Can the Certification Requirement of Section 877(a)(2)(C) be Satisfied “After the Fact”?

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Probably most “Accidental Americans” around the world do not and have not filed U.S. federal income tax returns during their lifetimes.  A most important issue for these individuals who are considering renouncing their USC, is whether they can satisfy the statutory requirement (set out below) late; i.e., “after the fact” – if they have not previously filed tax returns?

See the relevant provision of the statute below:IRS Form 8854

  • (C) such individual fails to certify under penalty of perjury that he has met the requirements of this title for the 5 preceding taxable years or fails to submit such evidence of such compliance as the Secretary may require.

Can an “Accidental American” who has lived almost all of their lives outside the U.S., and who has never filed U.S. income tax returns satisfy the statutory language “. . . of the the requirements of this title [Title 26 – Federal Tax Laws] for the 5 preceding taxable years. . . “?

Some interpret the statute to say that filing late income tax returns (e.g., in 2014 for the years 2009 through 2013/2014) should be permissible, provided the former USC indeed satisfies all of the requirements set forth in the law at some later point in time.

Will the IRS argue late filings of tax returns means the taxpayer has not met the requirements of Title 26?  Will they argue that a failure to file a timely return and violation of Section 6651 means such an individual did not meet the requirements of the law?  See, § 6651 – Failure to file tax return or to pay tax, which provides in relevant part –

a) Addition to the tax
In case of failure—

(1) to file any return required under authority of subchapter A of chapter 61. . . on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, . . .

Will the IRS or Tax Division, Justice Department lawyers argue that any federal tax returns that are not timely filed under Section 7502, means that a former USC cannot have satisfy the statutory language of “. . .  the requirements of this title [Title 26 – Federal Tax Laws] for the 5 preceding taxable years. . . “?

Obviously, the stakes can be very high for any such former U.S. citizen (or LPR), due to the consequences of being deemed a “covered expatriate.”  See, Why “covered expat” (“covered expatriate”) status matters, even if you have no assets! The “Forever Taint”!

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