This new streamlined program is designed specifically for low compliance risk taxpayers. All submission will be reviewed by the IRS. Should your returns present a low compliance risk, the IRS will expedite the review and will not assess penalties.
Who can file under this program?
You are eligible if you meet the following criteria:
- Resided outside the US since January 1, 2009
- Not filed U.S. tax returns during this period
- Present a low compliance risk
Determining your compliance risk?
Low risk is determined based upon a simple tax return and less than $1,500 tax due in each of the years. There are several risk factors that can increase the risk level.
- If any of the returns submitted through this program claim a refund;
- If there is material economic activity in the United States;
- If the taxpayer has not declared all of his/her income in his/her country of residence;
- If the taxpayer is under audit or investigation by the IRS;
- If FBAR penalties have been previously assessed against the taxpayer or if the taxpayer has previously received an FBAR warning letter;
- If the taxpayer has a financial interest or authority over a financial account(s) located outside his/her country of residence;
- If the taxpayer has a financial interest in an entity or entities located outside his/her country of residence;
- If there is U.S. source income; or
- If there are indications of sophisticated tax planning or avoidance.
What is to be filed?
Taxpayers under this program will be required to file US tax returns for the past 3 years, along with all related information returns and FBARs for the past 6 years. Any tax and/or interest is to be remitted at the time of filing. There is an additional questionnaire that must be submitted with the returns.
What if you are filing amended tax returns?
The IRS will treat amended returns submitted through this program as high risk and subject to examination.
There is, however, one exception to this. The IRS will accept amendments to the tax returns should the sole purpose be to late-file Form 8891 to take advantage of the deferral of income election for certain retirement or saving plans (RRSP, RRIF).
AG Tax LLP Can Help
Aylett Grant Tax LLP is a full service accounting firm with a dedicated team of experts who can help you with your U.S. and Canadian Tax preparation, Cross-Border Tax consulting, and all of the necessary accounting to satisfy both Canadian and U.S. regulations.
Our specialists at Aylett Grant Tax LLP are trusted advisors and have considerable experience helping clients in many different complex tax needs. We will work with you to balance the business, investment, and tax considerations to achieve a result that best suits your individual situation. We want to work with you to ensure that you are properly complying with the various tax jurisdictions and are neither underpaying nor overpaying tax.
IRS Circular 230 Disclaimer: Please note that this document is to be considered other written advice. Any tax advice in this document was not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer under the Internal Revenue Code or applicable state or local tax law provisions.
Furthermore, the information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.