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IRS Has a New Program for Expat Americans with Delinquent Taxes

In 2014 the IRS expanded the terms of the program that allows overseas Americans file overdue US tax returns. This program was originally announced in 2012; it allowed delinquent taxpayers living abroad an opportunity to avoid the penalties and fees by coming into compliance. 2014 changes made the already popular program even better - resulting in over 48,000 taxpayers using it.

Most importantly, the program has broadened eligibility criteria and eliminated all penalties related to late filing / late payments.

Additionally, the program may be used for filing amended returns to claim retroactive relief on qualified foreign pension plans eligible for tax deferral.

Participation in the Program Requires

  • Filing of 3 years tax returns (currently 2014-2016) and FBAR reports for 6 years (2011-2016)
    • Even if you have not filed for far longer than that, this program allows you to file just the last three years, greatly reducing the burden involved.
  • Under the New Procedure, the taxpayer must certify that the failure to report all income, pay all tax, and submit all required information returns (including the FBAR) was due to “non-willful conduct”.
    • That means that failure to declare happened due to a good faith misunderstanding or simply not knowing law. In plain English - it essentially means “Oops - I did not know I had to!”

      This is huge as all other laws still apply regardless of whether you know about them. Thus the main qualification for getting into the program is giving a statement that you did not know you had to file those returns.

  • Under these new procedures eligible taxpayers will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties unless the returns are selected for audit and upon audit a determination is made that the original tax noncompliance was fraudulent or that the FBAR violation was willful.

To be eligible for the program It doesn’t matter what your income level is or how long you haven’t filed -- this program allows you to start with a clean slate with amnesty from penalties. The increased scope of this program has opened the door to come into compliance without fear of penalties.

3 Years of Federal Tax Returns 350 * 3 = $1,050
6 Years of FBARs 75 * 6 = $450
Analysis of situation and applicability for the program $150
Total $1,650

We are offering a special package price of $1,200 - saving you 27%.

Please note - the package above only consists of preparation & filing of the Tax Returns & FBAR. There is another form that is required. You can prepare it yourself or we can do it for you.

Preparation of the IRS Certification by U.S. Person Residing Outside of the U.S statement for the Streamlined Procedure costs $300
Preparation of the IRS Certification by U.S. Person Residing in the U.S statement for the Streamlined Procedure costs $500

Same percent discount applies if your income is over $100,000 - package then costs $1,400.

If your bank requires proof of US tax compliance, we can also prepare and mail them the U.S. Paid Preparer Certification and Notification. This service costs $150.

Now is the Perfect Time

Given the attention that the US government is devoting to this issue (see this article we wrote that explains why it’s becoming very tenuous for expats to avoid filing), now is the perfect time to become compliant and stop worrying about IRS finding you.

Streamlined Procedure FAQ

1. I just found out that I need to file US taxes and want to get up to date. Should I contact the IRS beforehand and let them know I will be sending in my forms soon?

2. I am unable to open the Streamlined Non-Resident Questionnaire from the link in Final Instructions http://www.irs.gov/pub/irs-pdf/f14438.pdf

3. What happens if you analyze my situation and determine that the Streamlined Procedure won't be an option - what can I do in that case?

5. If I have already been accepted into the Offshore Voluntary Disclosure Program but I qualify for the Streamlined Procedures, can I request to switch into the Streamlined Procedure?

6. Can a married couple file together for the SP? Is our fee the same for one person or married couple?

7. I mailed my return to the IRS some time ago but have not received any word from them. How long do they usually take to respond in the case of Streamlined Procedure and back taxes?

8. How will IRS inform me about my Streamlined Procedure filing?

9. I heard about another program called OVDP. What is the difference between it and the SP and which do you recommend?

10. I am up to date with my tax returns but I have not filed FBAR for ALL my non-US accounts -- what are my options?

11. I'm up to date with my tax returns, but I did not file 5471 for my foreign corporation. What should I do?