IRS Streamlined Filing Compliance Procedures
Streamlined Filing Compliance Procedures: The purpose of the IRS Streamlined Procedures bring U.S. Taxpayers into offshore filing compliance. When non-willful U.S. Person owns offshore accounts, assets, investments, and income, they may be eligible to apply. Under the terms of the programs, taxpayer can to go back and file three (3) amended or original tax returns and international information returns and six (6) FBAR (Foreign Bank Account Reporting or FinCEN Form 114).
Common information returns include the following submissions:
- FATCA Form 8938
- Form 3520
- Form 3520-A
- Form 5471
- Form 8865
Purpose of the IRS Streamlined Procedures
The IRS developed the new streamlined filing compliance procedures (SFCP) in 2014.
The purpose of the IRS Streamlined Filing Compliance Procedures is to bring taxpayers into U.S. tax and reporting compliance.
Specifically, it is to bring non-willful applicants with foreign income, assets, accounts and investments into compliance. But, a person can disclose unreported U.S. income as well.
Before the streamlined procedures were available, non-willful taxpayers were stuck using OVDP and then opting-out.
The Streamlined Filing Compliance Procedures include the domestic program and foreign program. Both programs are used to report offshore accounts, assets and income, but the domestic program is for non-foreign residents, and the foreign program is for foreign residents. Each program has their own set of requirements, but both programs require the taxpayer to be non-willful.
There are two versions of the streamlined program:
The two programs are similar, but different.
Three Main Components to IRS Streamlined Filing Compliance Procedures
With the streamlined filing procedures, the taxpayer has three (3) main obligations:
- File original or amended tax returns
- File necessary informational returns and reporting forms, such as FBAR and FATCA Form 8938
- Pay all necessary taxes and penalties
Who is Eligible for the Streamlined Procedures
While the eligibility requirements vary between the two streamlined programs, there are some general consistencies:
Taxpayers Must be Non-Willful
In order to qualify for either streamlined procedure, the taxpayer must be non-willful. Unfortunately, there is no bright-line test to determine non-willfulness. Still, there are many resources available online to assist you with making the determination.
The issue of non-willfulness is very important because the taxpayer must certify under penalty of perjury.
No Initiation of an IRS Civil Examination
If you are already under an IRS audit or examination, then you are disqualified from submitting to the streamlined program.
Because if you are already under IRS audit or examination, even if it is because of issues unrelated the streamlined procedures, you are under obligation to update the auditor about the unreported foreign money.
*There are some complex issues involving self-incrimination and eggshell audits. You may want to speak with attorney if you’re already under examination.
Resolving Past Delinquent Quiet Disclosure
If you were unaware of these procedures, and already submitted previously filed tax returns and/or information returns, you may still qualify for the streamlined procedures — but this presumes your prior actions were non-willful.
Tax Identification Number
The IRS requires that you have a Social Security number or valid Individual Taxpayer Identification Number (ITIN). But, if you do not have either, and do not qualify for a Social Security number, you can still apply.
The submission should include a request for the taxpayer identification number.
*If you qualify for a Social Security number, you cannot apply for an ITIN as an alternative.
OVDP or Streamlined
Even though OVDP has ended, the traditional VDP has picked up where OVDP left off. If you are submitting to the streamlined procedures, you do not also get to submit to VDP. In other words, let’s say you are unsure if you qualify as non-willful. If you submitted to IRS streamline procedures and are rejected – you cannot then go back and submit to VDP.
This is why it is crucial that you retain experienced counsel who specializes exclusively in this area of law to guide through the tax and legal process of submission.
General Treatment under the Streamlined Filing Compliance Procedures
A common questions is about how the taxpayer is treated in the program. Here are some key tips:
Can I Still be Audited after a Streamlined Disclosure?
Yes, you can still be audited after a streamlined disclosure.
Is there an Increased Chance of Audit?
No, entering the streamlined procedure does not increase the chance of audit.
Because at the end of the day if you are in IRS offshore compliance, then the IRS does not have much in the way of issuing more penalties against you.
Do I Receive a Closing Letter?
You do not receive a closing agreement after submitting to the program. If you submit to the domestic procedures, you should receive a confirmation letter later in the process. If you submit to the foreign procedures do not receive the same letter, since there is no penalty for the IRS to confirm.
Does the Streamlined Procedure provide Criminal Protection?
No. But, if you are non-willful, then you are not at risk for any IRS Special Agent investigation or criminal prosecution.
Take the First Step and Contact our Streamlined Specialist Team
Our Board-Certified Tax Law Specialist team can safely get you compliant. Contact us today for a reduced-fee initial consultation.
We Specialize in Streamlined & Offshore Voluntary Disclosure
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about our Firm?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.