The IRS released a new program that allows former U.S. citizens to become compliant with the U.S. tax law without risking any penalties – Relief Procedures For Certain Former Citizens. If you only recently found out about your tax filing obligation to the U.S./your second citizenship and you’re contemplating renouncing it, this program might be for you.

In this article, we will explore relief procedures available to former U.S. citizens, as well as the eligibility requirements for this new amnesty program. Credit attribution for this article is given to Kasia Strzelczyk who is an Enrolled Agent with 1040 Abroad.

What Are The Relief Procedures For Certain Former Citizens The IRS Offers?
The United States is one of the only two countries that taxes their citizens and permanent residents (green card holders) on their worldwide income. It means that even if you live and work abroad, you still need to report all your foreign source income and file a U.S. tax return each year.

Unfortunately, this also applies to Accidental Americans – people who weren’t even aware they are considered U.S. citizens according to the United States immigration law. They might have received their U.S. citizenship at birth or through a U.S. citizen parent. The good news is, there is a way to become compliant and avoid all the penalties, charges for late filing, and other less favorable tax implications. And if one chooses to give up their U.S. passport, he/she can do so now too.

Background
Back in 2019, the Internal Revenue Service announced the opening of a new tax amnesty program called Relief Procedures for Certain Former Citizens. Amnesty programs are created to encourage indebted taxpayers to come forward and declare their tax liabilities. In return, they guarantee not to impose punishments on those unpaid taxes, and may even allow criminal offenses to go without prosecution.

Relief procedures for certain former American citizens is a program designed to address the concerns of accidental Americans. The program is aimed at tax-delinquent U.S. citizens who renounced (or intend to renounce) their American citizenship without facing back taxes and penalties.
These procedures cover individuals only. Trusts, corporations, partnerships, and other types of taxpayers are not eligible for the amnesty program.
These procedures are limited to taxpayers who have been out of compliance due to non-willful conduct. Non-willful conduct is a result of negligence, mistake, or a good-faith misunderstanding of the requirements of the law. In short, this means that you didn’t deliberately dodge your federal tax obligations.

Relief Available Under This Program
If you qualify for the new program, you will not owe any taxes, penalties, or interest to the United States. You will also not be considered a “covered expatriate”, allowing you to avoid the Exit Tax as well.
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