American citizens living Canada are breathing little easier after last Friday’s announcement by the United States government that it plans to ease up on the massive fines and penalties it was imposing on American citizens living abroad.
In September The Interior News ran two stories on Canadian citizens who were sharing growing concerns over recently discovered tax forms an the penalties that people would incur for not filling them and providing bank account information.
At that time, the IRS was threatening to slap their citizens with enormous fines as high as $250,000.
This was a shock to many Americans, particularly for some living in the Hazeltons as they were not aware of their duty to file forms they did not even know existed until the media disclosed the IRS program last summer.
When the issue was brought to the Canadian government a few months ago, the Canadian Revenue Service announced they would not be aiding either the IRS or the citizens living in Canada.However, in a fact sheet published last week on the IRS website, there are some new changes and leniency’s now coming to the surface.
“The IRS is aware that some taxpayers who are dual citizens of the United States and a foreign country may have failed to timely file United States federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), despite being required to do so,” it states. “Some of those taxpayers are now aware of their filing obligations and seek to come into compliance with the law.”
The website fact sheet continues to say that they will no longer be imposing late-filling fees on returns if no tax is due in the U.S.
In addition, it states that if taxes are due, the penalty may be waived if the taxpayer can show the failure to file on time is “due to reasonable cause and not due to willful neglect.”
While some local residents were also concerned with how far back they needed to file the FBAR forms, the fact sheet states that taxpayers were not required to file past six years and the same applied for tax returns.
While it is recommended that all American citizens living abroad read the recent fact sheet, the information does not cover everything. For example, the fact sheet does not talk about where that leaves those who did come forward in the voluntary disclosure that ended on Sept. 9. Nor does it deal with the announcement made by the U.S. Embassy last week that stated that “the clarified IRS rules would allow those who took part in earlier amnesty programs to “opt-out” and reapply under normal examination procedures.”
For several Hazelton residents who not only worried about the IRS forms and tax laws for weeks and spent money for accountants and legal fees, this is the break they were waiting for.
For more information on the fact sheet and recent announcements from the IRS visit: www.irs.gov.