This post was originally published on May 13, 2013, it was updated July 10, 2014 with information relevant to the 2014 tax year.
US Expats Avoid Harsh Penalties
As of Sept. 1, 2012, the IRS has launched a new Streamlined Procedure designed specifically for delinquent taxpayers living abroad. This new procedure enables taxpayers to get caught up on their US expat tax returns by filing tax returns for the last three years and FBAR forms for the last six years. For US expats who haven’t filed in several years, this is big news! Prior to this program’s inception the IRS required individuals to file at least 6-8 years of back taxes and FBAR forms.
Qualifying for the Program
To qualify for the Streamlined Procedures, you simply have to be a US taxpayer who is behind on their US tax return filings. As of June 2014, the IRS lifted the residency and taxes owed restrictions. This program is available to anyone whose lack of filing was non-willful (meaning, you didn’t purposely hide the money in an offshore account to avoid paying US taxes). In addition, the IRS has waived the late filing and FBAR penalties. This is a welcome relief for expats who were nervous about coming forward because of the possible harsh penalties they could face.
For those who may be facing criminal prosecution for their purposeful hiding of assets, the Offshore Voluntary Disclosure Program should be considered. There are significant penalties associated with this program, however, and you are encouraged to consult a qualified tax attorney prior to enrolling in this program.
Although this procedure has no deadline, US expats who qualify for the Streamlined Procedure are advised to complete their delinquent US expat tax returns and FBAR forms as soon as possible. The IRS may end this program at any time.
Need Help Filing Your Delinquent US Expat Tax Returns?
For additional information on the Streamlined Procedure, check out this FAQ page. If you have questions about filing your delinquent US expat tax returns or if you would like help completing your return, please contact our tax experts.