The New (2019) IRS Tax Compliance Program for Expats

In 2019, the Large Business and International division of the IRS announced new compliance campaigns, one of which is known as the U.S. Expat Compliance Campaign. According to this program, United States citizens and long-term residents that were expatriated on or after March 18, 2010, who have not paid their taxes can take advantage of certain relief procedures.

Expats who have unpaid taxes can benefit from using the services of an accounting firm that specializes in tax compliance for United States citizens who live abroad. CPA Ted Kleinman is available to help expats understand and utilize the new (2019) IRS tax compliance program for expats. To schedule a consultation with foreign tax accountant Ted Kleinman from US Tax Help to discuss using the new IRS tax compliance program for expats, call us at (541) 362-9127.

The 2019 Tax Compliance Program for Americans Living Abroad

New procedures that allow individuals who have relinquished their U.S. citizenship to come into compliance with U.S. tax law went into effect in 2019. These new procedures are known as Relief Procedures for Certain Former Citizens and apply to individuals who did not file their U.S. tax returns when they were a U.S. citizen or resident. To use these compliance procedures, individuals must also owe under a certain amount of back taxes, cannot have net assets worth more than $2 million, and must have past compliance failures that were non-willful.

To benefit from this compliance program, eligible individuals must file outstanding U.S. tax returns for the year of their expatriation as well as the five years leading up to it (a total of six years), which includes all of the required schedules and information returns. If the individual’s tax liability is less than $25,000, they are relieved from having to pay the U.S.  taxes they owe and will be exempt from having to pay penalties and interest. Note that these new tax compliance procedures for expats are only available to individuals, not estates, trusts, corporations, partnerships, or other entities.

Expat Tax Compliance Obligation

U.S. citizens or long-term residents who terminate that status are known officially as expatriates. Expatriates are required to file Form 8854 with their tax returns during the year they are expatriated from the United States. Failing to file Form 8854 or filing late may result in a penalty of $10,000. Other unfiled information returns (including Form 8938, Form 5471, Form 3520, Form 3520-A, Form 8621, Financial Crimes Enforcement Network Form 114, and others) can also result in penalties.

While the new IRS tax compliance program is beneficial to U.S. expats who have unfiled taxes and tax debts, U.S. taxpayers must comply with other rules, such as FATCA. The Foreign Account Tax Compliance Act requires U.S. taxpayers and financial institutions to report their foreign assets. FATCA applies to U.S. taxpayers who live in the United States and abroad — they must disclose their assets to the IRS if they are held in a financial institution that is based outside of the United States. FATCA also required foreign financial institutions to disclose information about citizens who hold accounts with them. U.S. expats must comply with FATCA rules. Failure to comply can result in a fine ranging between $10,000 and $50,000.

The Streamlined Filing Compliance Procedure

While the new tax compliance programs for expats offer new ways for taxpayers living abroad to comply with U.S. tax law, U.S. taxpayers can also benefit from the pre-existing Streamlined Filing Compliance Procedure. This tax compliance procedure is available to taxpayers who can certify that their failure to report their foreign financial assets (and file and pay taxes accordingly) was not the result of their willful conduct. (Non-willful conduct is conduct that occurs because of negligence, inadvertence, or mistakes that are the result of a good faith misunderstanding of the requirement of the law.) The Streamlined Filing Compliance Procedure helps taxpayers by providing them with a streamlined procedure for filing delinquent or amended returns and terms for resolving their tax and penalty obligations.

Accounting Services for Expats to Avoid Tax Compliance Issues

United States citizens who give up their citizenship are required to essentially “log out” of the United States tax system, which can be done by filing Form 8854. Failing to do so can result in years’ worth of unfiled tax returns and subsequent unpaid taxes.

If you have been expatriated from the United States, use the help of an experienced foreign tax accountant to successfully file Form 8854 and certify that taxes from the prior five years are correct and complete. If you have been expatriated from the U.S. and you have not certified that your taxes from the previous five years have been paid, get in touch with an accountant to help you make the most of the new IRS tax compliance program. A foreign tax accountant can also help you with other necessary forms you’ll have to file as a United States citizen living abroad, such as the forms necessitated by the FATCA.

Accountant for Tax Compliance for Expats

If you’re a United States citizen who has been living abroad with unpaid taxes, you might qualify for the new (2019) IRS tax compliance program for expats. To find out if you can benefit from this program and what it means for your taxes, get in touch with foreign tax CPA Ted Kleinman from US Tax Help by calling (541) 362-9127.