According to a statement from the US tax authority, it will offer “a new option to help some US citizens and others residing abroad who haven’t been filing tax returns and provide them a chance to catch up with their tax filing obligations if they owe little or no back taxes”.
The service, which will take effect at the start of September, comes in response to the failure of overseas US taxpayers to timely file their US tax returns. The IRS said some such citizens have only recently become aware of the FBAR requirements, and now wish to comply.
While full details of the new procedure are yet to be released, the IRS said that taxpayers will be required “to file delinquent tax returns, with appropriate related information returns, for the past three years and to file delinquent FBARs for the past six years”. All submissions will be reviewed, with the “intensity” of the review depending on the compliance risk associated with each case.
Reviews for low-risk taxpayers will be expedited as a result, and the IRS will not assert penalties or pursue follow-up actions. However, cases representing a higher compliance risk (those of taxpayers with higher levels of income and assets) will be subject to “a more thorough review”. Tax, interest and penalties, where appropriate, will be imposed in accordance with US federal tax laws.
Further details of the new procedure are available on the IRS website.