ExpatBriefing: IRS To Waive Small Tax Debts For Former Citizens

By Hans Esser, for Expatbriefing.com 09 September, 2019

On September 6, 2019, the United States Internal Revenue Service announced new procedures that will enable certain individuals who relinquished their US citizenship to come into compliance with their US tax and filing obligations and receive relief for back taxes.

According to the IRS, the "Relief Procedures for Certain Former Citizens" apply only to individuals who have not filed US tax returns as US citizens or residents, owe a limited amount of back taxes to the United States and have net assets of less than USD2m.

The IRS said that only taxpayers whose past compliance failures were non-willful can take advantage of these new procedures. Many in this group may have lived outside the United States most of their lives and may have not been aware that they had US tax obligations.

Eligible individuals wishing to use these relief procedures are required to file outstanding US tax returns, including all required schedules and information returns, for the five years preceding and their year of expatriation. Provided that the taxpayer's tax liability does not exceed a total of USD25,000 for the six years in question, the taxpayer is relieved from paying US taxes, the IRS confirmed. Individuals who qualify for these procedures will not be assessed penalties and interest.

The IRS is offering these procedures without a specific termination date and will announce a closing date prior to ending the procedures. Individuals who relinquished their US citizenship any time after March 18, 2010, are eligible so long as they satisfy the other criteria of the procedures.

These procedures are only available to individuals. Estates, trusts, corporations, partnerships and other entities may not use these procedures.

Tags: Individuals | Expatriates | Compliance | Tax | Tax Compliance | Interest | Trusts | United States | Penalties |