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Tax Compliance

IRS Announces an Expanded “Streamlined Program”

By August 9, 2014December 14th, 2023No Comments


In the past, the Streamlined Program was narrow in its application to individuals who would ultimately quality and the penalties were quite high. Now, as we approach the second half of 2014, the IRS has revised the Streamlined Program to allow a wider acceptance of individuals who apply and a lessening of penalties that may apply.

Do you fit the Streamlined Program definition?

The new Streamlined Program is open to individuals who “certify”, a term yet to be defined by the IRS, that failure to report foreign financial assets and pay all tax due with respect to those assets did not result from willful conduct on their part. Although the IRS heavily implied that the long-running OVDP provided protection from criminal prosecution, in reality, neither the OVDP nor the Streamlined Program provides any protection from criminal prosecution, refer to my earlier articles.

The individuals aim at by the IRS for acceptance to the Streamlined Program are:

• U.S. Citizens, Green-Card Holders and US Residents residing in the U.S., which was not allowed earlier; and
• U.S. Citizens, Green-Card Holders and US Residents who previously had filed U.S. tax returns can now be eligible.

Tax Situations That Are Now Qualified are:

1. The $1,500 tax threshold has now been eliminated. Under the prior program, a qualified individual who owed more than $1,500 of tax during any of the three prior tax years was not eligible for the program; and
2. The “risk assessment” process and Streamlined questionnaire have been eliminated. However, an eligible individual now must submit a certification where he or she certifies that non-compliance was not willful. NB: This is the major obstacle in the program and should be enter with the full commitment of a qualified Tax Professional!

To participate in the program, “qualified” individual must submit, but certainly not limited to, the following:

1. Delinquent or amended tax returns for the previous three years,
2. Foreign Bank Account Reports for the previous six years,
3. Certification that the “qualified” individual’s non-compliance was not willful, and
4. Full payment of all tax, interest and (for individuals residing inside the United States) the 5% offshore penalty.

If you reside outside of the U.S., then:

1. Qualified Individuals must send all the submission materials in paper form to a special IRS office in Austin, Texas
2. Qualified Individuals who reside outside the U.S. and participate in the Streamlined Program are not required to pay any offshore penalty
3. All tax returns submitted under the Streamlined Program must include a valid TIN (generally, a social security number or, for taxpayers who are not eligible for a social security number, an Individual Taxpayer Identification Number (“ITIN”)).

If you reside inside the U.S., then:
1. Qualified Individuals who reside inside the U.S. and participate in the Streamlined Program are required to pay a 5% offshore penalty.
2. Qualified Individuals must pay the 5% penalty at the time of submitting the application and the other required materials, such as tax returns, amended tax returns and FBAR.
3. “Other required materials” mentioned above in 2., also must be certain to be completely and accurately filed which included the many newly created forms such as 3520, 3520A, 5471 and many others. You should seek the assistance to an International U.S. Tax Attorney.

Michael Nelson

Michael has great depth of experiences and skills that evolved from over 35 years of representing international businesses, executives, expatriates and multi-national families. From these years of successful legal representations of CEOs of Fortune 500 Companies to family clients with needs from complex estate planning to international trusts and private foundations. He is committed to his clients, always finding better alternatives or options for his clients. Dedication to the client is synonymous with his name.