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There are many people who live outside the U.S. but are required to file U.S. tax returns. The IRS recently announced a new option to help taxpayers living abroad to come into compliance with their U.S. tax obligations. The new, streamlined compliance program is expected to provide thousands of people, such as citizens and green card holders, a new avenue to become tax compliant. Even green card holders with expired green cards may be required to file U.S. tax returns and may benefit from this new penalty-free program. Details about the program include:

• Non-willful certification. The program is available to taxpayers certifying that their failure to report foreign financial assets and pay all taxes due with respect to those assets did not result from willful conduct.

• No penalties. Taxpayers who qualify and comply will not be subject to failure-to-file penalties, failure-to-pay penalties, accuracy-related penalties, information-return penalties, or Report of Foreign Bank and Financial Accounts (FBAR) penalties.

• Nonresidency requirement. The nonresidency requirements for U.S. citizens and green card holders are considered met if, in any one or more of the most recent three years, the taxpayer: (1) did not have a U.S. abode and (2) was physically outside the U.S. for at least 330 days.

• Filings required. If eligible to participate, taxpayers are required to file: (1) tax returns (original or amended) for the most recent three years; and (2) six years of FBARs.

• Relinquishing citizenship. In some cases, once a person living outside the U.S. has used this program to become compliance with U.S. tax obligations, that person can then ultimately elect to give up his or her U.S. citizenship.

All nonresident situations are unique, and careful analysis is required to determine if the new program is a good fit. Taxpayers are advised to seek legal counsel before participating in the program. Image courtesy of Stuart Miles via FreeDigitalPhotos.net