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Archive for Renouncing U.S. Citizenship

IRS Provides Limited Tax Relief For Certain Individuals Renounced(ing) After March 18, 2010

John Richardson On Renouncing U.S. Citizenship

In what appears to be a response to how FATCA issues affect “accidental Americans” living outside the United States, the IRS has introduced a procedure providing limited tax relief, penalty relief and certainty for accidental Americans who need to renounce U.S. citizenship in a FATCA world. The problem is described in this recent article by Helen Burggraf at American Expat Finance. Note that March 18, 2010 was the date that the HIRE Act (of which FATCA was a revenue offset) was enacted – making it clear that this relief is tied to FATCA and NOT to “citizenship-based taxation” per se.

In a nutshell, it appears (I will read this in more detail again) to say that Individuals who:

1. Have NEVER filed a 1040 U.S. tax return

2. Have relinquished/renounced U.S. citizenship after March 18, 2010

3. File the five tax years in the year prior to relinquishment

4. File a tax return in the year of relinquishment

5. Have a net worth of less than 2 million USD at the time of relinquishment AND at the time of filing

6. Have a total of less than $25,000.00 in U.S. tax liabilities over the five year period

7. Certify that their failure to file was non-willful.

can file, avoid paying the U.S. taxes owed and NOT be a covered expatriate.

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