In Tax Tip 12-18 we explained that the IRS had introduced new "streamlined" catch-up filing procedures for U.S. citizens who were resident outside of the United States and had not filed U.S. tax returns. These procedures became effective on September 1, 2012.
These procedures are only available to "low-risk" non-resident U.S. taxpayers (see Tax Tip 12-18) who have resided outside of the United States since January 1, 2009 or earlier and who have not filed a U.S. tax return during this period. Taxpayers who are not eligible under this program may still file under the 2012 Offshore Voluntary Disclosure Initiative (see Tax Tip 12-02) or consider filing under the "reasonable cause" approach.
In general, amended returns will not be accepted under this procedure. However, taxpayers who have filed but did not make the election to defer income earned in their RRSP or RRIF (Form 8891, "U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans" ) may file under this procedure to make a late election.
Taxpayers who are concerned about criminal prosecution should not file under this procedure as it does not provide protection from criminal prosecution if the IRS and the Department of Justice determine the taxpayer's particular facts warrant such prosecution. Once a taxpayer makes a submission under the new procedure, the ability to partake in the Offshore Voluntary Disclosure Initiative is no longer available.
Under the streamlined procedure, eligible taxpayers must:
Filing under this procedure does not guarantee that no penalties will be assessed if the IRS determines that the filer was not low risk. If you plan on using this program we suggest you contact your TSG representative.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.