IRS Relief For Expats

The Internal Revenue Service (IRS) is clarifying the tax requirements of US Expats after Expats in Canada raised concerns

London, UK (Pryce Warner International) December 14th, 2011 – Some US Expats in Canada recently discovered that they may be subject to heavy penalties that they had not previously been aware of.

These penalties are a result of new legislation that requires all foreign financial institutions to report the holdings of US citizens to the IRS. Failure to do this can lead to heavy penalties, something that the American Citizens Abroad Group (ACAG) has expressed grave concerns over.

The new legislation was introduced last year as a way to help offset the cost of tax credits for hiring new employees by cracking down on tax havens like Switzerland.

One of the principal concerns of ACAG and others like it is that the penalties effectively amount to individuals being penalised for retaining their US citizenship. Many individuals have also stated that they information was not made widely known with enough notice and that the exact requirements were not made clear.

A new page on the IRS website was created to try and allay these fears on Friday. The page stated that it recognised that many had not filed timely returns and that the new page was designed to provide a clear blueprint of what information needs to be submitted and when. The page went on the say that penalties will not be imposed in call cases.

Despite this some individuals may still have to pay penalties, as the IRS has to enforce congressional legislation.

The penalty is equivalent to 5% of the amount that should have appeared in the return. For every month after the deadline that the tax information is not returned a further 5% penalty will be added, though there is a maximum penalty of 25%.

Only those that can demonstrate their failure to file their tax return was due to reasonable cause and not wilful neglect will be exempt from penalties. If reasonable cause cannot be shown and it is determined that the person wilfully avoided paying, the penalty can go up to $100 000. However, if reasonable cause cannot be demonstrated but the individual was not found to be wilfully in avoidance, then the maximum penalty is $10 000.

-------------------------------
By Aneil Fatania
Financial Editor
Pryce Warner International Group
For any corrections of factual information contained within our news items please contact our editor.
Email: af@prycewarner.com
Skype: newsdesk-pwi
Management Contacts
Telephone: U.K.- +44 20 3364 5016 or Monaco - +377 97 97 29 22
Subscribe to NEWS