The IRS has released new streamlined filing compliance procedures for certain "low risk" nonresident U.S. taxpayers. The procedures went into effect on Sept. 1, 2012.
These procedures are available for nonresident U.S. taxpayers who have resided outside of the U.S. since Jan. 1, 2009, and who have not filed a U.S. tax return during the same period. These taxpayers must present a low level of compliance risk.
The IRS will determine the level of compliance risk presented by the submission based on information provided on the returns filed, and based on additional information provided in response to a questionnaire required as part of the submission. The determination of low risk will be predicated on simple returns with little or no U.S. tax due. Absent any high-risk factors, if the submitted returns and application show less than $1,500 in tax due in each of the years, they will be treated as low risk and processed in a streamlined manner.
Taxpayers wishing to use these streamlined procedures must submit:
- complete and accurate delinquent tax returns, with appropriate related information returns, for the last three years for which a U.S. tax return is due;
- payment of all tax due and owing as reflected on the returns and statutory interest due and owing;
- complete and accurate delinquent Reports of Foreign Bank and Financial Accounts FBARs for the last six years for which an FBAR is due; and
- a complete, accurate and signed questionnaire.
Any taxpayer seeking relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty will be required to submit:
- a statement requesting an extension of time to make an election to defer income tax and identifying the pertinent treaty provision;
- for relevant Canadian plans, a Form 8891 for each tax year and each plan, and a description of the type of plan covered by the submission; and
- a dated statement signed by the taxpayer under penalties of perjury describing the events that led to the failure to make the election, the events that led to the discovery of the failure, and if the taxpayer relied on a professional adviser, the nature of the adviser's engagement and responsibilities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.