The deafening cheer heard in our offices this morning was from the new IRS announcement late yesterday to help Non-Resident U.S. Taxpayers. With feedback from expat organizations, the Canadian Prime Minister and firms like ourselves, the IRS is beginning to realize that many overseas resident Americans who have not complied with their US filing requirements are probably not “high risk” non-compliant taxpayers. As a result, the IRS has now announced a new delinquent filer procedure that will come into effect on the 1st of September.

While more details will be forthcoming, taxpayers utilizing the new procedure 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, but the intensity of review will vary according to the level of compliance risk presented by the submission.

For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions. Submissions that present higher compliance risk are not eligible for the procedure and will be subject to a more thorough review and possibly a full examination, which in some cases may include more than three years, in a manner similar to opting out of the Offshore Voluntary Disclosure Program.

Absent high risk factors, if the submitted returns and application show less than $1,500 in tax due in each of the years, they will be treated as low risk.

We will keep you up to date as further announcements are made by the IRS.

Please let us know if you have questions:

• Mary McNabb in our Zurich office
• Andrew Aldridge in our London office
• Leonard Tuber in our Jerusalem office