New York, NY (PRWEB) September 04, 2012
A new IRS program for delinquent expats and dual citizens is coming into effect on September 1st, 2012. To become compliant, expats will now be required to file three years of tax returns and six years of FBARs.
Why is This Big News?
The new IRS program provides welcome relief for American expatriates who’ve fallen behind on their US tax filing. Unlike past programs, this program makes it clear that by filing now they will not be subject to fines or penalties. Given that most expatriates do not owe any tax and simply did not realize they still have to file US tax returns - this is really welcome news.
Who is Eligible for the New Program?
The new program is aimed at Americans or dual citizens living abroad who have not been filing their US tax returns. But - it is best suited for those who IRS considers ‘low-risk’. The IRS views returns with minimal ($1,500) tax due or no tax due to be low risk. After the taxpayer submits their documents, the IRS representative will assess whether the taxpayer can be considered low, moderate, or high risk for compliance. ‘Low Risk’ participants will be free of penalties. The less tax liability, income, assets, and complexity of the return the lower the risk it poses to the IRS. Conversely, the higher the tax liability and the more complex the return will generally lead to a higher assessment of risk.
What About Foreign Retirement Plans?
The new program also will help those with certain foreign retirement plans (such as Canadian Registered Retirement Savings Plans). Existing tax treaties allow such income to be deferred with respect to US tax - but only if such election is made on a timely basis. The new program will allow taxpayers do so even if the election was not made in time.
Is the New Program Better than Previous OVDI & OVDP?
The previous IRS programs had more stringent requirements - filing 8 years of tax returns and 8 years of FBARS. Those entering it also faced the prospect of paying a 27.5% penalty on highest foreign account balance. In contrast, the new program requires only 3 years of tax returns and 6 years of FBARs. Most importantly - its participants may not face any penalties.
Is THIS the time to come clean?
This is a welcome development in what had been a very grey area for US expat tax filers – many of whom wished to be compliant, but had no clear guidance from the IRS itself. IRS Commissioner Doug Shulman said so much himself.
"Today we are announcing a series of common-sense steps to help U.S. citizens abroad get current with their tax obligations and resolve pension issues. The IRS is aware that some US taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law.”
The program is really good news for Americans abroad who realize that they should become compliant but fear doing so because of potential penalties and fines. Now there is a clear and simple way to achieve compliance endorsed by the IRS itself - without worry about unexpected results.
Should You Go Alone or Hire a Professional?
Even though the new program is really a good news, the taxpayer should tread carefully when dealing with the IRS. One must bear in mind that the primary goal of the IRS is maximization of revenue generated for the US government.
That is why Taxes for Expats recommends that expats contact qualified expat tax professionals to discuss their situation.
If you have any questions regarding the new IRS program or need assistance joining it, Taxes for Expats have a special program. They can help you file last 3 years of tax returns and 6 years of FBARs for a flat fee of $1,200 - that’s 27% less than the list price if services were purchased separately. For more information please visit http://www.taxesforexpats.com.
About Taxes for Expats
Taxes for Expats specializes in preparation of US expatriate taxes for Americans and dual citizens living abroad. They offer flat-fee pricing, a simple and hassle-free process, and have over 20 years of experience in the field of expat tax preparation. With clients in over 75 countries around the world, Taxes for Expats have helped hundreds of expats file their back taxes and become compliant with the IRS.