IRS’ New Plan: U.S. Citizens Overseas Benefit

Last updated on September 26, 2012

In a new plan proposed by the IRS, U.S. citizens living aboard will be able to easily settle their earlier tax non-compliance. According to IRS Commissioner Doug Shulman, “Today 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.”

The new procedure will be effective from September 1, 2012.

Even those U.S. citizens who have dual citizenship can benefit from the new procedure. Taxpayers who have not been paying taxes to the U.S. government may resolve their tax issue with the IRS and begin to pay their taxes regularly.

The IRS will not charge penalty and IRS enforcement action on cases with low compliance risks. Those taxpayers who have a substantial tax debt due to non-compliance will not be covered by this procedure.

The IRS informs that U.S. taxpayers who are living overseas and have failed to file their tax returns on time or FBARs may get the benefit of early resolution. It is to be remembered that only taxpayers who owe $1,500 or less to the IRS for any of the covered years can receive benefit from the new plan.

The aim of the plan is to increase and encourage tax compliance in U.S. citizens residing overseas. Those who qualify for this plan will need to disclose their tax related activities for the past three years. Along with that, they will be required to file delinquent FBARs for the last six years.