The IRS has just announced some tax rule easement for Americans living abroad who still need to file their U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs). This easing of rules is another attempt by the US government to make it easier (and less expensive) for citizens living abroad to come out in the open and become IRS tax compliant.
The Montreal Gazette featured an article entitled IRS Eases Tax Filing Rules that reported on June 26th, 2012’s IRS bulletin announcing the IRS changes that are designed to give off shore taxpayers (who owe little or no taxes) a chance to catch up with their filing obligation without the threat of the heavy penalties associated with non-filing.
These new changes bring tax help by allowing:
- Taxpayers with simple tax returns owing $1,500 or less in tax for any of the years can file and get current without the threat of penalties or enforcement action.
- Taxpayers to resolve some of their tax issues relating to foreign retirement plans and pensions. The new changes address low compliance risk situations where income deferral was not made on time.
According to the IRS bulletin, taxpayers will be required to file delinquent tax returns along with appropriate related information returns for the past three years, and file delinquent FBARs for the past six years. Taxpayers considered a high compliance risk will be subject to further examination such as an IRS audit that covers more than three tax years.
The IRS also revealed the IRS voluntary disclosure programs thus far have exceeded the $5 billion mark of offshore tax collection and closed an offshore loophole that was used by some U.S. citizens to hide taxable assets.
These recent changes demonstrate IRS determination to collect from U.S. taxpayers wherever they reside in the world, but it’s clear these new changes apply to those who have relatively small tax bills. American taxpayers with large offshore holdings who have not yet filed income tax or FBAR’s could be looking at enormous FBAR penalties that exceed 100% of the value of the asset, plus tax penalties and interest. Worse, some taxpayers could face felony indictment of up to 5 years in prison! Taxpayers in this situation are encouraged to resolve their IRS tax problems sooner rather than later to avoid such harsh consequences.
Those who have yet to report their offshore income at this stage are encouraged to contact an IRS tax attorney or certified tax resolution specialist with experience handling FBAR cases. These tax professionals can help reduce the impact of severe tax penalties and negotiate a suitable offshore tax settlement that ultimately results in tax compliance and taxpayer piece of mind.
More Tax Help, IRS News and Tax Relief Tips:
- Doctor Sentenced for Failing to File FBAR Reports
- Treasury Proposes Multilateral Agreement for Offshore Compliance
- Back Tax Help-How Long to Keep IRS Records
- IRS Offers Tax Help Tips-Worker Classification
- To Avoid Tax Issues-Americans Give Up Passports
Tags: delinquent tax returns, FBAR, FBAR penalties, Foreign bank and Financial Accounts, IRS audit, IRS penalties, IRS tax attorney, IRS tax problems, Offshore Tax Settlements, tax help, tax issues, voluntary disclosure programs