What Are The Streamlined Foreign Offshore Procedures?
If you are like many US expats who didn’t realize that you had an ongoing annual US filing requirement after you moved abroad, you can breathe a little easier. The IRS has an amnesty program called the Streamlined Filing Compliance Procedures. This program is available for qualified expats who have not filed their US taxes for the previous three years or longer. The program enables delinquent filers to reduce or even eliminate penalties.
How Do I File The Streamlined Filing Compliance Procedures?
US expats who are delinquent filers and want to qualify for this IRS tax amnesty program must meet the following requirements:
- You lived in a foreign country for at least 330 days during one of the last three years and have not maintained a US residence
- You confirm that your failure to file US tax returns and FBARs was due to an honest misunderstanding of your responsibilities
Also, a delinquent filer must not have been first contacted by the IRS through the initiation of a civil examination, must not have willfully/knowingly failed to file, and must not have previously made a submission to the IRS’s Offshore Voluntary Disclosure Program (OVDP). The IRS defines non-willful conduct as “conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.”
What If I Forgot To File An FBAR?
Under the Streamlined Filing Compliance Procedures, the specific IRS requirements to catch up with delinquent filings include filing the previous three years of delinquent federal Tax Returns and the previous six years of FBARs (if the FBAR reporting threshold is met for that tax year) and a certification of non-willfulness. As of June 2014, the IRS has waived all late filing and FBAR penalties for taxpayers whose lack of filing was non-willful. This means that even if you owe taxes, you would not owe any penalties for those taxes. You would, however, still be required to pay the taxes that were owed along with interest on those taxes.
Are You Behind With Your Federal Return and FBAR Filings? Do You Want To Take Advantage Of The IRS Tax Amnesty Program? We Can Help!
Universal Tax Professionals can prepare your complete Streamlined Filing Compliance Procedures package to the IRS on your behalf for a flat fee of $950. There are additional charges if you owned a foreign corporation, had rental income, need state returns, or need additional FATCA forms.
The package includes:
- Preparation of Form 14653, Certification by US Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures. Form 146543 certifies that you are eligible as a delinquent filer to qualify for the Streamlined Filing Compliance Procedures because your tax delinquency was non-willful, in that you were genuinely unaware of your filing obligation.
- Preparation of the last three years of delinquent federal tax returns.
- Preparation of the last six years of FBARs, Reports of Foreign Bank and Financial Accounts (up to 10 accounts per FBAR).
US Taxpayers Residing in the United States – Streamlined Domestic Offshore Procedures
If you do not qualify for the IRS’s Streamlined Foreign Offshore Procedures, you may still be eligible for the IRS’s Streamlined Domestic Offshore Procedures. This program is meant for US residents living in the US with unreported foreign assets, accounts, investments or income. This program has many similarities to the Streamlined Foreign Offshore Procedures, but there are a few major differences.
The first difference is that, unlike the offshore program, this is program is for taxpayers who filed their US tax returns but unintentionally failed to include assets or investments, or they failed to include reporting forms such as 3520, 3520-A, 5471, 5621, 8865 or FBARs. In addition, there is a 5% penalty on certain assets.