United States taxpayers who have lived outside the United States since January 1, 2009, and who have not filed returns since then, may qualify to file under new streamlined filing procedures from September 1, 2012.

The returns will, however, be subject to increased scrutiny by the Internal Revenue Service (IRS). Returns filed under the new procedures are required by the IRS to furnish additional information by way of a submission to enable the IRS to assess the level of compliance risk in the returns.

The criteria for assessing the level of risk of non-compliance include the following:

1. Claim for a refund in any of the returns.
2. Material economic activity in the United States.
3. Non-declaration of income in the country of residence.
4. IRS audit activity involving the taxpayer.
5. Non-compliance in respect of Report of Foreign Bank Account Report (FBAR) obligations which have been detected by the IRS and communicated to the taxpayer.
6. Financial interests or authority over a bank account not located in the taxpayer’s country of residence.
7. US source income
8. Evidence of sophisticated tax planning or avoidance.

Other conditions are required to be met to qualify for the new procedures.

Taxpayers who don’t meet the criteria for the streamlined procedures, or who may not wish to use this avenue are generally required to file back 6 to 8 years, however, it depends on the individual’s particular circumstances for which specific tax advice should be sought.

Pursuant to Treasury Department Circular No. 230 (Rev. 6-2005) this communication may not be used for promoting, marketing, or recommending to any taxpayer for the purpose of avoiding or evading the imposition of taxes by the Internal Revenue Code. All facts and circumstances pertinent to specific tax situations are to be considered in an engagement, and unless otherwise specified, this communication is an opinion of a general nature and does not specifically address any particular tax issue.