This past August (and now in effect for the 2012 tax year), the IRS announced an amnesty program for what the Service calls low-risk non-filers. The details of this option (called "New Filing Compliance Procedures for Non-Resident U.S. Taxpayers") can be found at the following IRS website:
"The IRS is aware that 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), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law. The Service is announcing a new procedure for current non-residents including, but not limited to, dual citizens who have not filed U.S. income tax and information returns to file their delinquent returns.
"The IRS will determine the level of compliance risk presented by the submission based on certain information provided on the returns filed, and based on certain additional information that will be required as part of the submission. Low risk will be predicated on simple returns with little or no U.S. tax due. Absent high risk factors, if the submitted returns and application show less than $1,500 in [US] tax due in each of the years, they will be treated as low risk. In general, the risk level will rise as the income and assets of the taxpayer rise, if there are indications of sophisticated tax planning or avoidance, or if there is material economic activity in the United States. Additional risk factors include any additional history of noncompliance with United States tax law and the amount and type of United States source income."
Slightly more detailed, but perhaps more complex "Options Available to Help Taxpayers With Offshore Interests" may be found at this IRS website:
Please note the following admonition on the above website: "The IRS reminds taxpayers to consult with their professional tax advisor in determining which option is the most appropriate given their facts and circumstance."
Democrats Abroad, a constituent part of the Democratic Party in the US, has established a Task Force to address the impact of tax rulings and enforcement on Americans living abroad. We are actively engaging with members of both houses of Congress as well as relevant government agencies in a multi-pronged effort to lighten the burden that many are now experiencing.
The purpose of this website is to collect real stories that illustrate the challenges faced by Americans abroad in managing their tax affairs. We have been asked by agency and legislative senior staff to collect this kind of specific anecdotal evidence.
We welcome Americans living abroad (outside the US and US-regions) to share their experiences about:
- Meeting tax reporting and filing obligations (such as preparing Forms 1040, 8938, FBAR, FATCA, etc)
- The denial of financial services—bank or brokerage accounts, for example—because of the reporting requirements of FATCA
- Responding to IRS amnesty programs (such as the OVDI, the Offshore Voluntary Disclosure Initiative)
- Other issues you have had with the IRS as an American living abroad.
We are also interested in hearing your concerns about the complexity of preparing filings, penalties, potential double-taxation, pensions and other retirement savings, investments, real estate, banking access and taxation for dual citizens, non-national family members, or those with whom you share a business relationship.
A selection of stories will be published on this site daily. Stories may also be used in submissions to government. In preparing your story please note that our collective efforts are best served by keeping it simple, to the point and real.
Be assured all names will be redacted and all material used anonymously. Stories may be edited for succinctness, and not all stories will be published (eg duplicate stories or stories with too much personal information).
Please contact Joe Green if you have questions about submitting stories online or wish to have your identity known. Stories that have a real person or group of people attached have a greater impact.
Thank you for your participation.