THE IRS HAS TARGETED FOREIGN ISSUES - ARE YOU CURRENT WITH US TAX COMPLIANCE?
Be aware of Internal Revenue Service initiatives relating to foreign nationals and/or their US businesses. For example, are you aware that:
- Treasury Department Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, often referred to as FBAR) has been redesigned, applies to more persons (and entities), and asks for a greater amount of information. Moreover, the 2008 FBAR is due June 30, 2009 and the law does not provide for an extension of time to file an FBAR.
- The IRS will reduce penalties for failure to file FBARs for prior years provided the information is submitted by September 23, 2009. Back taxes will also have to be paid on income that was omitted from a tax return. The IRS announcement states that harsher penalties will be imposed on taxpayers who do not come forth "voluntarily."
- With limited exceptions, there is an exit tax imposed on individuals who either renounce their US citizenship or on certain “long-term residents” who surrender their green card (generally defined as individuals who have had a green card for at least 8 out 15 years prior to it being surrendered). Keep tax considerations in mind when applying for or surrendering a green card and/or US citizenship.
- On May 21 the IRS announced that its auditors would begin special compliance examinations to determine if businesses have properly withheld and remitted US income taxes on payments of US source income to foreign persons.
- Significant penalties can be imposed if a US taxpayer fails to file Form 5471 reporting ownership of 10% or more in a foreign corporation.