If you’re not compliant on your taxes, you’re in good company. Many expats are surprised to find out that their requirement to file US taxes every year lasts long after they have moved out of the country. The good news is that the IRS has an amnesty program for expats to use for late US tax filing!
Late US Tax Filing Basics
The first question to answer is: how late are you? If you are only one year behind, your best option is to file as soon as you can. However, if you are many years behind, the Streamlined Filing Procedures were meant especially for you. This IRS amnesty program allows expats to get caught up penalty-free. However, the IRS has recently placed termination dates on other amnesty programs, so expats will want to take advantage of this program while it is still available!
To file, you’ll need to submit
- Three years of delinquent Federal Tax Returns
- Six years of FBARs
Note: this program is only available to expats who were not aware of the requirement to file taxes annually. Read on to find out in which category you fit.
Willful Versus Non-Willful Tax Delinquency
The IRS has outlined its guidelines for making a willfulness determination. While the definition of willful is still a bit vague, the following behaviors are examples of what the IRS perceives as willful noncompliance:
- Making an effort to conceal the existence of certain accounts or their balances
- Filing prior years of FBARs and then ceasing to file
- Receiving a warning letter from the IRS and continuing to fail to file
- Taking actions meant to conceal sources of funds
Basically, if you didn’t know you still had a filing obligation, you can use the Streamlined Filing Procedures. If you knew and hid money in offshore accounts, you will need to use the Offshore Voluntary Disclosure Program, and you will need to use it soon! The IRS is closing this program on September 28, 2018.