The US Internal Revenue Service (IRS) has released frequently asked questions (FAQs) regarding the streamlined filing compliance procedures for non-resident, non-filer taxpayers, which went into effect on 1 September 2012.
The streamlined procedures were introduced to provide US taxpayers residing overseas, including dual citizens, who have not filed US federal income tax returns or Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, FBAR) with an opportunity to comply with their tax requirements by filing their delinquent income tax returns for the past 3 years and filing their delinquent FBARs for the past 6 years.
The streamlined procedures were introduced to provide US taxpayers residing overseas, including dual citizens, who have not filed US federal income tax returns or Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, FBAR) with an opportunity to comply with their tax requirements by filing their delinquent income tax returns for the past 3 years and filing their delinquent FBARs for the past 6 years.
The streamlined procedures are designed for taxpayers who present a low compliance risk, which is generally specified as a tax liability of less than USD 1,500 for each delinquent year.
In addition, the streamlined procedures provide retroactive relief for taxpayers who failed to make a timely election for income deferral on certain foreign retirement and savings plans (e.g. Canadian Registered Retirement Savings Plans) for which relevant treaties allow deferral only if an election is made on a timely basis.
The FAQs include the following clarifications:
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In addition, the streamlined procedures provide retroactive relief for taxpayers who failed to make a timely election for income deferral on certain foreign retirement and savings plans (e.g. Canadian Registered Retirement Savings Plans) for which relevant treaties allow deferral only if an election is made on a timely basis.
The FAQs include the following clarifications:
- Taxpayers will not be disqualified from admission to the streamlined procedures even if their tax liability exceeds USD 1,500 for any of the 3 years. However, submissions by such taxpayers may be determined to be higher risk, and applicable penalties and an examination may ensue.
- If qualifying taxpayers have been accepted into one of the offshore voluntary disclosure programs (OVDPs) prior to 1 September 2012, they may opt out of the OVDP and request the streamlined procedures (seeUnited States – Offshore Voluntary Disclosure Program reopened indefinitely, United States-1, News 11 January 2012United States – Offshore Voluntary Disclosure Program reopened indefinitely, United States-1, News 11 January 2012 ).
- Qualifying taxpayers may have their case reconsidered under the streamlined procedures even if they have entered into a closing agreement (IRS Form 906) with the IRS under one of the OVDPs.
- For the streamlined procedures, taxpayers should use IRS Form 1040 (US Individual Income Tax Return), except that taxpayers should use IRS Form 1040X (Amended US Individual Income Tax Return) if they are submitting amended returns for the sole purpose of submitting late-filed IRS Form 8891 (US Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans).
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