Once you’ve determined that you are eligible to use the Streamlined Filing Compliance Procedures, there are many documents and forms you’ll need to submit for processing. You also need to send a full payment of any back taxes, interest, and penalties due. The following is a list of the items required when using the Streamlined Procedures.
Three Amended Tax Returns
You’ll need to submit amended tax returns for the past three years. You can’t submit delinquent returns under the Streamlined Procedures.
Along with these amended returns, you’ll also need to submit any required information returns, such as Form 8938, Statement of Specified Foreign Financial Assets. You need to write “Streamlined Foreign Offshore” or “Streamlined Domestic Offshore” in red ink at the top of the first page of each amended return or information return.
Certification of Non-Willfulness
The is a certification that your failure to file FBARs and report foreign income was non-willful. You must also certify that you qualify to use the Streamlined Procedures and that your calculation of the miscellaneous offshore penalty is accurate.
Pay All Taxes, Interest, and Penalties
You must submit full payment of all taxes and interest due on your previously unreported foreign income. Taxpayers who reside in the United States must also submit a miscellaneous offshore penalty. This penalty is equal to 5% of the highest aggregate balance of your foreign accounts during your disclosure period. If you live overseas or qualify for the non-residency requirement, this penalty may be waived.
Fortunately, you won’t have to pay late-payment penalties, failure-to-file penalties, accuracy-related penalties, information return penalties, or FBAR penalties.
Six Years of FBARs
Finally, you’ll need to submit up to six years of FBARs. Note that while your other materials must be filed by mail, your FBARs must be filed electronically using the FinCen e-file system.
You’ll be asked to select a reason for filing late. You can choose “Other” and then write “Streamlined Filing Compliance Procedures” in the explanation box.
If you don’t submit all of the required materials and complete them properly, your forms may be processed under regular IRS procedures instead of the Streamlined Procedures. This could result in significant penalty assessments, including FBAR penalties.
Contact a tax attorney for assistance using the Streamlined Procedures or another offshore disclosure method.
The Gartzman Law Firm handles offshore disclosure matters and other tax resolution cases. Use our contact form to request a consultation with an Atlanta tax resolution attorney.