Procedures for Filing Late Offshore Reporting Forms
Procedures for Filing Late Offshore Reporting Forms: When a US Person has offshore account, assets, or investments and are out of compliance, they have various options available to get into IRS compliance. One of the more popular procedures used by Taxpayers are the “Delinquency Procedures.” The Delinquent International Information Returns Submission Procedures (DIIRSP) version of the program can be deceivingly complex. Some taxpayers may qualify for the IRS Delinquent International Information Return Submission Procedures and avoid offshore fines and penalties. The delinquency procedures are an alternative to the Streamlined Procedures & Voluntary Disclosure. It is generally reserved for non-willful taxpayers who have unreported offshore accounts, assets, or investments — and do not require traditional offshore disclosure — but still want to avoid the Internal Revenue Service’s aggressive international penalty enforcement tactics.
The IRS requires the Taxpayer meet 4 elements:
- 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
*The DIIRSP program was Updated in 11/2020.
Reduce Offshore Penalties
The delinquent international information return procedures are designed to help safely bring people into compliance without an “offshore penalty.” IRS International Information Returns typically include documents, including:
- 3520 (Gifts and Foreign Trust Distributions)
- 5471 (Foreign Corporations)
- 8621 (Passive Foreign Investment Companies)
- 8865 (Foreign Partnerships)
- FBAR and FATCA Form 8938
Are you Eligible to Qualify?
As provided by the IRS:
Taxpayers who have identified the need to file delinquent international information returns who 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 through normal filing procedures.
Penalties may be assessed in accordance with existing procedures.
All delinquent international information returns other than Forms 3520 and 3520-A should be attached to an amended return and filed according to the applicable instructions for the amended return.
All delinquent Forms 3520 and 3520-A should be filed according to the applicable instructions for those forms.
Taxpayers may attach a reasonable cause statement to each delinquent information return filed for which reasonable cause is being asserted. During processing of the delinquent information return, penalties may be assessed without considering the attached reasonable cause statement.
It may be necessary for taxpayers to respond to specific correspondence and submit or resubmit reasonable cause information.
Information returns filed with amended returns will not be automatically subject to audit but may be selected for audit through the existing audit selection processes that are in place for any tax or information returns.
Other Offshore Amnesty Options
The OffshoreAmnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
Golding & Golding: About our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure. Contact our firm today for assistance.