US Expats benefit from new IRS amnesty
Any US citizen, regardless of where they live, will be very quick to tell you that the US Inland Revenue Service is not associated with compassion, reasonableness or understanding. It is an organisation that plays hard ball.
It therefore will come as a welcome surprise to the millions of Americans living abroad, that the IRS has announced that for all eligible tax payers, it will now waive any US penalties.
The move is intended to streamline the tax system and to encourage as many people as possible to become tax compliant. Taxes owing, of course, will still have to be paid, and it is the responsibility of the individual to ensure that they are filing tax returns for the previous three years.
The major difference is that they will now not be subject to the very harsh penalties that were once imposed on those who may have failed to disclose a foreign bank account, funds, retirement income etc. These penalties, known not very affectionately, as FBARS, are imposed due to the requirement for a Report of Foreign Bank and Financial Accounts.
As ever with the IRS, nothing is ever completely simple. Taxpayers will have an amnesty but they must convince the officials that their failure to pay was an oversight and not a deliberate act of deception.
How you go about convincing the tax man of anything, is anyone’s guess.