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IRS ANNOUNCES NEW “PENALTY-FREE” PROGRAM

June 20, 2014

By Joshua Ashman, CPA

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IRS ANNOUNCES NEW “PENALTY-FREE” STREAMLINE PROGRAM FOR DELINQUENT EXPATS

On June 18th, the IRS announced significant changes to the current IRS Streamlined program.  As many of you may know, since June 2012, delinquent U.S. expats were afforded the opportunity to catch up on their U.S. taxes and FBARs (Foreign Bank Account Reporting) without being subject to penalties and by filing only a limited number of tax returns and FBARs.  However, the criteria for qualifying for the Streamlined program were very rigid and narrow, essentially leaving many U.S. expats “out in the cold” with the only real (i.e., legal) option of going through the more costly and gruesome OVDP (Offshore Voluntary Disclosure Program).

Effective July 1, 2014, this has all changed.  The IRS has gone away with several of the more challenging criteria and has essentially opened up the Streamlined program to any U.S. expat who can certify that their prior non-compliance was non-willful.  In addition, the IRS will no longer require the risk questionnaire and has eliminated the $1,500 tax liability threshold.

What does all of this mean?  In a nutshell, thousands of U.S. expats who have innocently failed to file tax returns or FBARs and who can establish that they did so without any intent to cheat the IRS or evade paying taxes, can now start fresh by filing three years of missing tax returns and six years of missing FBARs without being subject to FBAR penalties.  More information can be found in the revised FAQs published by the IRS here – http://www.irs.gov/Individuals/International-Taxpayers/Offshore-Voluntary-Disclosure-Program-Frequently-Asked-Questions-and-Answers-2012-Revised

In addition, the IRS has published a special FAQ list covering transition rules for those who are already in the OVDP.  These FAQs can be found here – http://www.irs.gov/Individuals/International-Taxpayers/Transition-Rules-Frequently-Asked-Questions-FAQs

In the coming days and weeks we will be closely following these changes and will update our website with more detailed information and insights regarding the Streamlined program.

If you happen to have fallen behind on your U.S. tax returns or FBARs, these modifications present a tremendous opportunity for you to come clean and start fresh without paying penalties.  At Expat Tax Professionals, we’ve been assisting U.S. expats all around the globe with catching up on their U.S. taxes via both the IRS Streamlined program and OVDP and we’re happy to hear from you in order to see how we can be of assistance in your case.

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