Filing tax returns is common to all countries. Every citizen is liable to file tax statements to their respective countries. The United States of America has a unique tax-paying policy which states that the ex-pats or US citizens residing abroad are liable to pay tax to the USA, along with listing all the income from worldwide and the statements of all their Foreign Accounts.
This law is not very well known and often people fail to file their tax returns due to this reason. The USA is probably the only country that levies taxes based on citizenship rather than based on residence. Unaware of any such law, many people fail to file the taxes for a long time, and end up in the defaulters’ list. Later the penalties involved in this process also discouraged people to come forward and pay the defaulted amount. Keeping all this in mind, the Internal Revenue Service (hereinafter referred to as IRS) took a noble initiative to launch a new tax program namely the Streamlined Tax Amnesty Program. This article discusses the same tax program in detail.
What is the Streamlined Tax Amnesty Program?
The Streamlined tax amnesty program is a procedure introduced by the IRS wherein any US ex-pat can who has failed to file his/her tax returns to the IRS in the previous years can do so, without having to pay any penalties or fine. In simple words, any US citizen residing abroad has failed to tax their tax returns to the US, they can pay late taxes but without facing the grunt of having to penalties or extra-fine for it.
Eligibility for the Program
Not every US ex-pat is eligible for this tax amnesty program. The program possesses a few checks on the people before qualifying them for the program. There are three main parameters for qualifying into the tax amnesty program.
- Only those people residing abroad can apply for the program, with an additional requirement of stay for a minimum of 330 days of the 3 years they are seeking amnesty for.
- They have to prove that it was unintentional for them to have not paid the taxes or non-declaration of their income.
- They have to submit an undertaking letter stating that they are aware of the taxation procedure and will be filing the returns soon.
Requirements for the Tax Amnesty Program
There are three paper requirements for qualifying to the Streamlined Tax Amnesty Program:
- The US tax returns of all the three years
- Foreign Bank Account Report of six years
- Offshore Certification, stating the reason for failing to file tax returns and that it was unintentional, along with an undertaking to file the tax returns accurately thereafter.