FOREIGN REPORTING CATCH UPBondBeebe
The IRS has announced new procedures (IR-2012-65) to help some US Citizens residing overseas file their delinquent tax returns and Reports of Foreign Bank and Financial Accounts (FBARs) without being assessed large penalties or other enforcement action. In addition to tax returns and FBARs the IRS will allow submission of retroactive deferral elections of foreign retirement plans under the new procedures. All of this is scheduled to go into effect September 1, 2012.
These new procedures specifically target taxpayers who are low compliance risks which mean they owe $1,500 or less for any of the covered years. The covered years are the previous 3 years for information and tax returns and the past 6 years for FBARs.
To take advantage of these new procedures, taxpayers simply have to submit the delinquent tax returns and FBARs in the covered period with any payment of tax that is due. The IRS will then assess whether or not the submissions qualify as low risk under the new procedures.