Expatriated From US? Intend To Expatriate? New IRS Procedure

Darlene Hart

On September 6, 2019, the Internal Revenue Service (IRS) announced a new procedure which allows certain non-compliant US citizens who relinquished their US citizenship to become US tax compliant.

This procedure is geared towards ‘Accidental Americans’ who were unaware of their US tax obligations. As well, under this procedure, no US social security number is required.

The main eligibility points include:

1.       Prior compliance failures were non-willful.

2.       Past tax liability is not in excess of $25,000 for the six years of returns to be filed.

3.       Less than $2 million in net assets as of expatriation date.

4.       Expatriated after March 18, 2010.  Must expatriate prior to filing under this procedure.

5.       It is limited to individuals only.

6.       The taxpayer has no tax filing history as a US citizen or resident.

7.       Must include a copy of approved form DS-403, Certificate of Loss of Nationality with the filing.

Eligible taxpayers must file US tax returns, including all required schedules, international information for the five years preceding and the year of expatriation. The Foreign Bank Account Reports (FBARs) are not a requirement of this procedure, however, if FBARs should have been filed and are filed at this time, the IRS will not asset the FBAR penalties. If the FBARs are not filed at this time the IRS may asset FBAR penalties in the future.

Qualifying taxpayers become compliant without having to pay any U.S. taxes, penalties or interest and avoid becoming a ‘covered expatriate’, a status that could result in owing exit tax, among other potential negative outcomes.

US Tax And Financial Services


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