IRS to Help U.S. Citizens Overseas

Last updated on September 25, 2021

The IRS has announced plans to provide tax assistance to U.S. citizens who live overseas. It includes dual citizens and also those who have foreign retirement plans. The help will come in the form of encouraging U.S. citizens residing overseas to fulfill their tax obligations if they have not been filing tax returns.

Only those citizens who have no back taxes or owe very little taxes to the U.S. government can get benefits from the new plan.

IRS Commissioner Doug Shulman said, “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 proposed plans will come into effect from September 1, 2012, he added.

According to the IRS, “. . . 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). Some of these taxpayers have recently become aware of their filing requirements and want to comply with the law.

To help these taxpayers, the IRS offered the new procedures that 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 will have simple tax returns and owe $1,500 or less in tax for any of the covered years.

The IRS also announced that the new procedures will allow resolution of certain issues related to certain foreign retirement plans (such as Canadian Registered Retirement Savings Plans). In some circumstances, tax treaties allow for income deferral under U.S. tax law, but only if an election is made on a timely basis. The streamlined procedures will be made available to resolve low compliance risk situations even though this election was not made on a timely basis.”

Those who will use this new plan will be required to provide information relating to filing of tax returns for the past three years. They will also be required to file delinquent FBARs (Foreign Bank and Financial Accounts) for the last six years.

You can find complete instructions for the new IRS plan for new streamlined filing compliance procedures for non-resident, non-filer U.S. Taxpayers here.