Here it is. Was this what you were waiting for?
IR-2012-65, June 26, 2012
WASHINGTON — The Internal Revenue Service today announced a plan to help U.S. citizens residing overseas, including dual citizens, catch up with tax filing obligations and provide assistance for people with foreign retirement plan issues.
“Today we are announcing a series of common-sense steps to help U.S. citizens abroad get current with their tax obligations and resolve pension issues,” said IRS Commissioner Doug Shulman.
Shulman announced the IRS will provide a new option to help some U.S. citizens and others residing abroad who haven’t been filing tax returns and provide them a chance to catch up with their tax filing obligations if they owe little or no back taxes. The new procedure will go into effect on Sept. 1, 2012.
The IRS is aware that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs). Some of these taxpayers have recently become aware of their filing requirements and want to comply with the law.
To help these taxpayers, the IRS offered the new procedures that will allow taxpayers who are low compliance risks to get current with their tax requirements without facing penalties or additional enforcement action. These people generally will have simple tax returns and owe $1,500 or less in tax for any of the covered years.
The IRS also announced that the new procedures will allow resolution of certain issues related to certain foreign retirement plans (such as Canadian Registered Retirement Savings Plans). In some circumstances, tax treaties allow for income deferral under U.S. tax law, but only if an election is made on a timely basis. The streamlined procedures will be made available to resolve low compliance risk situations even though this election was not made on a timely basis.
Taxpayers using the new procedures announced today will be required to file delinquent tax returns along with appropriate related information returns for the past three years, and to file delinquent FBARs for the past six years. Submissions from taxpayers that present higher compliance risk will be subject to a more thorough review and potentially subject to an audit, which could cover more than three tax years.
The IRS also announced its offshore voluntary disclosure programs have exceeded the $5 billion mark, released new details regarding the voluntary disclosure program announced in January and closed a loophole used by some U.S. citizens. See IR-2012-64 for more.
IRS Says Offshore Effort Tops $5 Billion, Announces New Details on the Voluntary Disclosure Program and Closing of Off
WASHINGTON — The Internal Revenue Service today announced that its offshore voluntary disclosure programs have exceeded the $5 billion mark and released new details regarding the voluntary disclosure program announced in January, including tightening the eligibility requirements.
“We continue to make strong progress in our international compliance efforts that help ensure honest taxpayers are not footing the bill for those hiding assets offshore,” said IRS Commissioner Doug Shulman. “People are finding it tougher and tougher to keep their assets hidden in offshore accounts.”
Shulman said the IRS offshore voluntary disclosure programs have so far resulted in the collection of more than $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under the first two programs. In addition, another 1,500 disclosures have been made under the new program announced in January.
The voluntary disclosure programs are part of a wider effort by the IRS to stop offshore tax evasion and ensure tax compliance. This includes beefed up enforcement, criminal prosecution and implementation of third-party reporting through the Foreign Account Tax Compliance Act ( FATCA).
The IRS also closed a loophole that’s been used by some taxpayers with offshore accounts. Under existing law, if a taxpayer challenges in a foreign court the disclosure of tax information by that government, the taxpayer is required to notify the U.S. Justice Department of the appeal.
The IRS said that if the taxpayer fails to comply with this law and does not notify the U.S. Justice Department of the foreign appeal, the taxpayer will no longer be eligible for the Offshore Voluntary Disclosure Program ( OVDP). The IRS also put taxpayers on notice that their eligibility for OVDP could be terminated once the U.S. government has taken action in connection with their specific financial institution.
Additional details of these eligibility issues are available in a new set of questions and answers released today on the current OVDP, which was announced in January ( see IR-2012-5). The IRS reopened the OVDP following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs.
This program – which helps bring people back into the tax system — will be open for an indefinite period until otherwise announced. The program is similar to the 2011 program in many ways, but with a few key differences. Unlike last year, there is no set deadline for people to apply. However, the terms of the program could change at any time going forward.
