New IRS procedures help U.S. citizens overseas with delinquent filings
The IRS is providing non-compliant U.S. taxpayers living abroad, including dual citizens, with an opportunity to catch up on outstanding tax filing obligations. The new procedures will require taxpayers to file three prior years of individual income tax returns and six prior years of FBARs (TDF 90-22.1 Report of Foreign Bank and Financial Accounts). Federal tax and interest due must be paid upon submission of the filings. Taxpayers determined to be low compliance risk (generally those with simple tax returns owing tax of $1,500 or less) will not be assessed additional penalties. However, the potential for additional penalties and even an audit increases as the compliance risk gets higher. Further details will be forthcoming regarding the new procedures, which are effective Sept. 1, 2012 and also address certain foreign retirement plan issues.