IRS relief procedures for certain former citizens: Full guide to tax compliance after expatriation
Many people give up their US citizenship and think that is where it ends. But no, sometimes through bank checks or other triggers, they later learn they must fix old filing gaps like missed returns or foreign account reports. That is why, in 2019, the Internal Revenue Service introduced a special path to help former citizens get compliant without harsh penalties.
Unlike other amnesty programs, this one is clear and simple – it sets a $25,000 total tax cap for six years and a $2,000,000 net worth limit, focusing only on those whose mistakes were not willful. In this guide, we explain who qualifies, what documents to file, and how this relief compares to other IRS options so you can choose the best route for your situation.
This article is brought to you by Taxes for Expats – learn more about our services or contact us today to guide you through the relief procedures for certain former citizens.
Eligibility criteria for this IRS relief
The court case Cheek v. United States taught an important lesson: a person breaks the law only if they knew what the law required and chose to ignore it. That same idea guides the relief procedures for certain former citizens. The Internal Revenue Service looks at three main things: whether the mistake was honest, how much money was involved, and the time period your tax records cover.
Also read. IRS relief for former citizens
Who qualifies
Picture a teacher who finds out years later that their bank flagged them for holding US citizenship they didn’t even know they had. That moment often leads to panic, but the IRS designed these rules to help people in exactly that situation. The program is open only to people who meet certain criteria:
- Non-willful conduct: Your past tax mistakes must be honest ones – you didn’t mean to break the law or hide income.
- Net worth under $2,000,000: When your citizenship ended and when you send in your forms, everything you own worldwide must add up to less than $2 million.
- Tax owed under $25,000: For the year of expatriation and the five tax years before it, the total tax you owe to the United States, after all credits and exclusions, must be no more than $25,000.
These simple limits keep the program focused on regular people who made innocent errors, not wealthy citizens who knowingly avoided their taxes.
Who does not qualify
Anyone who breaks those rules is out. This includes people who acted on purpose, those who owe more than $25,000 in total tax, or anyone whose assets are worth $2,000,000 or more. In those cases, the Internal Revenue Service may treat them as covered expatriates under IRC section 877A, which adds an “exit tax” on worldwide assets. That rule applies to high-income earners and to people who fail to file or correctly complete Form 8854, which is the official form that certifies tax compliance for the five tax years before giving up citizenship.
What does non-willful mean in practice?
As Wendy Christiansen, CPA, at Taxes for Expats, explains in the webinar she hosted, it’s a bit like when a parent says, “Tell me the truth and I won’t punish you.” The idea is fairness – people who didn’t know they were supposed to file, like someone born abroad who never realized they were still an American, should get a chance to fix things without harsh penalties. Being non-willful means your actions came from not knowing the rules, not from trying to hide.
The IRS says non-willful conduct comes from mistake, confusion, or a good-faith misunderstanding of the law. Many accidental Americans fall into this group. Take Matthew Kyle Nelson, for example. Although he wasn’t an accidental citizen, he worked overseas and followed what he heard from other expats – that paying local taxes was enough. His story shows how good intentions and bad advice can lead to non-willful noncompliance – exactly what this relief program is meant to fix.
Advantages of using the relief procedures
Since March 18, 2010, the relief procedures for certain former citizens have offered an easy way to fix past tax matters and move forward with confidence. Created by the Internal Revenue Service, this program helps people stay in good standing without confusion or stress.
- Avoiding penalties and the exit tax helps anyone who gave up US citizenship settle their taxes safely and keep more of their money.
- Simplified filing requirements cover only the year of expatriation and the five tax years before it, making the process quick and easy to follow.
- A clean tax compliance record gives former citizens peace of mind, showing that all steps were done right and no future tax issues remain.
How the relief for former citizens works
Knowing you qualify is a great first step, but that’s just the framework on paper. What really matters is understanding how the relief procedures for certain former citizens unfold in practice and how you can make them work for you.
Step 1: Collect proof of loss of US citizenship, along with ID, most commonly an approved Certificate of Loss of Nationality DS-4083 showing a relinquishment date after March 18, 2010, plus a passport or a birth certificate with government ID.
Step 2: Prepare the returns for the year of expatriation using a dual-status setup that includes Form 1040NR as the main return and a Form 1040 attached as an information return up to the day before expatriation with all required information returns for the five tax years prior, along with Form 8854 to confirm compliance and status, and file FBARs if necessary so that the IRS can consider the submission complete.
