For citizens and dual citizens residing overseas, filing taxes can be a true headache. There are special laws to be aware of, new forms to fill out, and new hoops to jump through that you might not even be aware of until after you either lose money or accidentally shirk the law. The IRS is aware that there are many US expats who have failed, in all innocence, to properly file their tax returns or Reports of Foreign Bank and Financial Accounts, and is now trying to make it easier for such people to clean their records.
New procedures, effective as of September 1st, 2012, allow low compliance risk individuals to catch up on their tax returns with no threat of additional penalties or enforcement action. Such individuals will usually have simple tax returns and owe between $0 and $1,500 in back taxes for the past three years. Anyone taking advantage of these new procedures will be required to file a delinquent tax return in addition to related information returns for the appropriate years. Higher compliance risks may be subject to a more thorough review and possibly an audit, which may cover more than the past three years.
Additionally, the IRS announced that these new procedures will resolve tax issues related to certain foreign retirement plans. Tax treaties have often allowed for income deferral under US law only if an election is made on a timely basis, but the new, streamlined system will rectify this situation for low compliance risk situations.
If you are a citizen or a dual citizen who may be able to benefit from these new procedures, contact the Alisa Na CPA is Seattle today.