Streamlined Filing Compliance Procedures
For those of you American taxpayers, who missed filing on time for one or more years, or filed but missed to report, for example some or all of your foreign bank reports (FBAR/FIN CEN 114, Forms 8938), but can certify that have not intentionally done so, there is a solution. It is called “Streamlined Filing Compliance Procedures”. It allows you to catch up with your past obligations by filing the last 3 delinquent tax returns and the last 6 delinquent FBARs. The penalty is waived to the expats, but for the Americans living in the U.S., there is a 5% penalty on the undeclared foreign financial assets. For more on the Streamlined Filing Compliance Procedures please read on the IRS website.
Offshore Voluntary Disclosure Program (OVDP)
For those of you who cannot certify that non-willingly missed the filing of your tax returns or FBARs, or who may face criminal prosecution if found first by IRS, there is the IRS 2012 Offshore Voluntary Disclosure Program. The 2012 OVDP requires the filing of the last 8 tax returns and FBARs. For more on this program please read on the IRS website.
Please note that the OVDP is an administratively guided program that overrides the higher statutory penalties that IRS may impose if successful. If one has filed under the Streamlined Procedures, cannot return to the OVDP and vice versa. Opting out of the OVDP may or may not automatically trigger referral to the Criminal Investigation Division, but it will definitely result in a full blown IRS examination that is time consuming and costly.
One should consider hiring a good criminal tax litigator (we are not), who in turn may hire us under a Kovel agreement to prepare the tax returns and submissions. We would be glad to refer you to some of the best U.S. criminal tax litigators in your state or overseas.
There is a middle way in every way… IRS wants you to file BEFORE THEY CATCH YOU!
Taxpayers who do not need to use the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:
- have not filed one or more required international information returns;
- have reasonable cause for not timely filing the information returns;
- are not under a civil examination or a criminal investigation by the IRS and
- have not already been contacted by the IRS about the delinquent information returns
should file the delinquent information returns with a statement of all facts establishing reasonable cause for the failure to file.
Taxpayers who do not need to use the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:
- have not filed a required Report of Foreign Bank and Financial Accounts (FBAR) (FinCEN Form 114, previously Form TD F 90-22.1);
- are not under a civil examination or a criminal investigation by the IRS, and
- have not already been contacted by the IRS about the delinquent FBARs
should file the delinquent FBARs according to the FBAR instructions.
Contact USCANTAX for choosing the right program for you and for helping you with the filings.