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Streamlined Filing Compliance Procedures

Streamlined Filing Compliance 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.

If you ever find yourself behind on US taxes, Universal Tax Professionals can help you catch up. Our team of international tax professionals possesses the expertise needed to assist you in reducing or even eradicating your tax liabilities, while also maximizing the available credits and deductions. Additionally, if you have other filing obligations, we offer an extensive array of US expat tax services tailored to serve US citizens residing worldwide.

How Do I File The Streamlined Filing Compliance Procedures?

Meeting Eligibility Criteria

To initiate the process of rectifying tax discrepancies, individuals must adhere to the stringent criteria outlined by the IRS Streamlined Filing Compliance Procedures. These criteria serve as a litmus test, ensuring that only qualified candidates avail themselves of this tax amnesty program.

Residency Requirement

The foremost criterion mandates that an individual must have resided in a foreign country for a minimum of 330 days within one of the last three years. This stipulation underscores the program’s focus on expatriates, encouraging compliance from those genuinely living abroad and not maintaining a US residence.

Demonstrating Honest Misunderstanding

In addition to meeting the residency requirement, applicants must convincingly establish that their failure to file US tax returns and FBARs was rooted in an honest misunderstanding of their fiscal responsibilities. This requirement acknowledges that tax obligations can be complex, and the IRS seeks to address unintentional non-compliance.

Exclusions from the Program

While the Streamlined Filing Offshore Procedures present an invaluable opportunity for many expatriates, there are certain exclusions to consider. To qualify for this program, individuals must not fall under the following categories:

Prior IRS Contact

Eligible applicants must not have been first contacted by the IRS through the initiation of a civil examination. This provision safeguards against those who may have previously come under scrutiny for tax-related matters.

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Willful or Knowing Non-Compliance

Furthermore, individuals who have willfully or knowingly failed to file are not eligible for the IRS Streamlined Program. This delineates a clear distinction between unintentional errors and deliberate attempts to evade tax obligations.

Prior OVPD Submissions

Finally, those who have previously made a submission to the IRS’s Offshore Voluntary Disclosure Program (OVDP) are excluded from the Streamlined Procedures. This ensures that the program is targeted towards those who have not previously availed themselves of similar opportunities for rectification.

What is non-willful conduct - Streamlined Filing Offshore Procedures

What If I Forgot To File An FBAR?

In the event that an individual has inadvertently forgotten to file an FBAR, the IRS Streamlined Filing Compliance Procedures offer a pathway to rectify this oversight. This specialized program addresses cases of unintentional non-compliance, providing a structured approach to catching up with delinquent filings.

Fulfilling IRS Requirements

Under the purview of the Streamlined Filing Offshore Procedures, the IRS mandates a specific set of requirements for individuals seeking to rectify their FBAR filing lapses. 

This includes the submission of the preceding three years’ delinquent Federal Tax Returns, alongside the prior six years’ FBARs, provided that the FBAR reporting threshold is met for the respective tax years.

Certification of Non-Willfulness

A pivotal component of this process involves furnishing the IRS with a certification of non-willfulness. This attestation serves as a formal declaration affirming that the failure to file FBARs was not a result of deliberate intent or a conscious effort to evade fiscal responsibilities.

Penalty Waiver for Non-Willful Lapses

As of June 2014, the IRS has implemented a significant policy shift by waiving all late filing and FBAR penalties for individuals whose failure to file was deemed non-willful. This represents a substantial relief for taxpayers, as it means that even if there are outstanding tax liabilities, no additional penalties will be imposed. It’s important to note, however, that the individual remains accountable for paying the taxes owed, along with any accrued interest on those outstanding tax amounts.

This policy adjustment underscores the IRS’s recognition of unintentional oversight and its commitment to facilitating compliance for individuals who may have inadvertently overlooked their FBAR filing obligations. By alleviating the burden of penalties, the Streamlined Filing Compliance Procedures offer a second chance for expatriates to rectify their fiscal affairs in a fair and equitable manner.

Are You Behind With Your Federal Return and FBAR Filings?

Universal Tax Professionals can prepare your complete Streamlined Filing Compliance Procedures package to the IRS on your behalf. 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 8 accounts per FBAR). 

US Taxpayers Residing in the US – 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.