IRS Introduces New Relief Procedures for Certain Former Citizens

By October 23, 2020 No Comments

On September 6, 2019, the IRS announced new relief procedures for certain former citizens. This is another type of program for former citizens to come into compliance WITHOUT penalties. Noncompliance must have been non-willful and there are 6 criteria to be met (no exceptions) including filing U.S. returns for the year of expatriation and 5 prior years. 

Only taxpayers whose past compliance failures were due to non-willful conduct may use these procedures. All the following criteria must be met. 

  1. You have relinquished your U.S. citizenship after March 18, 2010;
  2. You have no filing history as a U.S. citizen or resident;
  3. You did not exceed the threshold in IRC 877(a)(2)(A), related to average annual net income tax for the period of 5 tax years ending before your date of expatriation;
  4. Your net worth is less than $2,000,000 at the time of expatriation and at the time of making your submission under these procedures;
  5. You have an aggregate total tax liability of $25,000 or less for the five tax years preceding expatriation and in the year of expatriation (after application of all applicable deductions, exclusions, exemptions and credits, including foreign tax credits, but excluding the application of IRC 877A and excluding any penalties and interest); and
  6. You agree to complete and submit with your submission all required Federal tax returns for the six tax years at issue (year of expatriation and 5 prior years) including all required schedules and information returns, such as Forms 8938 & FBARs. 

Only taxpayers whose past compliance failures were due to non-willful conduct may use these procedures. All eligibility criteria must be strictly met to use these procedures. 

See below to link to the IRS website.


About the Author 

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high net worth families and their advisors. Alicea has more than 17 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm. Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, FATCA registration, and foreign companies wanting to do business in the U.S. Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York City Bar, the New York State Society of Certified Public Accountants (NYSSCPAs), the American Institute of Certified Public Accountants (AICPA) and the International Fiscal Association (IFA).  She is the New York/Northeast Regional Representative of the Women of IFA Network (WIN). Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession.

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental. 

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