Streamlined Filing Compliance Procedures 2020-2021
Streamlined Filing Compliance Procedures
Streamlined Filing Compliance Procedures: The purpose of the IRS Streamlined Filing Compliance Procedures is to bring U.S. Taxpayers into offshore filing compliance. When a non-willful U.S. Person owns offshore accounts, assets, investments, and income, they may be eligible to apply to the program. Under the terms of the IRS Streamlined Procedures, a taxpayer can to go back and file three (3) years of amended or original tax returns (Streamlined Foreign only) and submit International Information Returns such as the FBAR (Foreign Bank Account Reporting or FinCEN Form 114) for six (6) years.
- FATCA Form 8938
- Form 3520
- Form 3520-A
- Form 5471
- Form 8865
Purpose of the IRS Streamlined Filing Compliance Procedures
Before the streamlined procedures were available, non-willful taxpayers were stuck using OVDP and then opting-out or trying to qualify for a very narrow “streamlined” exception.
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.
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.
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.
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.
General Treatment under the Streamlined Filing Compliance Procedures
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?
We Specialize in Streamlined & Offshore Voluntary Disclosure
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure and Streamlined Filing Compliance Procedures.
Contact our firm today for assistance with getting compliant.