Recognizing, as announced on June 3, that there is a large population of Americans residing abroad who have been afraid to become “compliant” and honor mandatory tax and financial asset reporting requirements imposed by the US Internal Revenue Service, the IRS announced on June 18 “major changes in its offshore voluntary compliance programs, providing new options to help (…) taxpayers residing overseas (…). The changes are anticipated to provide thousands of people a new avenue to come into compliance with their U.S. tax obligations.” These changes apply to “US tax persons” whose failure to comply with these obligations is non-willful.
This is the case for great numbers of Americans and other “US persons” abroad who 1) have been unaware of their filing obligations, in large part because information has been difficult to access overseas, or 2) have actually been unaware that the obligations applied to them (e.g. children born abroad to US citizens who have lived most or all of their lives abroad; foreign nationals born in the United States, having acquired US nationality at birth), or 3) have been terrified in the face of the daunting financial penalties imposed on non-filers.
FAWCO will soon release an analysis of the full repercussions of this announcement but, in the meantime, readers will be delighted and reassured to know that all penalties for non-willful late- or non-filing will be waived for US residents overseas providing the specific procedures outlined by the IRS program are followed properly.
FAWCO and its traditional partners have long advocated on behalf of the law-abiding citizens residing abroad who have been unfairly amalgamated with tax cheats in the United States. We consider this to be an important step forward in encouraging tax and reporting compliance on the part of the 7+ million Americans living and working around the globe.
For the complete statement from the IRS, click here.
