Under most circumstances, citizens of the United States must file annual income tax returns regardless of residency. In 2012, the Internal Revenue Service (“IRS”) introduced 2 voluntary compliance programs to allow US citizens to comply with their income tax filing obligations thereby avoiding possible criminal prosecution and penalties: 1. the streamlined process for US citizens who live outside the US and owing little or no tax and 2. The Offshore Voluntary Disclosure Program (“OVDP”) for assets maintained offshore which carry certain prescribed penalties.

In June, 2014 IRS announced changes to these voluntary compliance programs that many believe will significantly increase the number of US citizens participating in voluntary filings. Changes have been made to the streamlined process to allow more individuals to qualify and to the OVDP to permit individuals to participate if they do not qualify for the streamlined process and provide more certainty and relief from prosecution. In fact, many feel this is good news for those US citizens who have filed their Canadian tax returns and made full payment on Canadian taxes owing while living in Canada.

This would certainly be welcome news for those who are executors or trustees of an estate of US citizen. While the task to comply with US tax filing obligations is still not an easy one and requires the assistance of professionals, the process may be simpler as a result of these rule changes.

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