IRS Amnesty for Former US Citizens: How to Become Compliant

IRS Amnesty for Former US Citizens: How to Become Compliant
September 11, 2019

In 2019, an IRS amnesty program was launched for those who have renounced their American citizenship (or even those who intend to!). The Relief Procedures for Certain Former Citizens offer incentives to noncompliant taxpayers to voluntarily come forward and get caught up on their taxes without being taxed as a covered expatriate. Find out how this amnesty program could affect expats’ decisions to renounce their citizenship below!


What Exactly Is the IRS Amnesty Program for Former US Citizens?

These relief procedures help a specific subgroup of former citizens – primarily those with limited tax debt who didn’t know they needed to file and who have never filed before. The limitations on this IRS amnesty program suggest that they were meant to offer amnesty to accidental Americans. This may in response to the many lawsuits that Accidental Americans have lodged against what they see as an unfair tax policy.

Accidental Americans are people who have lived abroad for nearly their entire lives and did not know that they were subject to American taxation. Sometimes they may have been born in the US, perhaps while their parents were on vacation or just passing through, and spend the rest of their lives in another country, finding out only much later on that they are subject to American taxation and deeply noncompliant.

The IRS amnesty program could also help young expats who have never filed taxes and are planning to expatriate, or anyone who fits the requirements of program use. The restrictions on those who can benefit from the Relief Procedures for Certain Former Citizens are:

  • Only applies to those who expatriated after March 18, 2010
  • Only applies to those who have a net worth of less than $2 million at the time of expatriation and at the time of making their submission
  • Only applies to those who have an aggregate tax liability of $25,000 or less for the taxable year of expatriation and the five prior years
  • Only applies to those who have no prior tax-filing history and were non-willful about failing to meet the existing requirements

How to Use the Relief Procedures for Certain Former Citizens

To use the Relief Procedures for Certain Former Citizens, you must file a Certificate of Loss of Nationality (CLN), a copy of a government-issued ID, and a dual-status return for the year of expatriation including Form 1040NR with all required information returns, including:

  • Form 8854 (Annual Expatriation Statement)
  • Form 8938 (FATCA)

FBARs are not a filing requirement under this program, but the IRS recommends that you file any outstanding FBARs as well.

Benefits of IRS Amnesty for Former US Expats

Using these relief procedures means that the IRS will waive your expatriation tax – a hefty fee that can deter some expats from renouncing. In addition, using this program waives the former citizen’s tax payments and penalties, which is a significant benefit. Another stipulation that makes this amnesty program different from the others is that you don’t need a social security number to use it.

After the IRS receives your submission, they will respond within two months.

Note: the IRS can terminate this program at any time, and has confirmed that it will only be open for an unspecified period of time.

How Will This Affect Citizenship Renunciation?

With a legitimate path towards tax compliance and citizenship renunciation that does not include penalties or tax payments, the citizenship renunciation numbers may rise as expats take advantage of this program. But remember: citizenship renunciation is a permanent decision that is only revocable under the strictest of circumstances. Ultimately, once you decide you’re not going to be an American citizen anymore, there is no going back.

Want to Find Out Which IRS Amnesty Program You Qualify For?

Greenback’s accountants specialize in all things expat-related, and they know the IRS amnesty programs inside and out. If you don’t qualify for the Relief Procedures for Certain Former Citizens, you may still qualify for the Streamlined Filing Procedures that allow certain expats to get caught up on their taxes penalty-free! Find out which program would be the most financially sound to choose based on your individual situation by getting started with Greenback today!

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