Streamlined Foreign Offshore Procedures
Eligibility – Streamlined Foreign Offshore Procedures
To meet the applicable eligibility requirements for this program, taxpayers must meet the nonresidence requirements (if a married joint filing, both taxpayers must meet), 2) taxpayers must have failed to report income from a Foreign Financial Asset (FFA) and pay tax as required by U.S. tax law, and may have failed to file a FinCen FBAR Form 114 all resulting from non-willful conduct.
Where ‘Non-willful’ was loosely defined as: conduct that is due to negligence, inadvertence or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law. In reality conceptually the difference between Fraud- an intent to deceive versus simply Gross Negligence, where no such intent existed.
Nonresidence Requirements- Streamlined Foreign Offshore Procedures
Nonresidency- for U.S. citizens or Lawful Permanent Residents (Green Card Holders)
If in at least one (1) or more of the last three (3) years for which the most recent tax return due date (or properly applied for extended due date) has passed, there is no U.S. abode (i.e. taxpayer meets the THT) and they meet the PPT under IRC Sec 911- they are outside U.S. for at least 330 full days.
Nonresidency for non U.S. citizens and non Green Card Holders-
If in at least one ( 1) or more of the last 3 years for which the most recent tax return due date (or properly applied for extended due date) has passed, the individual taxpayer did not meet the Substantial Presence Test (SPT) test under IRC Sec 7701(b)(3).
Filing Requirements- Streamlined Foreign Offshore Procedures
U.S. taxpayers eligible for the Streamlined Foreign Offshore Procedures as outlined above must:
1) for each of the most recent three (3) years for which the U.S. income tax return due date (or properly applied for extended due date) has passed (“closed year”) file delinquent or amended returns together with all information-returns and
2) for each of the most recent six (6) years of FinCEN FBAR Form 114 due dates that have passed, file any delinquent FinCEN FBAR Form 114s.
The full amount of tax and interest due in connection with these filings must be remitted with the delinquent or amended returns.
U.S. taxpayers eligible for the Streamlined Foreign Offshore Procedures and who comply with the requirements as outlined, are not subject to any late filing, late payments, accuracy or information penalties. Even if subsequently selected for audit, unless an audit uncovers that the noncompliance was fraudulent or FinCEN FBAR Form 114 was a willful violation, the taxpayer will not be subjected to any late filing, late payments, accuracy or information penalties or FBAR penalties.
Any prior assess penalties with respect to (w.r.t.) those covered Streamlined years will not be abated. The above also does not stop additional tax assessment or penalties relating to that additional assessment of tax, as with any U.S. tax return filing.
Filing Instructions- Streamlined Foreign Offshore Procedures
1) Submit the three (3) prior years of U.S. income tax returns Form 1040 or 1040X as may be the case, with all Information returns even if filed separately.
2) At top of each U.S income tax return and information return “Streamlined Foreign Offshore” should be written in red ink.
3) Complete and sign “Form 14653- Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures”,
4) Submit payment of all tax and interest (interest calculator linked),
5) If no SSN then submit Form W-7- Application for IRS Individual Taxpayer Identification Number,
6) Relief/ failure to timely elect deferral of income from certain retirement or savings plans procedures, see instructions,
7) Send documents and payment to specified address:
Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined Foreign Offshore
Austin, TX 78741
8) All FinCEN FBAR Form 114 FBARs must be filed electronically, choosing as a delinquent reason Other and type in “Streamlined Filing Compliance Procedures”.
Information on the Streamlined Foreign Offshore Procedures may be found at:
http://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States
Protax has completed and are in process of completing thousands of such Streamlined filings.
Please contact us for a free consultation and for further details.