NEW STREAMLINED APPROACH FOR TAXPAYERS LIVING ABROAD TO FILE PAST YEARS RETURNS AND REQUIRED FOREIGN ASSET DISCLOSURE FORMS (Effective September 1, 2012)


 

By Don D. Nelson, Attorney at Law, C.P.A.


As of 9/1/12 there is a new streamed and much easier program for delinquent taxpayer abroad to file their tax returns and other required forms.   This program permits you to only to file the past 3 year tax returns ( including required forms for foreign corporations, partnerships, trusts, etc.) and past 6 years FBAR (foreign bank and financial account report forms) and if accepted all of your past tax omissions are forgiven. If you owe income taxes, under this program the IRS will only impose normal penalties and interest on top of the taxes owed.

There are some restrictions for you to use this program to become  current:
 
  • You must have resided  outside of the USA since 1/1/2009.
  • You cannot have material economic activity in the USA
  • You must have filed required tax returns in your country of residence
  • You cannot owe more than $1,500 in US taxes (after tax credits) for the three most recent years you file your Form 1040.
  • Your personal situation cannot include certain “high risk factors” as defined by the IRS and are set forth below.

The IRS defines “ H
igh Risk Factors” are those which might cause you to be thrown out of this program. These factors include:
 
  • Amended returns other than those filed to claim treaty relief from failing to make timely elections with respect to foreign pension plans.
  • If any of returns submitted claim a refund
  • There is material economic activity in the US
  • The taxpayer is under audit or investigation by the IRS
  • US source income
  • Indications of sophisticated tax planning or avoidance.
  • The taxpayer has an interest in entities located outside of his or her country of residence
  • The taxpayer has previously received penalty notices or FBAR warning letter.
  • The taxpayer has financial interest or authority in financial accounts located outside the taxpayer’s country of residence.

This program can also be used to file amended returns to claim retroactive relief for those who failed to timely elect income deferral on certain retirement and savings plans  where deferral is permitted by the relvant US tax treaty (such as Canada)

If you enter this new program and the IRS decides you are not eligible due  “high risk factors” they will send the return for examination. This may result  in the imposition of regular penalties as well as additional penalties for not timely filing certain foreign assets reporting forms (which can be very$10,000 or more per year for foreign asset reporting forms) and possible criminal prosecution. If rejected from this program you cannot then enter the regular 2012 Offshore Voluntary Disclosure Initiative which reduces certain penalties and in most situations forecloses the possibility of criminal prosecution.

Due to the  many variables involved in the four possible methods you can use to file past tax returns with foreign income or asset issues with the IRS, it is best to talk with a tax professional before you proceed.  Any one of the following procedures may apply:

1. The regular disclosure program

2. The 2012 Offshore Voluntary Disclosure Program
3. The “Streamlined” approached that became effective as of 9/1/2012.
4. “ Silent Disclosure” which is frowned upon by the IRS.***

We can advise you based on your particular facts and circumstances the best way to proceed. As an Attorney/CPA we offer our clients the privacy and confidentiality of “Attorney-Client Privilege” which is not available from other CPAs,  accountants and enrolled agents.

LINK TO NEW 9/1/2012 STREAMLINED DISCLOSURE PROGRAM AND PROCEDURES

LINK TO FREQUENTLY ASKED QUESTIONS FOR THE 2012 OFFSHORE VOLUNTARY DISCLOSURE INITIATIVE AND PROCEDURES FOR ENTERING THAT PROGRAM

LINK TO IRS GENERAL  CID DISCLOSURE PROGRAM

LINK TO IRS PENALTIES INFORMATION

*** The IRS has defined “Silent Disclosure” as the situation where the delinquent taxpayer just files all past unfiled returns and foreign asset disclosure forms in the normal manner in hopes that they will flow through the system without being noticed and therefore none of the very high  special penalties for failing to file foreign asset reporting forms are assessed.  The IRS says that if they catch anyone trying this method (which was commonly used 4-5 years ago) they will immediately send all such returns to audit examination and all applicable failure to file penalties will be imposed.

_________________________________________________

 
  For More Information on these programs, assistance and representation in entering the program and determining which program is best for you, please contact Don D. Nelson, Attorney, CPA at ddnelson@gmail.com  As an attorney/CPA he offers you the privacy and legal confidentiality of "Attorney client" privilege which assures you your communication with him cannot be used against you by the IRS.  

 

Don D. Nelson,  US  INTERNATIONAL & EXPATRIATE TAX Attorney
All returns prepared by Kauffman Nelson LLP, CPAs
US Phone (949) 480-1235    US Fax: (949) 606-9627
 SKYPE NO:
dondnelson
Email inquiries & questions ddnelson@gmail.com  or use our email inquiry form

34145 Pacific Coast Highway #601
Dana Point, California  92629 USA
Our US Phone Number Abroad: 949-860-9606

                 

 |Homepage-Expatriate Tax | Site Index |Homepage Legal-Tax|  Expatriate Tax Return Preparation |  More About Don Nelson  |  Search Site   | Expatriate Tax Law Explained | IRS  Foreign Tax Forms |  Web Links  | Personal " Mini-Consultation"  |

Want to Receive Our Free Email Newsletter with Information on US tax law for expatriates, changes in that law, and new developments?  Send an email  by clicking here and completing our newsletter request form. Your address will not be given to others and remains confidential.

 


 

 
 

2016 &  and Earlier Years US EXPATRIATE TAX RETURN QUESTIONNAIRE FOR DOWNLOAD AND PRINTING (ms word ver)

FOR THE LATEST EXPATRIATE AND INTERNATIONAL TAX DEVELOPMENTS  VISIT OUR BLOG

 FOR MORE ABOUT US- MEXICO TAX VISIT OUR MEXICO - US TAX  BLOG

Member of American Institute of Certified Public Accountants and American Bar Association   

© TaxMeLess.com  2016                                                                   Last Updated on:12/29/16

  Terms of Use of this Website and Disclaimer