Streamlined Domestic Offshore Procedures – Board Certified Specialist
- 1 Streamlined Domestic Offshore Procedures
- 2 Streamlined Domestic Offshore Specialist — Golding & Golding – Board Certified in Tax Law
- 3 Streamlined Domestic Procedures – What’s the Purpose?
- 4 Streamlined Domestic Offshore Eligibility
- 5 Qualifying for Streamlined Domestic
- 6 Streamlined Non-Willful vs. Lower Standards of Willfulness
- 7 What is Willful Blindness?
- 8 What is Reckless Disregard?
- 9 IRS Form 14654 Streamlined Penalty Computation Example
- 10 Streamlined vs. IRS Informational Reporting Form Penalties
- 11 Hiring a Streamlined Domestic Offshore Procedures Attorney
- 12 How to Find Experienced & Reputable Streamlined Disclosure Counsel
- 13 Need a Second Opinion about going Streamlined?
Streamlined Domestic Offshore Procedures – Board Certified Specialist
Streamlined Domestic Offshore Procedures: The Streamlined Domestic Offshore Procedures are an alternative to the Traditional IRS Voluntary Disclosure Program. IRS Streamlined Procedures (domestic) are designed to bring U.S. Resident Taxpayers (and other Taxpayers who do not qualify as Foreign Residents) into offshore compliance.
Streamlined Domestic Offshore Procedures
Taxpayers prepare a non-willful certification on IRS Form 14654, and reduce their Non-Willful Title 26 Miscellaneous penalty to 5%.
We are the top firm for this area of law. We have many free resources to assist you with answering common Streamlined Domestic Offshore Disclosure FAQ, providing a Streamlined penalty calculation example, and helping you determine if you are eligible for the Streamlined program.
Learn the Eligibility & Submission requirements for the Streamlined Domestic Offshore Procedures from our Board Certified Tax Law Specialist Team.
SDOP is the acronym for Streamlined Domestic Offshore Procedures. The IRS Streamlined program actually goes by many names, including:
- IRS Streamlined Domestic
- Streamlined Filing Compliance Procedures
- Streamlined Procedures
- Streamlined Disclosure
- IRS Streamlined Amnesty Program
Streamlined Domestic Offshore Procedures Ending?
There is no knowing if the Streamlined Domestic Offshore Procedures Ending date is coming now, or later. BUT, the IRS reserves the right to end the program at any time and has indicated that the program “won’t last forever.”
Streamlined Domestic Offshore Specialist — Golding & Golding – Board Certified in Tax Law
Golding & Golding represents clients worldwide in over 70-countries exclusively in Streamlined, Offshore and IRS Voluntary Disclosure matters. We have successfully completed more than 1000 streamlined and voluntary disclosure submissions.
Our Team Lead is a Board Certified Tax Law Specialist (Less than 1% of Attorneys nationwide) and Enrolled Agent, with a Master’s of Tax Law (LL.M.)
Mr. Golding leads his team in each and every case we accept for submission.
- Learn more about the Board Certified Tax Law Specialist credential
- Learn the benefits of hiring a Dually Licensed Attorney/Tax Professional
- Learn more about Golding & Golding’s Case Accomplishments
- Learn more about Golding & Golding Testimonials from prior clients
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
The exam is widely regarded as one of (if not) the hardest tax exam given in the United States for practicing Attorneys.
Streamlined Domestic Procedures – What’s the Purpose?
The purpose of the Streamlined Domestic Program is to leverage a smaller penalty now, against a potential larger penalty later.
In other words, you voluntarily pay a “5% Streamlined Penalty“ up-front, to avoid a potentially much larger penalty in the future.
Streamlined Domestic Penalty Avoidance
Here is a brief list of the penalties:
|IRS Forms||What is the Purpose of the Form||Penalties|
|FBAR (FinCEN 114)||Penalties Range: Civil FBAR, Non-Willful FBAR, Willful FBAR, Criminal FBAR||FBAR Penalties|
|Form 3520||Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts:||3520 Penalties|
|Form 3520-A||Annual Information Return of Foreign Trust With a U.S. Owner||3520-A Penalties|
|Form 5471||Information Return of U.S. Persons With Respect to Certain Foreign Corporations||Form 5471 Penalties|
|Form 5472||Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business||Form 5472 Penalties|
|Form 8621|| |
Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund
|Form 8621 Penalties|
|Form 8938||Statement of Specified Foreign Financial Assets||Form 8938 Penalties|
|Form 8865||Return of U.S. Persons With Respect to Certain Foreign Partnership||Form 8865 Penalties|
Streamlined Domestic Offshore Eligibility
Typically, there are three (3) main eligibility requirements that a U.S. Taxpayer must meet in order to qualify and become eligible for the Streamlined Domestic Offshore Procedures.
