IRS Scheme for Non-resident Tax Payers to Clear Dues

by lawfirm on January 3, 2013

Non-resident taxpayers of the United Sates often fail to file their tax returns timely. Failure to pay tax on time can result in serious consequence apart from that the tax debt accumulates over time. The Internal Revenue Service (IRS) is aware that the US citizens dwelling abroad usually failed to pay their tax on time.

New procedure for non-resident US citizens

It is observed that some of these taxpayers are aware of their liability and they want to come in conformity with laws. Thus, IRS came up with new procedures for non-residents who have not filed their income tax return.

The new procedure states that the non-resident tax payers have to file their due tax returns along with appropriate information related to the return, for past three years.  It is also compulsory to submit Foreign Bank Account Report of past six years. All these documents submitted will be reviewed, but intensity of this review will vary according to the level of compliance presented by these submissions.

The review will be expedited for those taxpayers imposing low abidance risk. It is likely in such cases that the IRS will not pursue follow-up actions or charge any penalties. Documents that offer higher compliance risk are reviewed thoroughly. This examination process may even take up to three years.

Consequence of unfiled returns

Self-employed person who fail to file return will fail to receive their credits toward disability benefit or Social Security retirement benefit. Usually, tax payers who do not file returns always want to know what can be the consequence. IRS does not recommend criminal trial against an individual for failure to pay tax. However, the individuals must take initiatives to voluntarily file or make arrangements to file tax returns before IRS is forced to notify the tax payer of criminal investigation.

Filing correct return

It is expected that the taxpayers will disclose their true income. IRS may begin criminal proceedings for tax evasion against a taxpayer with undisclosed foreign account or income. Substantial civil penalties and criminal trails can be avoided if the tax payers make voluntary submission. Even if detected by IRS that you are trying to evade tax; you may approach IRS officials for fair disclosure. However, in such situation it is best to take a compatible tax lawyer to represent you. Experienced lawyer with proven track record can manage this situation in a better way and assure you of reduced penalties and elimination of any form of criminal proceedings.

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