IRS has recently announced a new procedure whereby certain individuals who relinquished their U.S. citizenship could come into compliance with their U.S. tax and filing obligations and receive relief for back taxes.

As per US Tax laws, U.S. citizens, and Green Card holders, regardless of whether they live in the United States or abroad, are required to report and pay to the Internal Revenue Service (IRS) all applicable taxes on their worldwide income, including on their income from foreign financial assets. Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime.

Individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible to avail of relief provided by the new procedure announced by the IRS so long as they satisfy the other criteria of the procedures.

According to the IRS, the Relief Procedures for Certain Former Citizens apply only to individuals who have not filed U.S. tax returns as U.S. citizens or residents, owe a limited amount of back taxes to the United States and have net assets of less than $2 million.  Moreover, only taxpayers whose past compliance failures were non-willful can take advantage of these new procedures.

Expatriated individuals who are eligible to avail of the Relief Procedures and wish to use them, are required to file delinquent U.S. tax returns, including all required information returns, for the five years preceding besides the one for their year of expatriation. If the taxpayer’s tax liability does not exceed a total of $25,000 for the six years in question, the taxpayer is even relieved from paying U.S. taxes, penalties and interest.

Announced in September 2019, the IRS is currently offering these procedures without a specific termination date as of now, but IRS will announce a closing date prior to ending the procedures.

 

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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