRS also means business. They are not inclined to take a benevolent attitude toward those who willfully neglect their US tax responsibilities, or have used tax evasion.

We consult routinely with international tax attorneys as well as receiving feedback from our cross border professional networks. Across the board, the word is that there is very little room for negotiation with the IRS for those who do not voluntarily disclose offshore accounts, late or no filed tax returns.

On Monday of last week, the Miami Herald reported that one of the first US citizens prosecuted for evading taxes by lodging investments with UBS, a Swiss investment bank, was sentenced to jail time.

Under US law, tax evasion is a criminal offence, a felony, punishable by prosecution, severe fines, and possibly prison sentences. There is much advice floating around Bermuda regarding these critical issues that is obsolete, incorrect, bad, just plain wrong, and misunderstood from well-intended misinformed individuals, trustees, advisors about whether to file, what, where, how, and when to file tax and information reporting returns.

It is very important that you obtain relevant current qualified professional advice from internationally experienced US tax and planning professionals here in Bermuda about your personal situation.

If you value that US passport, and right to residency in the United States; still want that "oh beautiful for spacious skies and amber waves of green" choice, get professional advice, make a decision and move forward with your beautiful life.

Martha Harris Myron, CPA, CFP(US) TEP(UK) is a Certified Financial Planner and a Partner at Patterson Partners Ltd. She specializes in independent fee-only cross-border tax, estate, investment, and strategic planning services for Bermuda residents with cross-border and multi-national connections, internationally mobile people, and US citizens living abroad. She is a member of the American Institute of Certified Public Accountants Advanced Personal Financial Planning Steering Committee. For more information, contact mmyron@patterson-partners.com or phone 296-3528.

Disclaimer: this article is for general information purposes only and is not to be used as specific tax advice for any individual situation. IRS CIRCULAR 230 NOTICE: Pursuant to recently enacted US Treasury Department Regulations, I am now required to advise you that, unless otherwise expressly indicated, any federal tax information (or advice) expressed above was neither written, nor intended by the author to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed under US tax law.