THOUSANDS of United States expatriates living in Hong Kong may face an investigation into their earnings in a new drive by Washington to enforce tax payments. Under US law, citizens are subject to tax on their income, regardless of where they live. The US Treasury Department is finalising a hit-list of expatriate communities where large numbers of US citizens are suspected of attempting to evade their tax bills. Tax experts believe Hong Kong's high concentration of wealthy expatriates and low tax rate compared to the US makes it an ideal target for the campaign. There are nearly 40,000 US citizens in Hong Kong, the second-biggest expatriate group after the Philippine community. Tax officials are expected to focus on obvious high-income targets ranging from pilots to executives. A report, compiled by the Treasury's Office of Tax Policy, concluded that an initiative aimed merely at increasing overseas filing compliance might not raise sufficient revenue to justify its costs. The Inland Revenue Service said it would 'focus its future compliance efforts on areas of non-compliance that have the greatest potential for tax collection'. Prototype campaigns aimed at unidentified target groups have yielded an average of more than US$4,000 additional tax due per taxpayer. The report concluded: 'They have also had the general effect of deterring others from risking non-compliance.' The campaign has devised a six-step plan designed at identifying members of the US community and local tax practitioners, using media to educate about liabilities and 'initiating appropriate individual examinations and investigations'.