Some ‘common sense’ finally prevails on IRS. IRS is announcing a series of ‘common-sense steps’ (as the IRS commissioner Doug Shulman puts it) to help U.S. citizens abroad get current with their tax obligations and resolve pension issues.

IRS is announcing a new procedure for current non-residents including, but not limited to dual citizens who have not filed U.S. income tax and FBAR returns to file their delinquent returns.  This procedure will go into effect on Sept. 1, 2012. 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 3 years and to file delinquent FBARs for the past 6 years.

The IRS will determine the level of compliance risk presented by these submissions based on certain information provided on the returns filed, and based on certain additional information that will be required as part of the submission.  Low risk will be predicated on simple returns with little or no U.S. tax due.  High risk factors will include level of income and assets of taxpayers, sophisticated tax planning or avoidance, or if there is material economic activity in the US by the taxpayer, besides others that IRS may announce before the effective date of the new procedure.  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.  For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions.

This should provide a huge relief for such ‘low compliance risk’ taxpayers, in sharp contrast to the OVDI/ OVDP which presents a scary and threatening scenario by stating that no amount of unreported income is considered de minimis for purposes of determining whether there has been tax non-compliance with respect to an account or asset and whether the account or asset should be included in the base for the 25/ 27.5 percent penalty.

Unlike OVDI/ OVDP, however, this new procedure does not provide protection from criminal prosecution if the IRS and Department of Justice determine that the taxpayer’s particular circumstances warrant such prosecution.


http://www.irs.gov/businesses/small/international/article/0,,id=256772,00.html

– NEERAJ BHATIA

   CPA (US), FCA(India), AICWA (India), LL.M (Intlernational Tax-US)

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About Bhatiaco

About Us Bhatia & Co, Inc, Certified Public Accountants is a diversified Full service financial and business services firm concentrating on providingservices to domestic and international organizations, with special focus on international transactions and tax planning. Our Team of highly skilled and diversified range of finance and business professionals provide services in areas of business and individual tax,audit & review, international tax planning, incorporation and corporatecompliance, accounting, outsourcing, business consulting, financial and retirement planning, immigration consulting and litigation support to adiverse range of clients.. We are located in the prestigious Techmart building in the heart of Silicon Valley in Santa Clara,CA for the last 13+ years and have offices in New Delhi for 30+ years. . Our current engagements include cross border tax planning and transactions, corporate structuring, and complex Tax audits and representation including recent oversees disclosure programs (OVDP/OVDI). Our organization is headed by Neeraj Bhatia, who is an accomplished accounting professional with 30+ years expertise in international and domestic tax planning and compliance for startups and multinational entities. Neeraj is a licensed CPA in California, New York and Colorado and a CA in India. He also has a LL.M. in International Taxation from the US, Costs and Works (Management) Accountancy, and a Bachelor (Honors) degree in Commerce from India. During his academic years he has received several awards and scholarships for being the top ranker nationally.

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