The Internal Revenue Service says it has new procedures in place that can help certain expatriated American taxpayers come into compliance with their U.S. tax obligations and get relief for back taxes.
Relief Procedures for Certain Former Citizens apply only to those individuals who have not filed U.S. tax returns as American citizens or residents, owe a limited amount of back taxes to the U.S. and have net assets of less than $2 million.
Lack of compliance by eligible taxpayers must not have been willful in order to take part in this program. The IRS acknowledges that many of the taxpayers in this group have lived outside the U.S. for most of their lives and my not even been aware they had American tax obligations.
To qualify for the program, the IRS says taxpayers have to file their missing tax returns as a first step:
“Eligible individuals wishing to use these relief procedures are required to file outstanding U.S. tax returns, including all required schedules and information returns, for the five years preceding and their year of expatriation. Provided that the taxpayer’s tax liability does not exceed a total of $25,000 for the six years in question, the taxpayer is relieved from paying U.S. taxes,” the IRS press release states.
Individuals who qualify for the procedure will not be assessed penalties and interest. These procedures are only available to individuals. Estates, trusts, corporations, partnerships and other entities are not eligible.
No specific termination date was issued for this new program, although the IRS says it will issue a closing date before it decides to shut the program down.
Taxpayers who relinquished their U.S. citizenship any time after March 18, 2010, are eligible – as long as they satisfy the other criteria of the new procedure.
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