Under the current OVDP, the offshore penalty has been raised to 27.5 percent from 25 percent in the 2011 program. The reduced penalty categories of 5 percent and 12.5 percent are still available.
The IRS also announced a plan to help U.S. citizens residing overseas to catch up with tax filing obligations and assistance for people with foreign retirement plan issues. See IR-2012-65 for more.
Editor’s note: Here are more details on the procedure:
New Filing Compliance Procedures for Non-Resident U.S. Taxpayers
*the Senate-loaded revoking-passports section of that bill was said to have been removed during the House/Senate joining of versions–posted by another Brocker. Thank God. It’s difficult to imagine the spite the Senate put into this.
And that’s why it is imperative to lie lie lie, tell them nothing that they do not already know. Why some people out there go all boyscout in reporting everything… i’ll never understand.
*The IRS is taking away important Obama votes from Americans Abroad who are democrats by lumping them together with Americans who live in the USA and have hided foreign accounts not to pay taxes; Americans Abroad have Income Exclusion and Tax Credits. They don´t need to hide anything. If the don´t fill their IRS Returns is more because of the paper work and the cost of paying US CPAs and Tax Lawyers than anything else. We should all write to President Obama telling him that he is losing votes from the Americans Abroad because the way they are being treated by the IRS. And perhaps remind him that by working abroad we are creating jobs in the USA.
From Todays NYTs and Brian Knowlton who writes on Expat issues… It was headlined this way…
Pentagon Reverses Course on American Voters Living Abroad
but the story also goes on to mention the recent changes “common sense” changes announced by Commissioner Shulman on the 26th of June…
*In my opinion Brian was too kind to the IRS. I was disappointed. Although I like what he writes it seems to me that he failed to mention that the changes were minimal and Americans Abroad continue to be harassed and penalized by the IRS in an unfair way.
@thatisme- I would agree with you. I felt the same way about the CBC interview and also about Finance Minister Flaherty’s position on the issue. The problem is that the powers that be, in both the media and international politics, are dancing around the periphery of this whole issue. No one is brave enough to attack the heart of the beast because everyone is too scared of offending the Americans.
This is no time to be a shrinking violet. For Finance Minster Flaherty to publicly come out and denouce citizenship based taxation would be the best thing that he could do. The Americans have to be made aware of the fact that the jig is up. Attempting to make the U.S. seem like a reasonable player is only playing into U.S. hands.
This was published in the International Herald Tribune. I would keep an eye on their http://rendezvous.blogs.nytimes.com/ blog to see if it shows up and available for comment. You could express your disappointment there. I am not sure what determines if a piece moves to the Blog for comment, but that is what happened with David Jolly’s piece some time back and many Brocker’s commented. Brian was a contributor to that piece too.
*Yes, Brian´s article was written in a hurry. And was bad for us, giving the impression that the IRS was really being fair to us. The IRS not only owes us an apology for considering us criminals but also needs to change his approach to us. I am still suffering under their uncalled for pressure.
Robert Woods @forbestaxblogs writes again about this program..
IRS Streamlines Foreign Account Amnesty
@ Just Me
Your comment on the Forbes article rightly points out that there needs to be a huge PROCEED WITH CAUTION attached to this latest “streamlining” offer by the IRS. We all know what true amnesty would look like but the IRS doesn’t seem to have a clue. They may have lowered the hoops a tad and even removed a few but there are still hoops galore and a lot of uncertainty about how many will even qualify to attempt to jump through them and if they do, what exactly lies beyond that last hoop?
Exactly… there are always technical hoops and barriers with the IRS! Nothing is easy. I sometimes wonder if the little IRS scribe that sits in some dinghy cubicle in DC ever looks up and asks himself, “What the hell have I just created?” with this latest 14 layer description of technical compliance exemptions and restrictions?
@ Just Me
It must be a hellish place, inside an IRS scribe’s head. I’ve had to reread certain passages in the tax manual many times over and still not been able to figure them out. IRS scribes must get many hours of training in convoluted thinking.