ON TIME — IRS releases details of new procedures for non-compliant taxpayers living abroad
This just arrived from Moodys Tax, with a link to the full text in the announcement.
Published on Friday, 31 August 2012 14:55Written by Roy A. Berg JD, LLM (US Tax) and James Gifford JD, LLM (US Tax)
As discussed in our June 28, 2012 blog, the Internal Revenue Service (“IRS”) previously announced new procedures that will enable non-resident US taxpayers who demonstrate “low compliance risk” to bring unfiled tax returns and related tax reporting obligations current and avoid potentially ruinous penalties. This afternoon the IRS released details regarding the new program for non-residents (such as Americans living in Canada) to get compliant with past tax obligations. We’ll have a more detailed analysis on Tuesday, but for now here are a few highlights:
- Persons qualifying for, submitting under the new “Streamlined Filing Procedure,” and presenting a low compliance risk will not have to pay penalties or face follow-up review by the IRS.
- To qualify, you must be a non-resident US taxpayer who has lived outside of the US since January 1, 2009 and has not filed a US return since.
- To participate, taxpayers must file three years of tax returns and information returns along with six years of “FBARs.” Tax and interest must be paid at the time of filing. A valid Taxpayer Identification Number or Social Security Number is required.
- The determination of compliance risk is based on a large number of factors and the answers to a special questionnaire required as part of the submission.
- Generally, amended returns will not be accepted in this program. Where they are, the amended returns will be considered “high risk” and subject to increased scrutiny.
- Retroactive relief for deferral on Canadian retirement plans is available.
- The Streamlined Filing Procedure does not protect against the risk of criminal prosecution.
The full text of today’s announcement is available HERE.
NOTE: Thank you, bubblebustin, for finding the link for this information on the revamped IRS website *. I am adjusting the Moodys link above (and HERE) to reach the new “IRS Instructions for New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers”.
*EXPLANATION (compliments of ERIC!)
Further analysis: from “renounceuscitizenship”
I’ve read it and my conclusion only is ‘good luck on roping more in’. Those that do probably will have already been contemplating it and it suits them. It will likely scare newcomers to the issue. There may be deeper-digging ostriches until the reality of full FATCA implementation, if FATCA can’t be stopped or drastically changed. Now to look for the media reactions to this latest from the US IRS. I’m glad it is, this instance, a timely announcement!
@Lisa
I haven’t come across where the guidelines mention that OVD participants are excluded. Can you direct me? One always has the option of opting out of OVDI.
Can someone define what the IRS considers ‘sophisticated tax planning’? It’s speculated elsewhere that the evidence of sophisticated tax planning rises with the financial assets of an individual tax payer, but regardless of these assets, isn’t it evidence that no sophisticated tax planning was done when a taxpayer neglected to file FBARS and private letter rulings?As I said before, this program only helps those who don’t have what the IRS wants, which is a source of revenue.
Here is what the IRS says about the New Streamlined procedures to allow non-resident U.S. persons to come into compliance.
http://www.irs.gov/uac/Instructions-for-New-Streamlined-Filing-Compliance-Procedures-for-Non-Resident-Non-Filer-US-Taxpayers
There is a link on this page to the all important questionaire
Also, if you are interested my take on this:
http://renounceuscitizenship.wordpress.com/2012/09/01/new-filing-compliance-procedures-for-non-resident-u-s-taxpayers-effective-september-1-2012/
@bubblebustin, renounce and Eric,
Thank you! I have updated the links in the post to arrive at the correct IRS “new instructions”.
@ bubblebustin,
Above, Roy Berg has said he will have More (analysis) to follow this weekend. Renounce has a good take on these new instructions as well: http://renounceuscitizenship.wordpress.com/2012/09/01/new-filing-compliance-procedures-for-non-resident-u-s-taxpayers-effective-september-1-2012/
From “Instructions for New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers”
*UPSET. No they won’t. They have enough to worry about.
Pingback: The Isaac Brock Society - New Filing Compliance Procedures for Non-Resident U.S. Taxpayers – Effective September 1, 2012 – A Preliminary Analysis
IRS and Practitioners Comment on Streamlined OVDI Procedure
??
@Just Me, this is getting ever more confusing – so in this article, are they calling the ‘streamlined compliance procedure‘ a form of ‘streamlined’ OVDI?
The title says “Streamlined OVDI Procedure”.
I don’t get it. I thought that the OVDI was supposed to be for those with more criminal rather than civil risk (though many who entered didn’t know that, or were aware of the distinctions). In contrast, I thought that the ‘Streamlined’ procedure “…was meant as a way to
allow low-risk, noncompliant account holders to come clean to the
government”.
So, now is the streamlined procedure supposed to be connected to the OVDI and OVDP in some way? What happens to the ‘low-risk’ minnow people who got into the OVDI/Ps through bad practitioner advice or panic at IRS threats, and ‘trying to do the right thing’ as the IRS told them to do. Is this a way of allowing the low-risk people stuck in the OVD to move into the low-risk process, or to apply to it, as well as to let new people coming forward have a path that is less rigid than the OVD programs?
@badger
I wouldn’t get too hung up on it. I think that is just the semantics that Jack Townsend used (mistakenly) in the title, or took from something he read on Tax Notes, which I do not have a subscription to. On the IRS web site they do not use the same term. They just called it a Streamlined process. And, by the way, the IRS has gone back to the old description, OVDP now, yet again, for the process after january 9, 2012. 🙂