June 19, 2003

Partial tax amnesty for foreign non-filers announced by IRS

On June 17, 2003 the IRS announced a partial tax amnesty available to non-resident alien taxpayers who have failed to file U.S. tax returns. The amnesty program provides that if foreign taxpayers file returns by September 15, the IRS will allow deductions and tax credits. Under current rules, a foreign taxpayer filing a return late is not allowed any deductions or tax credits. This amnesty program requires a foreign taxpayer to file all applicable returns for all years from 1996 to present, pay the tax, penalties and interest and cooperate with the IRS in examinations to determine the tax liability. A taxpayer complying with this program will not be examined for any tax years prior to 1996. This program is not available to a taxpayer that has already received an inquiry from the IRS regarding returns that have not been filed. This is not a complete amnesty as all penalties and interest are still due. However, since taxpayers will be eligible to deductions and tax credits that would otherwise be disallowed due to non-filing, foreign non-filers might want to consider taking advantage of this program.

Notice is scheduled to appear in the Internal Revenue Bulletin 2003-27, dated July 7.