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Moore Stephens Doeren Mayhew Blog

Tax Relief for Certain Former US Citizens or Expatriates

The Internal Revenue Service (IRS) released on September 6 new procedures that will allow certain United States (US) citizens who have relinquished or intend to relinquish their US citizenship to come into compliance with their US reporting tax obligations. In the case of former US citizens, this new procedure will apply to those who relinquished their US citizenship after March 18, 2010 and who “have no filing history as a U.S. citizen or resident”.  

Unlike the traditional 2014 Offshore Voluntary Disclosure Program (OVDP) which closed in September 2018, these procedures do not require preclearance or prior approval before sending a submission thereunder. However, all the eligible criteria must be met at the time of submission.

The program is available to individuals who were:

  • Taxpayers whose past compliance failure is due to non-willful conduct (i.e., negligence, inadvertence, or mistake or conduct that is a result of a “good faith” understanding of the US tax filing requirements);
  • Taxpayers who have relinquished their US citizenship after March 18, 2010;
  • Taxpayers with a net worth less than $2 million at the time of expatriation and time of filing their submission under these procedures;
  • Taxpayers with an aggregate tax liability that does not exceed $25,000 for the year of expatriation and for the five years prior to expatriation; and
  • Taxpayers that agree to submit all the required Federal tax returns for the six years in question.

Similar to the Streamlined Foreign Offshore Procedures, Federal tax returns submitted under these procedures will not be automatically subject to an IRS audit. However, they may be selected for audit under the existing audit procedures applicable to any US tax return. Taxpayers eligible to make a submission under these procedures will not be required to make a payment of tax, penalties or interest with their submission. Taxpayers not eligible to make a submission under these procedures will be liable for all taxes, penalties and interested associated with the submission. The taxpayer will receive notification from the IRS once the submission has been reviewed and completed.

If you think you meet the eligibility criterion, please contact us and we will be happy to assist you with your submission.

Grensy Quintero

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