August 14, 2012

The IRS announced it will launch a new program to assist Americans living overseas, dual citizens and others who carry unmet tax obligations. Individuals who owe no more than $1,500 in total unmet tax obligations may contact the IRS after September 1, 2012 in order to attain compliance. There will be no penalty assessed against those who participate in this program. Those who take advantage of this opportunity, however, will be expected to: 

  1. File delinquent tax returns (and related documents) for the previous three years
  2. File delinquent Report of Foreign Bank and Financial Accounts for the previous six years
  3. Submit additional information to better determine compliance risk
  4. Submit required tax payments and interest related to the delinquency period 

The IRS has also made available Fact Sheet FS-2011-13 for individuals who believe they have had “reasonable cause” for a failure to submit tax filings during the delinquency period. One reason the IRS created this program was the recognition that not all overseas Americans and dual citizens fully understood the extent of their tax obligations. 

An additional component of this program concerns certain foreign retirement plans. “In some circumstances,” says the IRS, “tax treaties allow for income deferral under U.S. tax law but only if an election is made on a timely basis.” Streamlined procedures introduced by this program allow the resolution of low risk situations despite elections that may not have been made in a timely manner. 

Tax filers facing greater compliance risk may which to review details about the IRS’s Offshore Voluntary Disclosure Program, which provides some individuals with the opportunity to comply with as-yet unmet tax obligations related to offshore accounts. 

Gelman, Rosenberg & Freedman provides expat tax consulting to businesses with employees overseas as well as tax services to assist individuals with their tax liabilities while they are stationed abroad. If you have questions about this new IRS program, please contact one of our international tax specialists.

This article was originally posted on August 14, 2012 and the information may no longer be current. For questions, please contact GRF CPAs & Advisors at