Friday, August 31, 2012

New Filing Compliance Procedures for Non-Resident U.S. Taxpayers

We first posted this New Filing Compliance Procedures for Non-Resident U.S. on Tuesday, June 26, 2012 in our blog post entitled IRS announced a plan to Help U.S. Citizens Overseas Become Compliant and then we supplemented it with examples in our blog posts entitled
Tax amnesty offered to Americans in Mexico and Tax amnesty offered to Americans in Canada and now the IRS has a new webpage devoted to this option entitled New Filing Compliance Procedures for Non-Resident U.S. Taxpayers.

The IRS is aware that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law.  

The Service 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 information returns to file their delinquent returns. This procedure will go into effect on Sept. 1, 2012.

Description of proposed new procedure:

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, as discussed below, 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. These taxpayers generally will have simple tax returns and owe $1,500 or less in tax for any of the covered years, IRS said.

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.Instructions, Questionnaire to Be Issued by IRS on Streamlined Filing Compliance Procedures.

New instructions and a questionnaire are expected to be released Aug. 31 by the Internal Revenue Service for eligible nonresident U.S. taxpayers needing to catch up on overdue federal filing requirements under a recent streamlined filing procedure in the Service's Tax-Filing Compliance Program.

If you would like to avail yourself of this new Amnesty, contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at or or Toll Free at 888-8TaxAid (888 882-9243).


  1. Carol S.

    Hello Laurie, and all. Same in Calgary. We've been seeing a 3520 letter for each form filed, most asking for "missed" information -whicht wa, however, already provided in the 3520 as filed. A couple penalty letters but - so far - no penalty assessments. Glad you could get your penalty reversed. The AICPA letter has been helpful to let clients know that they are not alone and we did not commit errors.

  2. Gary T.

    Thanks Laurie - same experience here One client has been assessed penalties for the 3520 and another for the 3520A related to their RESP. We are tyring to have them reversed but it is a slow and painful process.

  3. Laurie Y.

    I was talking with an IRS rep in the Systemic Advocacy program last week and she said the IRS was looking at it still. No actual progress so far but hopefully they will institute some sort of minimum threshold requirement that would eliminate the need to file 3520's for most RESP's and TFSA's.

  4. Gary T.

    Tax returns and FBAR requirements are difficult enough but our experience in terms of problems arising after filing relate to 3520 and 3520A. Penalties have been threatened and in some cases assessed. The IRS seems to treat all filings as Grantor Trusts and requires follow up information that one would not expect to apply. It does not seem to matter whether the filing relates to TFSA, RESP or domestic trust filings. We have a copy of the AICPA letter to the Commissioner discussing these issues. Anyone aware of an update? Also I understand that the IRS was lookiing into the status of TFSA and RESP accounts for purposes of reviewing the 3520 requirements -anyone heard of any changes on that front?