Geneva, Switzerland (PRWEB) July 02, 2012
Three overseas advocacy organizations have expressed their appreciation that concerns raised in a meeting with IRS officials this past April are being taken into consideration, as announced by the IRS on June 26th. ACA (American Citizens Abroad), AARO (Association of Americans Resident Overseas) and FAWCO (Federation of American Women’s Clubs Overseas) were represented at the April meeting alongside Democats Abroad and Republicans Abroad.
According to the IRS statement, the agency has announced a plan “to help US citizens residing overseas, including dual citizens, catch up with tax filing obligations and provide assistance for people with foreign retirement plan issues.”
Further, the IRS statement acknowledges that those Americans who were non-compliant due to ignorance of their US tax obligations, and who owe little or no back taxes, will not be subjected to ruinous Foreign Bank Account Reporting (FBAR) penalties. ACA and AARO know from their worldwide members that many who entered into the Offshore Voluntary Disclosure program (OVP) to rectify their situation were assessed fines of up to 25% to 50% of the total value of their accounts. This level of penalty was put in place to combat criminals involved in money laundering and drug trafficking but it has often been indiscriminately applied to Americans living overseas who made honest mistakes.
“This is an important step forward and we commend the IRS and Commissioner Shulman for working to address the issue,” said ACA Executive Director Marylouise Serrato. “However, ACA believes that IRS regulations should be further eased. In particular, the threshold below which penalties are waived for back taxes owed should be raised from the current low $1,500, and more discretion should be applied in cases of non-compliance by Americans living abroad.”
"We appreciate the attempt to accommodate Americans overseas who are ineligible for domestic tax-deferred savings and retirement plans," noted Lucy Stensland Laederich, FAWCO U.S. Liaison and AARO President. “Solutions must be found to avoid penalizing them for joining plans abroad when they are excluded from equivalent plans in the United States."
The organizations’ goal is to simplify the tax filing situation of Americans living overseas and ensure that Americans who have been non-compliant due to honest misunderstandings of their tax filing requirements will continue to come into the system.