Step 3: Submit the complete package to the Internal Revenue Service at the Austin, TX address, write Relief for Certain Former Citizens in red at the top of each return, include the non-willful certification built into the process, and do not enclose a check because eligible submissions require no payment.
Step 4: Wait while the IRS reviews the file and issues an acknowledgment, knowing that qualified applicants are not treated as covered expatriates and no penalties are added for the covered years.
Step 5: For anyone without a Social Security Number, send the package anyway and leave the SSN boxes blank, including an ITIN only if one already exists.
Covered Expatriate status and how to avoid it
In Topsnik v Commissioner, the Tax Court showed how section 877A works and agreed with the IRS that all gains are counted the day before someone leaves. That rule connects to the relief procedures for certain former citizens, which can stop people from being treated as covered expatriates when they follow the right steps.
A covered expatriate is someone who gives up American citizenship but owes too much tax, owns too many assets, or forgets to send the right forms. They are left out because the exit tax counts everything they own as sold the day before the year of expatriation.
To stay safe, check your taxes for the five tax years before leaving and make sure Form 8854 is done and sent the right way.
What to expect after you file for relief
Once you submit your forms under the relief procedures for certain former citizens, the waiting starts. The IRS will look over your file and then tell you what comes next.
- Reviews can take a while. The IRS usually needs at least two months to look over your papers before sending an update.
- A letter will arrive by mail to confirm they got your package. This note matches the record of your loss of American citizenship kept by the Department of State.
- If the IRS asks for more details, send only what they request. Keep copies of your forms for the year of expatriation in one folder so you can find them fast.
- When you get an approval letter, it means no tax or penalties apply for the covered years. It also shows that all returns for the five tax years have been accepted.
Alternative options to the relief procedure
Many Americans with unfiled returns look for a simple way to catch up before or after giving up American citizenship. The relief procedures for certain former citizens might not fit every case, but there are still clear and safe paths to fix past tax years.
Aside from these two, there are other traditional ways to correct past filings – one of the most common is Traditional amended filings (Form 1040-X) through the IRS.
- What it means: This option lets someone correct a mistake on a tax return by filing Form 1040-X, used for changes to income, deductions, or credits.
- How it works: Fill out Form 1040-X with the old and new numbers, explain what changed, attach any updated schedules, sign, and mail it to the right IRS address.
NOTE! You can now e-file Form 1040-X for the current and two prior years, but if your original return was on paper, your amendment usually must be on paper too.
These paths serve different goals but share one purpose – helping people fix their record with the IRS. The table compares the main programs and who they work best for.
| Program | Who it helps | What’s filed & penalties |
|---|---|---|
| 1040-X / Amended Return | Anyone who needs to correct income, deductions, or credits for specific years. | File Form 1040-X for each year that needs fixing; regular tax and interest may apply. |
| Streamlined Filing | Non-willful taxpayers abroad catching up on missed filings. | Submit 3 years of tax returns and 6 years of FBARs; eligible filers abroad pay no penalties. |
| Voluntary Disclosure | Those with serious or willful issues needing a clean start. | Complete full disclosure after IRS pre-approval; civil penalties may apply, but prevent criminal exposure. |
| Relief procedures for certain former citizens | Former citizens with no past filings and a small total tax owed. | File 5 years of returns plus the year of expatriation and Form 8854; no tax or penalties if accepted. |
When to seek professional help
Taxes for Expats is trusted by thousands of Americans worldwide for handling complex cross-border filings and expatriation cases. Accurate documentation and proper filing are essential – even small mistakes can slow down IRS processing or create unnecessary tax issues.
Our licensed tax advisors and CPAs specialize in expat compliance, ensuring that every return, from the year of expatriation through the five tax years before it, is complete, accurate, and fully compliant with IRS rules.
FAQ
Usually, no, since the State rarely approves renunciation under 16 and suggests waiting until 18, but a minor with an approved Certificate of Loss of Nationality who meets all rules may use it.
You must be under 2 million both on the expatriation date and on the date you submit, with no exceptions for this program.
Yes, as long as your renunciation date is after March 18, 2010, and you meet every eligibility test.
No; if you qualify for the program, the IRS will not assert penalties for the covered years.
