IRS Annouces New Report of Foreign Bank Account (“FBAR”) Relief for U.S. Citizens Residing Abroad & U.S. Expatriates Holding Foregin Retirement Accounts
On June 26, 2012 the IRS announced a long awaited easier path for those US individual taxpayers they consider to be “low risk” who reside abroad and have not been in US tax or reporting compliance. This seems particularly aimed at Canadians who have issues with not having done prior proper RRSP tax deferral elections or FBAR reporting, although it certainly applies to those residing in other countries as well. The new IRS program for coming forward starts September 1, 2012. For those individuals who are in this situation and were wondering how best to come forward, they should not do so until September 1.
Key elements of the new program:
- No onerous penalties or enforcement action for those who owe less than US $1,500 in taxes for any tax year covered in the program
- Taxpayers must file delinquent returns for the past 3 years, and delinquent FBAR forms for past 6 years, and include a statement showing reasonable cause for nonfiling
- Retroactive relief for not having made timely Canadian RRSP deferral elections on Form 8891 in the past (i.e. now the need for private letter rulings is eliminated)
Link to full article: http://1.usa.gov/OukPAL
Carol-Ann Simon is a shareholder at Perkins & Co, an independent member of the BDO Seidman Alliance since 1995. She is both a Canadian CA and a US CPA, specializing in crossborder issues affecting US and Canadian citizens. She provides both Canadian and US tax compliance services, and would be pleased to consult with you or assist any of your clients who have crossborder service needs. She is available at firstname.lastname@example.org and 503-221-7580.