The Streamlined Filing Compliance Procedures (“Streamlined Procedures”) offer taxpayers a less costly method of disclosing their unreported foreign bank accounts when compared to the new Offshore Disclosure Program. However, there are some important restrictions that could prevent some taxpayers from using the Streamlined Procedures.
Make sure you meet all of the following conditions if you want to use the Streamlined Procedures.
No Willful Conduct
You must certify that your failure to file FBARs or pay taxes on your foreign source income was not willful. This means your conduct must have been due to negligence, inadvertence, mistake or a good faith misunderstanding of the law.
The Streamlined Procedures do not offer immunity from criminal prosecution. Make sure you discuss the issue of willfulness with a tax lawyer before you use this offshore disclosure method.
Not Under Examination
You can’t use the Streamlined Procedures of you under examination or audit by the IRS. This true even when the audit has nothing to do with your unreported foreign bank accounts.
You also don’t qualify for the Streamlined Procedures if the IRS is investigating you for criminal tax violations, even if those violations don’t involve foreign financial accounts.
No Unfiled Tax Returns
If you were legally required to file a tax return, you must have filed a return for each of the past three years. Even if you meet all the other requirements, an unfiled tax return could disqualify you from using the Streamlined Procedures.
Pay Penalties for Quiet Disclosures
If you previously made a quiet disclosure, you may still be able to use the Streamlined Procedures. However, you’ll need to pay any penalties assessed because of those delinquent or amended information returns, and these penalties can’t be abated.
Even if you meet all of these requirements, you should still discuss the pros and cons of every available offshore disclosure method with a tax attorney. The Offshore Disclosure Program may come with a higher penalty, but also protects you from the risk of criminal prosecution.
Talk to an offshore disclosure attorney to determine which is the best option for your situation and for assistance submitting your offshore disclosure application.
Get help with offshore disclosure matters by calling The Gartzman Law Firm at (770) 939-7710. We can listen to your concerns and help you find the best tax resolution strategy for your case.