- 1 Streamlined Filing Compliance Procedures
- 2 SFCP
- 3 Purpose of the Streamlined Filing Compliance Program
- 4 IRS Streamlined Filing
- 5 Main Eligibility Criteria: Non-Willfulness
- 6 Eligibility Criteria for the Streamlined Procedures (Provided by the IRS)
- 7 Streamlined Filing Compliance Procedures Lawyers – Golding & Golding, A PLC
- 8 SFCP – A Few Recent Updates
- 9 Interested in Filing under IRS Streamlined Filing Compliance Procedures
Streamlined Filing Compliance Procedures in 2020 (SFCP)
Streamlined Filing Compliance Procedures (SFCP): If you are out of compliance with reporting foreign money and income to the IRS, you may qualify for the Streamlined Filing Compliance Procedures (SFCP).
Streamlined Filing Compliance Procedures
Streamlined Filing Compliance Procedures. The IRS developed the Streamlined Filing Compliance Procedures as a safe alternative to OVDP (Offshore Voluntary Disclosure Program). “Streamlined Filing” is an approved method for taxpayers to get compliant using one of the two versions of IRS Streamlined submissions.
SFCP is an acronym for Streamlined Filing Compliance Procedures
The program is also referred to as the IRS Streamlined Procedure, IRS Streamlined, and Streamlined Procedure. And, by making a streamlined tax filing on form 14563 or 14654, you can you these new IRS procedures to safely disclose prior year foreign investments, assets, accounts, and income.
Purpose of the Streamlined Filing Compliance Program
The overall goal of going streamlined, is to get into IRS compliance — without breaking the bank.
By entering the program, you can leverage a smaller penalty now, against a potentially larger penalty later — noting that in recent years, the IRS has become much more aggressive in enforcing FBAR and offshore penalties.
By proactively submitting a Streamlined Domestic submission, you voluntarily pay a “5% Streamlined Penalty” up-front, to avoid a potentially much larger penalty in the future.
While not everybody gets hit with offshore penalties, the IRS has increased enforcement.
IRS Streamlined Filing
By using the Streamlined Filing Compliance Procedures, an applicant can file either a Form 14654 or 14653, and resolve issues involving (but not limited to):
- Foreign Accounts, Assets & Investments
- Foreign Income
- Foreign Earned Income Exclusion
- Foreign Tax Credit
Main Eligibility Criteria: Non-Willfulness
In order to be eligible for the streamlined filing compliance procedures, a person must be non-willful
A. Were You Non-Willful?
Generally, if a person was unaware that there was a foreign account, foreign income, or foreign asset reporting requirement, the applicant may qualify as non-willful.
Unfortunately, there is no bright-line test, and a more complex “totality of the circumstances” analysis is required.
Non-Willful vs. Lower Standards of Willfulness
Willfulness does not mean intent.
There can be “lower” forms of willfulness, which do not require willful or intent — these additional willful standard are referred to as:
Even if a person was only non-willful for a small amount of time, or was willful but only had relatively small amounts of unreported income they do not qualify.
Learn what happens if you are willful and try to enter Streamlined Filing Compliance Procedures.
Eligibility Criteria for the Streamlined Procedures (Provided by the IRS)
As provided by the IRS:
The modified streamlined filing compliance procedures are designed only for individual taxpayers, including estates of individual taxpayers.
The streamlined procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States.
Descriptions of the specific eligibility requirements for the streamlined procedures for both non-U.S. residents (the “Streamlined Foreign Offshore Procedures”) and U.S. residents (“Streamlined Domestic Offshore Procedures”) are set forth below.
Summary of Streamlined Domestic and Streamlined Foreign
Golding & Golding specializes exclusively in IRS offshore disclosure. We have summarized the two different programs for you:
Taxpayers must certify that conduct was not willful
Taxpayers using either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct.
Non-willful conduct is 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
IRS has initiated a civil examination of taxpayer’s returns for any taxable year.
If the IRS has initiated a civil examination of taxpayer’s returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the streamlined procedures.
Taxpayers under examination may consult with their agent. Similarly, a taxpayer under criminal investigation by IRS Criminal Investigation is also ineligible to use the streamlined procedures.
Taxpayers eligible to use streamlined procedures who have previously filed delinquent or amended returns must pay previous penalty assessments
Taxpayers eligible to use the streamlined procedures who have previously filed delinquent or amended returns in an attempt to address U.S. tax and information reporting obligations with respect to foreign financial assets (so-called “quiet disclosures” made outside of the Offshore Voluntary Disclosure Program (OVDP) or its predecessor programs) may still use the streamlined procedures by following the instructions set forth below.
However, any penalty assessments previously made with respect to those filing will not be abated.
Taxpayers who want to participate in the streamlined procedures need a valid Taxpayer Identification Number
All returns submitted under the streamlined procedures must have a valid Taxpayer Identification Number. For U.S. citizens, resident aliens, and certain other individuals, the proper TIN is a valid Social Security Number (SSN).
For individuals who are not eligible for an SSN or ITIN, your tax return will not be processed under the streamlined procedures.
However, for taxpayers who are ineligible for an SSN but do not have an ITIN, a submission may be made under the streamlined procedures if accompanied by a complete ITIN application. Additional information on getting an ITIN is available.
General treatment under the streamlined procedures
Tax returns submitted under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures will be processed like any other return submitted to the IRS.
Consequently, receipt of the returns will not be acknowledged by the IRS and the streamlined filing process will not culminate in the signing of a closing agreement with the IRS.
Returns submitted under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures will not be subject to IRS audit automatically, but they may be selected for audit under the existing audit selection processes applicable to any U. S. tax return and may also be subject to verification procedures in that the accuracy and completeness of submissions may be checked against information received from banks, financial advisors, and other sources.
Thus, returns submitted under the streamlined procedures may be subject to IRS examination, additional civil penalties, and even criminal liability, if appropriate.
Taxpayers who are concerned that their failure to report income, pay tax, and submit required information returns was due to willful conduct and who therefore seek assurances that they will not be subject to criminal liability and/or substantial monetary penalties should consider participating in the Offshore Voluntary Disclosure Program and should consult with their tax professional or legal advisers.
After a taxpayer has completed the streamlined filing compliance procedures, he or she will be expected to comply with U.S. law for all future years and file returns according to regular filing procedures.
Streamlined Filing Compliance Procedures Lawyers – Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.
- Learn more about the Board-Certified Tax Lawyer Specialist credential
- Learn more about the Enrolled Agent credential
- Learn more about Golding & Golding’s Case Accomplishments
- Learn more about Golding & Golding Testimonials from prior clients
IRS Increased Enforcement of Offshore Penalties
Here is a brief list of the potential penalties you can get hit with by the IRS:
- FBAR Penalties
- 3520 Penalties
- 3520-A Penalties
- Form 5471 Penalties
- Form 5472 Penalties
- Form 8621 Penalties
- Form 8938 Penalties
- Form 8865 Penalties
SFCP – A Few Recent Updates
Over the past year or so, the IRS has updated the Streamlined Filing Compliance Procedures (SFCP). The IRS has issued formalized updates, insomuch as the IRS has provided the following informal updates that you should be aware of:
– There is not a separate Streamlined Program for Cryptocurrency.
– The IRS will end the Streamlined Program “sooner as opposed to later.”
– The IRS is increasing the number of Streamlined Disclosure audits.
Interested in Filing under IRS Streamlined Filing Compliance Procedures
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in offshore tax and reporting amnesty. Contact our firm today for assistance with getting compliant.
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.