American citizens who live overseas are still generally responsible for filing a federal tax return with the IRS. While many former Georgia residents who now live overseas can claim a credit for foreign income taxes paid, this has not been true for individuals residing in France. However, new guidance now allows taxpayers to claim a credit for Contribution Sociale Généralisée and Contribution pour le Remboursement de la Dette Sociale payments.
Until recently, the IRS said that these were payments for social programs, which meant that they were not deductible. It is estimated that 5,000 people will be able to claim refunds that range from $10,000 to $15,000 per year for an average of five years. To be eligible, a person must have paid American income taxes, which means that he or she would have needed to make more than the foreign earned income credit.
Furthermore, the IRS will not be required to pay any back taxes for the 2008 tax year. This is because the statute of limitations for filing an amended return has already lapsed. Ultimately, the IRS is expected to pay $150 million to $300 million in refunds. The matter has been before the U.S. Tax Court since at least 2012, and some believe that the court could have ruled on the matter sooner.
Those who owe income taxes to the IRS could have their wages garnished if they don’t pay them in a timely manner. It is also possible to have assets seized or a passport revoked depending on how much a person owes. An attorney may be able to help a person who has been audited or is subject to other IRS penalties. Legal counsel may be able to reduce the amount that a person owes or negotiate a favorable payment plan.