Streamlined Domestic Offshore Procedures – Quick Facts
IRS Streamlined Program Rules
- The IRS’ Streamlined Domestic Offshore Procedure is a significantly less expensive way to resolve foreign account noncompliance, including the failure to file FBARs, Form 8938s, etc. and/or failure to pay income tax on earnings from unreported foreign assets. The requirements, if you qualify, are:
Amend (or file for the first time) the last three years of US tax returns to report earnings from foreign assets, paying the necessary tax and interest
Pay a penalty equal to 5% of the highest year-end value of undeclared assets in the last six years (one 5% penalty only)
Only non-willful taxpayers qualify for the IRS Streamlined Program, and only an attorney can properly analyze whether you are non-willful. A Streamlined filing compliance attorney will know what information is relevant to this determination, what the evidence means, and will analyze and write a convincing examiner-ready memorandum establishing your non-willfulness.
Call Streamlined Domestic program tax attorney Andrew L. Jones now at (415) 745-1924 for a free, fully confidential consultation to determine if you are eligible for the Streamlined Domestic Offshore Procedures! Experience matters – working with a US tax attorney with a practice exclusively dedicated to IRS voluntary disclosure means no surprises and no learning on the job.
Interested in learning more about the Streamlined Filing Compliance Procedures offered by the IRS? Keep reading!
The IRS Streamlined Option – Formally Known as the Streamlined Domestic Offshore Procedures – Allows US Taxpayers to Disclose Their Undeclared Foreign Accounts for Lower Penalties
On June 18, 2014, the IRS created a new option for US taxpayers who failed to file file FBARs, Forms 3520, 3520-A, 5471, 8865 or 8938 reporting various foreign assets. This option, called Streamlined Domestic Offshore Procedures, allows US residents who failed to declare their foreign accounts to the IRS, to make a voluntary disclosure for a dramatically lower cost.
In a nutshell:
- If you failed to:
- File a Foreign Bank Account Report (FBAR) and/or,
- File a Form 3520 and/or,
- File a Form 3520-A and/or,
- File a Form 5471 and/or,
- File a Form 8865, and/or
- File a Form 8938 and/or,
- Failed to report income from foreign assets
- And your failure was non-willful, then the IRS Streamlined Program – formally known as the Streamlined Domestic Offshore Procedures – allows you to resolve your non-compliance and pay a lesser 5%-of-assets penalty (a strong reduction as compared to the 27.5% or 50% penalties of the now-closed Offshore Voluntary Disclosure Program).
IRS Streamlined Program Requirements
The IRS Streamlined Offshore Reporting Program requires a taxpayer to make a voluntary disclosure of their non-compliance by:
- Filing three years of amended tax returns (the most recent three for which the due date has passed) to report undeclared income from their foreign assets
- Pay the tax that is due on those amended returns, plus statutory interest
- Pay a penalty equal to 5% of the highest year-end value of their undeclared foreign assets in the last six year (one 5% penalty only)
- Submit extensive supporting documentation specific to the Streamlined program, in particular, the Certification of Non-Willfulness
Streamlined Domestic Offshore Procedures Are Hugely Less Expensive Than Disclosing Via the (Now-Closed) Offshore Voluntary Disclosure Program (OVDP)
Compare the above Streamlined costs to the terms of the (now-closed) IRS OVDP:
- Amend the last eight years of tax returns, and
- Pay a penalty equal to 20% of the unpaid tax over that period, and
- Pay a penalty of up to 25% of the unpaid tax over that period, and
- Statutory interest due on the unpaid tax over that period, and finally
- Pay a penalty equal to 27.5% of the highest composite balance of undisclosed assets at any one time in the last eight years (and, as to a limited number of ‘bad banks,’ post-August 3, 2014, that penalty rose to 50%)
Eligibility for the Streamlined Domestic Offshore Procedures Hinges on Taxpayer Willfulness
Streamlined is only available to those taxpayers whose noncompliance was ‘non-willful,’ and requires participants to document the non-willful nature of their noncompliance through a Certification of Non-Willfulness.
Willfulness is an extremely complex legal standard but can be summarized as “an intentional violation of a known legal duty” (see Cheek v. United States).
Only a Qualified Streamlined Domestic Offshore Procedures Tax Attorney Can Properly Advise You Regarding Willfulness, And Write the Necessary Legal Argument (Certification of Non-Willfulness)
The involvement of a qualified Streamlined Procedures tax attorney is critical in all phases of the Streamlined process, including:
- Determining whether the taxpayer was willful. Willfulness is a legal standard set forth in the statutory law, and articulated in case law (court decisions). Non-attorneys (CPAs, enrolled agents or other ‘consultants’) are not qualified to make this determination.
- Writing a persuasive Certification of Non-Willfulness which anticipates and neutralizes all the IRS’ lines of attack relating to possible willfulness and ‘bad facts.’ The goal is to show the examiner that the IRS cannot establish (to the necessary standard of proof) that your failures to file International Information Returns (e.g. Forms 3520, 3520-A, 5471, 8865 or 8938) and/or pay US tax were willful. If the IRS examiner concedes that your failure was non-willful in nature, the IRS will by definition approve the Streamlined filing.
- Guiding and carrying out the collection of evidence relevant to the taxpayer’s willfulness or non-willfulness. Because willfulness is almost always determined by circumstantial evidence, a voluntary disclosure tax attorney will know the statutory law, the case law, and the current thinking at the IRS regarding what evidence indicates – or does not indicate – willfulness.
- Knowing what foreign assets are subject to the penalty, at what valuation, and in what years during the six-year look-back period. Huge sums of money are at stake in these questions and the determinations require an experienced guide.
- Overseeing the proper amendment of three years’ of tax returns, which is particularly important in the case of less-common types of foreign assets including retirement plans, annuities, closely-held business interests, etc.
- Preserving attorney-client privilege. Any information provided to a non-attorney can and will – if necessary – be obtained by the IRS. Hiring and working directly with a tax attorney preserves your rights.
- Preparing all of the necessary documents in the submission, which include the amended returns, FBARs, Forms 3520, 3520-A, 5471, 8621, 8865 and 8938, and all supplementary Streamlined Disclosure documentation including the penalty calculation.
Streamlined Domestic Offshore Procedures tax attorney Andrew L. Jones is highly qualified to provide you swift, effective and fully-confidential representation for your voluntary disclosure:
- He has guided dozens of clients through the collective disclosure of over $27 million in previously-unreported foreign assets; the median disclosure was $360,000 (numbers as of 1/29/2015).
- Not a single one of Andrew’s clients’ Streamlined Domestic Offshore or Streamlined Foreign Offshore filings have ever been challenged or rejected by the IRS.
- Andrew personally handles every part of the legal process of your voluntary foreign account disclosure, responds personally and rapidly to all your calls and messages, and personally supervises the accounting phase (amendment of returns) of the client engagement. Ask our competition: we think you’ll quickly learn that no other law firm offers this personal service commitment.
Call Streamlined Domestic Offshore Program tax attorney Andrew L. Jones now at (415) 745-1924 for a free, fully confidential consultation to determine if you are eligible for this faster, simpler and less expensive option to solve your foreign account problems!