“…. we are announcing a series of common-sense steps to help U.S. citizens abroad get current with their tax obligations and resolve pension issues,” said IRS Commissioner Doug Shulman.The Internal Revenue Service has announced a plan to help U.S. citizens residing overseas (including dual citizens) to catch up with tax filing obligations (IRS Newswire 26 June 2012).

The IRS will provide a new option to help U.S. citizens and non others residing abroad to catch up with their tax filing obligations if they owe little or no back taxes (new procedure – effect on Sept. 1, 2012).

Some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs). To help taxpayers, who want to comply with U.S. tax filing obligations, the new procedures have been issued. They will allow taxpayers, who are low compliance risks, to get current with their tax requirements without facing penalties or additional enforcement action. These people generally have simple tax returns and owe $1,500 or less in tax for any of the covered years.

Taxpayers using the new procedures will be required to file delinquent tax returns along with appropriate related information returns for the past three years, and to file delinquent FBARs for the past six years.

Submissions from taxpayers that present higher compliance risk will be subject to a more thorough review and potentially subject to an audit, which could cover more than three tax years.

Jan Lambrechts – ICHIBAN Consult