The requirements include:
- Non-Willful Certification Statement using IRS Form 14654
- Not Qualify as a Foreign Resident
- Filed Timely Tax Returns
Qualifying for Streamlined Domestic
The requirements for meeting the Streamlined Domestic Program can be broken down further into the following elements:
There is no bright-line test to determine willfulness.
It is a ‘Totality of the Circumstances‘ test based on whether or not your specific facts and circumstances reflect that you knew, or should have known that you were required to disclose and report your foreign accounts and offshore income — and made the decision not to disclose.
Generally, if a person was unaware that there was a foreign account/foreign income/foreign asset reporting requirement, the client begins in the “non-willful” category, but more analysis is needed.
How to Analyze Willful vs. Non-Willful
- What is your U.S. status?
- How long have you been in the United States for?
- How many years have you filed U.S. tax returns?
- What types of investments do you have overseas?
- Do you utilize a financial planner?
- Do you have a CPA or EA?
- Is your CPA or EA experienced in international tax?
- Did your CPA or EA send you questions in writing asking about Foreign Accounts or Income?
- Did you respond truthful to the CPA or EA?
- Did you complete a schedule B?
- Are you tax compliant in the country in which the accounts are maintained?
- Did you have unreported income as well?
Filed Timely Tax Returns
It is important to note that you cannot file original tax returns with the Streamlined Domestic Offshore Procedures — only amended returns.
Streamlined 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:
If you have any concern of willful vs. non-willful, It is crucial that you consult with an experienced Streamlined and Offshore Disclosure Lawyer before making any submission.
What is Willful Blindness?
Willful Blindness is a form of “deliberate ignorance.” It is the concept that a person could readily obtain information, which if they did, would inform them that their actions could be criminal. Instead of seeking out the information, they “intentionally” avoid learning the information (aka burying their head in the sand).
What does Willful Blindness Mean?
It means you are “willfully” staying ignorant to a fact that would inform you that your actions are illegal.
Is Willful Blindness a Crime?
Yes. It is a substitute for willfulness. In other words, while you may have not intended to cause a crime, the fact that had you made yourself uninformed to the fact that your actions were illegal — takes you over the willfulness threshold.
What is the Mens Rea of Willful Blindness?
The idea of Mens Rea of Willful Blindness is the idea that the knowledge of the crime is presumed, due to the intentional lack of knowledge on the part of the participant.
What is Deliberate Ignorance?
Deliberate ignorance is essentially a synonym for willful blindness.
Willful Blindness Law School 101 Definition
Outside of the world of FBAR Penalties, the willful blindness standard is nothing new.
Here’s a typical example you learn in your first-year criminal law and procedures class:
David and his friends are hanging out in a seedy part of Tijuana. A Gentlemen approaches them and tells David and his two buddies that he will pay them each $1 million if they drive a car across the border.
None of the individuals ask the man why he is paying them that much to drive a vehicle for a few hours. Clearly, they should have some questions, but the money is just too good.
Therefore, David and his friends avoid asking any questions, believing if they do not ask, then they cannot know what is in the car – and that will absolve them from liability.
When they get pulled over and the police discover 50 pounds of cocaine in the car, the fact that they “didn’t know about the drugs” would not matter — since they were “willfully blind.”
What is Reckless Disregard?
Reckless disregard is a lower standard of willful. It does not require intent, but rather behavior which shows the U.S. person could have known and/or could have filed the FBAR.
How do the Courts Define Reckless Disregard?
Reckless Disregard In offshore disclosure, essentially means: “I Could have known better.”
The court in Bohanecs summarizes reckless disregard as:
“Although Defendants assert that “willfulness” encompasses only intentional violations of known legal duties, and not reckless disregard of statutory duties, no court has adopted that principle in a civil tax matter.
Where willfulness is an element of civil liability, the Supreme Court generally understands the term as covering “not only knowing violations of a standard, but reckless ones as well.” Safeco, 551 U.S. at 57.
