IRS Issues New Filing Compliance Procedure
The IRS is aware that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns of Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Because these taxpayers are becoming aware of their filing obligations and wanting to comply with the law, the IRS is announcing a new procedure for current non-residents to file their delinquent returns. The procedure will go into effect on Sept. 1, 2012.
Under the new procedure, taxpayers will be required to file delinquent returns for the past three years and to file delinquent FBARs for the past six years. However, the intensity of the review will be determined by the level of compliance risk. Low risk will be predicated on simple returns with little or no U.S. tax due (less than $1,500). In general, the risk level will rise as the income and assets of the taxpayer rise. Tax, interest and penalties will be imposed in accordance with U.S. federal tax laws based on a review of the submission. Taxpayers who are concerned about the risk of criminal prosecution should be advised that this procedure does not give them protection from criminal prosecution if the IRS determines their behavior warrants it.
For more information on this new filing compliance procedure, visit the IRS.