Many Americans (including US citizens and US green card holders) living abroad will get a…
IRS Announces Penalty Mitigation for Smaller US Taxpayers Living Abroad
The Internal Revenue Service appears to have finally created a process to finally separate small non-resident (foreign resident) US taxpayers from larger non-resident US taxpayers at the front end, and not force everyone through the OVDI/OVDP programs.
Yesterday, the IRS today announced a plan to help U.S. citizens residing overseas, including dual citizens, catch up with tax filing obligations and provide assistance for people with foreign retirement plan issues.
The IRS will provide a new option to help some U.S. citizens and others residing abroad who haven’t been filing tax returns and provide them a chance to catch up with their tax filing obligations if they owe little or no back taxes. The new procedure will go into effect on September 1, 2012.
The IRS is aware that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs). Some of these taxpayers have recently become aware of their filing requirements and want to comply with the law. To help these taxpayers, the IRS offered the new procedures that will allow taxpayers who are low compliance risks to get current with their tax requirements without facing penalties or additional enforcement action. These people generally will have simple tax returns and owe $1,500 or less in tax for any of the covered years.
The IRS also announced that the new procedures will allow resolution of certain issues related to certain foreign retirement plans (such as Canadian Registered Retirement Savings Plans). In some circumstances, tax treaties allow for income deferral under U.S. tax law, but only if an election is made on a timely basis. The streamlined procedures will be made available to resolve low compliance risk situations even though this election was not made on a timely basis.
Taxpayers using the new procedures will be required to file delinquent tax returns along with appropriate related information returns for the past three years, and to file delinquent FBARs for the past six years. Submissions from taxpayers that present higher compliance risk will be subject to a more thorough review and potentially subject to an audit, which could cover more than three tax years. It is unclear how non-resident US taxpayers currently in OVDI will be handled.
While the new IRS process offers smaller non-resident US taxpayers a viable opportunity to clean up their tax affairs, we still strongly recommend legal representation to ensure attorney-client protected confidential advice to avoid further complications.
Our law firm expects unabated aggressive enforcement of the US tax laws, including FATCA with increased criminal prosecutions and civil audit examinations. We have been advising our clients to expect the unexpected (and the worst) in their tax treatment and disclosure of offshore assets. Taxpayers, who have not done so already, should explore the OVDP program to avoid criminal prosecutions and civil audit examinations.
Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign accounts.
Patel Law Offices offers a strategy session to discuss how to resolve your legal problem. Conveniently schedule online today with our online scheduler and questionnaire.
Related Posts
- IRS offers tax opportunity to Americans living abroad
- IRS Announces new OVDP Declines-Withdrawals Campaign
Earlier this month, the IRS' Large Business and International division released its list of 13…
- IRS Announces New international campaigns
On November 3, 2017, the IRS announced an additional 11 compliance campaigns as areas of…
Search
Categories
Recent Posts
- Are Trusts Required to Report under the Corporate Transparency Act (CTA)? February 10, 2024
- Is First-Time Abatement Applicable In International Penalty Cases? January 26, 2024
- National Taxpayer Advocate calls IRS Penalties Draconian and Inefficient January 19, 2024
- Crypto is not = Cash currency for IRS reporting January 17, 2024
- Interesting 2023 Foreign Account Cases January 17, 2024
- Fantastic Recommendations for Form 3520 January 15, 2024
- The New IRS ERC Voluntary Disclosure Program January 10, 2024
- AICPA Makes Useful Recommendations For International Forms 3520/3520 January 2, 2024
- New IRS Voluntary Disclosure Program lets employers who received questionable Employee Retention Credits pay them back December 24, 2023
- Parag Patel Esq. Speaks at NJCPA Seminar on”Employee Retention Credit Audit Issues: Surviving IRS Scrutiny” December 20, 2023
- The IRS’s First-Time Abatement (FTA) Penalty Waiver December 19, 2023
- Parag Patel Esq. Speaks at NJCPA Seminar on”The Corporate Transparency Act: What You Need To Know” December 16, 2023