IRS Introduces New Expatriation & Offshore Disclosure Program
The IRS has come to understand that there must be procedures in place to assist individuals with giving-up their U.S. status. And, for some of these citizens — they should not be stuck with U.S. tax consequences of non-filing.
As a result, the IRS introduced a new program designed to assist certain individuals (estates and businesses may not apply to the program) with getting compliance — and avoid taxes due.
On Friday, September 6, 2019, the IRS introduced new procedures entitled: “Relief Procedures for Certain Former Citizens”
New New Expatriation (Amnesty)
As provided by the IRS:
WASHINGTON – The Internal Revenue Service today announced new procedures that will enable certain individuals who relinquished their U.S. citizenship to come into compliance with their U.S. tax and filing obligations and receive relief for back taxes.
The Relief Procedures for Certain Former Citizens apply only to individuals who have not filed U.S. tax returns as U.S. citizens or residents, owe a limited amount of back taxes to the United States and have net assets of less than $2 million.
Only taxpayers whose past compliance failures were non-willful can take advantage of these new procedures. Many in this group may have lived outside the United States most of their lives and may have not been aware that they had U.S. tax obligations.
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 purpose of these procedures is to provide relief for certain former citizens. Individuals who qualify for these procedures will not be assessed penalties and interest. The IRS is offering these procedures without a specific termination date.
The IRS will announce a closing date prior to ending the procedures.
Individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible so long as they satisfy the other criteria of the procedures. These procedures are only available to individuals.
Estates, trusts, corporations, partnerships and other entities may not use these procedures. The IRS will host an on-line webinar in the near future providing additional information and practical tips for making a submission to the Relief Procedures for Certain Former Citizens.
Relinquishing U.S. citizenship and the tax consequences that follow are serious matters that involve irrevocable decisions.
Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime.
Taxpayers interested in these procedures should read all the materials carefully, including the FAQs, and consider consulting legal counsel before making any decisions.
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.