# IRS rolling out new compliance checks for expats-particularly those who renounced.



## DavidMcKeegan

Just a FYI for folks but the IRS will be rolling out new compliance checks to make sure taxpayers have filed the proper forms. One of these in particular will focus on those who have renounced. 

I know in particular there are a good number of people who renounced at the embassy, but did not take steps to back file the last five years of tax returns or Form 8854 to fully exit the US system. If you fall into that category, you might want to get back on track now before these compliance checks come about.

Details are limited right now but this is what the IRS said:

“U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008, may not have met their filing requirements or tax obligations. The Internal Revenue Service will address noncompliance through a variety of treatment streams, including outreach, soft letters, and examination.”


More info here: 

https://hodgen.com/new-irs-expatriation-compliance-initiative/

https://www.greenbacktaxservices.com/blog/the-irs-new-compliance-campaigns-target-expats-and-taxes/


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## underation

I speculate that most former citizens who didn’t file Form 8854, didn’t have any untaxed US-source income. And therefore don’t need to worry (though personally I agree it’s good to get it documented).


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## Nononymous

This does confirm my impression that more folks are renouncing without any tax filings. Which is the predictable consequence of FATCA causing banking problems for duals/accidentals who've never had any financial connection to the US. 

However, other than receiving Christmas cards from the IRS Commissioner, what are the possible consequences for someone who never entered the US tax system, has no US assets or income sources, and didn't bother with the exit procedure? Particularly those who even managed to avoid FATCA reporting, in which case all the IRS has is a name and address.

What a waste of time and postage. Idiots. Don't be surprised if the response is a bunch 8854 forms showing columns of zeros.


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## underation

Nononymous said:


> ...what are the possible consequences for someone ... who has no US assets or income sources, and didn't bother with the exit procedure?


It doesn’t make any difference, financially. If the former citizen didn’t owe any US tax tax when s/he renounced, s/he still doesn’t owe any US tax after renouncing. A position which can conveniently be documented for one’s eventual executor by filing Form 8854 and stapling a copy to one’s CLN.


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## underation

DavidMcKeegan said:


> Just a FYI for folks but the IRS will be rolling out new compliance checks to make sure taxpayers have filed the proper forms. One of these in particular will focus on those who have renounced.


None of the 59 campaigns that have so far been announced by the IRS LB&I division seem to me to be aimed particularly at expats.

In the latest batch, there’s one aimed at former citizens (who may or may not have been US-resident before losing citizenship); one aimed at US taxpayers who joined an “offshore voluntary disclosure” programme (who also seem to me likely to be mostly US-resident); and one aimed at “high net worth” non-filers - most of whom, I hazard a guess, reside in the US of A.

It does seem very peculiar to keep announcing new “campaigns.” Trying for a funding increase? Who knows.


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## underation

From
https://taxcontroversy.foxrothschil...-lbi-announces-six-more-compliance-campaigns/



> *59 and Counting: IRS LB&I Announces Six More Compliance Campaigns*
> 
> The campaigns are the culmination of an extensive effort to redefine large business compliance work and build a supportive infrastructure inside LB&I. The overall goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources.


There’s a link to the IRS description of all the campaigns. To me, there doesn’t seem to be any cause for alarm for any expats who aren’t committing tax evasion.


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## underation

DavidMcKeegan said:


> “U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008, may not have met their filing requirements or tax obligations.


So this sounds like it’s aimed at former citizens who renounced when too rich, rather than former citizens who renounced for tax purposes.



> Deferral of the payment of mark-to-market tax. You can make an irrevocable election to defer the payment of the mark-to-market tax imposed on the deemed sale of property. If you make this election, the following rules apply.
> 
> 1. You make the election on a property-by-property basis.
> 
> 2. The deferred tax on a particular property is due on the return for the tax year in which you dispose of the property.
> 
> 3. Interest is charged for the period the tax is deferred.
> 
> 4. The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates:
> 
> -The due date of the return required for the year of death.
> 
> - The time that the security provided for the property fails to be adequate. See item (6) below.
> 
> 5. You make the election in Part IV, Section C.
> 
> 6. You must provide adequate security (such as a bond).
> 
> 7. You must make an irrevocable waiver of any right under any treaty of the United States that would preclude assessment or collection of any tax imposed by section 877A.


The low-hanging fruit. A soft letter or two may be all it takes.


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## underation

underation said:


> From
> https://taxcontroversy.foxrothschil...-lbi-announces-six-more-compliance-campaigns/
> 
> 
> 
> There’s a link to the IRS description of all the campaigns. To me, there doesn’t seem to be any cause for alarm for any expats who aren’t committing tax evasion.


I withdraw that comment. Clearly, I was mistaken.

This seems to be the Compliance Campaign which has led to the unfair $10,000 “late” penalties:



> F3520/3520-A Non-Compliance and Campus Assessed Penalties
> 
> Practice Area: Withholding & International Individual Compliance
> 
> Lead Executive: John Cardone, Director, WIIC
> 
> This campaign will take a multifaceted approach to improving compliance with respect to the timely and accurate filing of information returns reporting ownership of and transactions with foreign Expatriation
> F3520/3520-A Non-Compliance and Campus Assessed Penalties
> Practice Area: Withholding & International Individual Compliance
> 
> Lead Executive: John Cardone, Director, WIIC
> 
> This campaign will take a multifaceted approach to improving compliance with respect to the timely and accurate filing of information returns reporting ownership of and transactions with foreign trusts. The Service will address noncompliance through a variety of treatment streams including, but not limited to, examinations and penalties assessed by the campus when the forms are received late or are incomplete.variety of treatment streams including, but not limited to, examinations and penalties assessed by the campus when the forms are received late or are incomplete.


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## Jca1

This guy might have been caught by the 8854 campaign. Russian citizen currently awaiting extradition hearings in the UK.

http://eltoma-global.com/news/oleg-...-charged-with-failing-to-pay-us-exit-tax.html


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## Jca1

More details here if anyone is interested:

https://www.justice.gov/opa/press-release/file/1256141/download

Basically it looks like his actual net worth was over a billion USD, but reported as around $300k on 8854.


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## Nononymous

For that kind of money, the IRS might be interested in extraditing someone. 

Fortunately I am worth considerably less.


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