Relief Procedures for Certain Former Citizens

Information about Relief Procedures for Certain Former Citizens

Relief Procedures for Former Citizens IRS

In 2019 the United States (US) Internal Revenue Service (IRS) released a new Procedure for certain persons who have relinquished, or intend to relinquish, their United States (U.S.) citizenship and who wish to come into compliance with their U.S. income tax.

What is the new Relief Procedures for Former Citizens?

The IRS announced the new Relief Procedures for Former Citizens on 6 September 2019 to support former US citizens to come back into compliance with their US tax filing obligations.

Relief Procedures for Former Citizens in short:

  • Return without penalty for not filing previous years
  • For people with a CLN (Certificate of Loss of Nationality) 
  • Social Security Number / TIN not required
  • Exempt from paying tax (if under $ 25,000)

The Relief Procedures for Former Citizens allow a taxpayer to come back into US tax compliance without actually having to pay any tax owed, provided they meet the following criteria:

  1. Their failure to file tax returns was non-willful.
  2. They did not previously have a filing history as a US citizen or resident.
  3. They had an average annual net income tax liability after credits for the 5 years ending before the year of expatriation below a certain annually-adjusted threshold (US$168,000 for 2019).
  4. They had global net assets of less than US$2,000,000 at the time of expatriation and at the time of filing their return under these procedures.
  5. They did not have an overall tax liability of more than US$25,000 over the five tax years prior to expatriating and in the year of expatriation.
  6. They agree to complete and submit all required Federal tax returns for the six tax years at issue, including all required schedules and information returns, including FBAR.

The IRS is also allowing individuals to file tax returns under the Relief Procedures without needing to obtain a Social Security Number (SSN) – a lengthy and administratively burdensome process for citizens living outside of the US.

What are the risks of filing within the Relief Procedure?

  1. If you don’t meet the conditions of the Relief Procedure you are not allowed to enter the Streamlined Procedure, the taxreturns will be processed as normal with all the risk at fines and interest.
  2. When you apply for a CLN, not having an SSN, and it appears that you do not meet the conditions of the Relief Procedure, you can no longer request an SSN and enter the Streamlined Procedure for example.

Need more information on Relief Procedures for Certain Former Citizens?

For more information and conditions, contact Americans Overseas without obligation!

We help Americans abroad to become US tax compliant in an organised way and avoid unnecessary double taxation.

Based on your personal situation, we give you information and introduce you to the appropriate US tax advisor in our Americans Overseas network who will make you a tailor-made offer to help with your tax filings free of charge and free of any obligations.

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Source: IRS