Expat Compliance With US Tax Filing Obligations

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on print
Share on email

Any bookkeeping, business or tax article contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor can it be used to avoid tax-related penalties. If desired, we would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.

Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime. If you’re an expat who has relinquished — or intends to relinquish — your US citizenship but still has US tax filing obligations (including owing back taxes) you’ll be relieved to know there are new IRS procedures in place that allow you to come into compliance and receive relief for any back taxes owed.

Here’s what you need to know:

Background

Intended for anyone who has relinquished, or intends to relinquish their United States (U.S.) citizenship, the Relief Procedures for Certain Former Citizens apply to taxpayers who want to come into compliance with their US income tax and reporting obligations and avoid being taxed as a “covered expatriate” under section 877A of the U.S. Internal Revenue Code (IRC).

Intended Use

The Relief Procedures for Certain Former Citizens apply only to individuals (not estates, trusts, corporations, partnerships, and other entities) who:

  • Have not filed U.S. tax returns as U.S. citizens or residents;
  • owe a limited amount of back taxes to the United States; and
  • have net assets of less than $2 million.

Furthermore, only those US taxpayers whose past compliance failures were non-willful can take advantage of these new procedures. Typically, this situation involves someone born in the United States to foreign parents or someone born outside the United States to U.S. citizen parents, who may be unaware of their status as U.S. citizens or the consequences of such status.

The Details

Eligible individuals wishing to use these relief procedures are required to file outstanding U.S. tax returns, including all required schedules and information returns, for the five years preceding and their year of expatriation. Provided that the taxpayer’s tax liability does not exceed a total of $25,000 for the six years in question, the taxpayer is relieved from paying U.S. taxes. The purpose of these procedures is to provide relief for certain former citizens. Individuals who qualify for these procedures will not be assessed penalties and interest.

There is no specific termination date associated with the new IRS procedures; however, a closing date will be announced prior to ending the procedures. Also, individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible as long as they satisfy the other criteria of the procedures.

Relinquishing U.S. citizenship and the tax consequences that follow are serious matters that involve irrevocable decisions. Please contact the office if you have any questions about this topic.

Share this post NOw

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on print
Share on email

Small Business Financial Services

We help you cut through the clutter and noise and help you focus on a clear path to success. We help you succeed with a reliable bookkeeping, payroll support and income tax reporting.
Learn more

Individual Income Tax Services and IRS Response Assistance

Stressed during tax season? Surprised with a huge tax bill? Receiving an IRS letter? FAS can help make your year-end tax compliance less stressful with professional tax services.
Learn more

US and Canada Cross Border Tax Services

Our experienced staff, combined with our US and Canada locations, allows us to provide the tax support you need, wherever you are, at home or abroad.
Learn more

Running a small business is an extremely challenging task. However with a team like FAS, I do not have to worry about our bookkeeping and tax services.

They are truly great team!
Garage Guys Automotive

Very responsive! FAS bookkeeping service has been an integral part of my consulting business.

I highly recommend FAS to business owners who are looking for a reliable business partner to handle their bookkeeping needs.

Bruce Saxton

I have known Christy for about 5 years. She has assisted several of my clients and me personally.

If you are a business owner, Christy makes an outstanding strategic partner. I highly recommend her.

Gerry Brisson

I started looking for a new bookkeeping and tax service firm as my company was no longer getting the service that we deserve from a bookkeeping firm.

I highly recommend FAS to business owners who are looking for a reliable and professional bookkeeping and tax preparation service firm.

Mark Sargent

 Because of the nature of my business and report requirements from corporate that are time-sensitive.

I can count on Cristy and her team’s eye for detail and reliability to deliver accurate and timely financial information.

Terri Foster

We've been with FAS for years and they are one of the most professional and honest people we've worked with.

I highly recommend Cristy, Dennis and FAS Bookkeeping & Tax Services Firm.

Katie To

Being a small business owner means we’re always constrained by time and resource.

I highly recommend FAS for your bookkeeping and tax preparation needs.

Roy Andrade
FAS, with Cristy & Dennis, has been an important part of our progress as a company and I will not hesitate recommending them to business owners who are looking for a serious business partner for such a sensitive financial matter.
Jorge Vasquez
I have referred Cristy to many of our clients and have always been impressed by her professionalism and dedication to her customers.

If you own a small business and operate in the Houston or Katy area you will benefit from working with Cristy on your financials
Roland Parker
Christy is an awesome bookkeeper and adviser. I highly recommend her for personal tax and business tax.

Not only she help with our taxes, she even organize our entire book keeping for very reasonable price.
Kayla Cory
FAS is the best bookkeeping services I have encountered in my 39 years of self employment. They are hard working, ethical and honest in every aspect of their professional lives.

Both Dennis and Cristy have gone way beyond their normal duties to provide services at the highest level.
Marv Conway