US Voluntary Disclosures
It is relatively common for US citizens and Greencard holders to overlook or misunderstand that they are required to file US Returns even if they are resident in a different country.
If you have not filed your returns then it is important that you get up to date as soon as possible, and the team at Burton sweet are here to help.
The IRS has two key ways to get up to date – Streamlined Voluntary Disclosure and Offshore Voluntary Disclosure Program (OVDP).
Streamlined Voluntary Disclosure
The program was introduced by the IRS in 2012, and is designed for non-resident and dual-resident US taxpayers who were unaware of their filing obligations, and helps to catch them up with their prior year filings while significantly minimising penalties.
To qualify for the Offshore Streamlined Filing Compliance Procedures, you must:
1. Have lived in a foreign country for at least 330 days during one of the last three years and not maintained a US abode.
2. Confirm that your failure to file US tax returns and FBAR was due to an honest misunderstanding of your responsibilities.
If you do qualify for Streamlined Filing Compliance Procedures, you will need to:
1. File late income tax returns and information returns for the last three tax years.
2. File late FBARs for the prior six tax years.
3. Complete a statement of explanation detailing why your tax returns and FBAR weren’t filed.
4. Pay the tax and interest due for the last three years.
Offshore Voluntary Disclosure Program (OVDP)
If you do not qualify for the Streamlined Filing Compliance Procedure then you will need to file under OVDP.
Whilst OVDP is not as beneficial, due to higher penalties, greater scrutiny, and significantly more returns and documents being required to be filed, entering this scheme should in almost all cases remove the threat of criminal prosecution.
Delinquent FBAR and Information Report Procedures
If you’ve been filing your US tax returns annually and reporting your income, but were unaware of your foreign bank account reporting requirements and associated FBAR penalties, or other informational reports, a different procedure may secure you amnesty.
Delinquent FBAR and Information Report Procedures allow you to file and amend tax returns to include omitted information reports. A detailed explanation is required with each report to make sure your failure to file was an honest mistake.
Whichever scheme you require, it is vitally important that you get your US Tax filings up to date, and then remain compliant going forward. Our team are here to help you through each stage of the process and help you get up to date as quickly and painlessly as possible.
Need some advice?
To speak to an adviser about your US/UK Tax affairs, please call Rachel Finch, Director, on 01934 620011. Alternatively, you can send us a message to the team now.