– Recklessness” is an objective standard that looks to whether conduct entails “an unjustifiably high risk of harm that is either known or so obvious that it should be known.” Safeco, 551 U.S. at 68 (internal quotation marks and citation omitted).
– Several other courts, citing Safeco, have held that “willfulness” under 31 U.S.C. § 5321 includes reckless disregard of a statutory duty. See United States v Williams, 489 Fed.Appx. 655, 658 (4th Cir. 2012); United States v. Bussell, No. CV15-02034 SJO(VBKx), 2015 WL 9957826 at *5 (C.D. Cal. Dec. 8, 2015); see also United States v. McBride, 908 F.Supp. 2d 1186, 1204, 1209 (D. Utah 2012).”
IRS Form 14654 Streamlined Penalty Computation Example
Evaluate your Offshore & Foreign Accounts and Assets
There are many different accounts and assets that may be included in the computation.
Two of the most common are assets and accounts involving FATCA (Foreign Account Tax Compliance Act) and FBAR (Report of Foreign Bank and Financial Account Form)
- “How-To” FATCA Guide to the Foreign Account Tax Compliance Act for Individuals with Foreign Assets
- “How-To” Guide to Reporting Foreign Accounts with FBAR and More
- “How-To” Guide to Understanding how to Evaluate if you have a PFIC
*Some assets and accounts may be excluded from the penalty-base.
Step 2: Compile the December 31st Balances
Compile the 12/31 balances on your Foreign Accounts, Insurance Policies and other 8938/FBAR qualified accounts for each year within the compliance period.
Step 3: Determine the proper exchange rate for each year
Determine the proper exchange rate for each year. There are various exchange rates you can use, such as the IRS exchange rates and Department of Treasury exchange rates.
Practice Pointer: Stay consistent with the source of exchange rates you used.
Step 4: Total or “Aggregate” the 12/31 balances
Total the 12/31 balances on your previously unreported Foreign Accounts, Insurance Policies and other 8938/FBAR qualified accounts (Value of Real Estate is not included for the Streamlined Program).
Step 5: Pick the Year that has the highest 12/31 balance
Pick the one-year that has the highest 12/31 balance (not highest max year balance, which is the standard for Traditional Voluntary Disclosure).
Step 6: Multiply the above-value by 5% (aka .05)
Example: Michael’s highest year 12/31 aggregate balance in the six (6) year compliance period is 2017. In 2017 his 12/31 balances totaled $2,600,000. His penalty would be $130,000.
Streamlined vs. IRS Informational Reporting Form Penalties
People ask why would they want to pay a penalty “up-front.”
The answer is relatively simple…leverage.
You are “leveraging” a smaller, up-front penalty now, to avoid a potential larger penalty later.
Hiring a Streamlined Domestic Offshore Procedures Attorney
People Can be Whomever They Want to be Online
And that is the problem.
In recent years, we have had many clients come to us after being horribly represented by inexperienced tax counsel. While we are sure it is a problem in many fields, it seems to run rampant in IRS offshore voluntary disclosure.
These Attorneys ‘manipulate’ their past legal experiences, such as working for the IRS — to make themselves sound more experienced than they are. You later find that they never worked as an attorney for the IRS, or even in the offshore disclosure department.
The IRS has nearly 100,000 employees, and just being one of them does not make an attorney qualified to be an effective and experienced offshore voluntary disclosure tax attorney specialist.
IRS Offshore Disclosure is complex enough for experienced practitioners who focus exclusively in the area of law, never mind relative newcomers who are trying to handle more than just offshore voluntary disclosure as part of their everyday tax practice.
We know, because those cases usually end up on our door-step. Examples of recent cases we had to takeover from less experienced Attorneys can be found by Clicking Here (Case 1) and Clicking Here (Case 2).
How to Find Experienced & Reputable Streamlined Disclosure Counsel
Nearly all the experienced Attorneys in this field will have 5 Main Attributes:
- Board Certified Tax Law Specialist
- Master’s of Tax Law (aka LL.M.)
- Dually Licensed as an Enrolled Agent or CPA
- Around 20-Years of Private Practice experience
- Extensive Litigation, Trial and related high-stakes experience.
Understanding How Tax Prep & Legal Fees Work in Offshore Disclosure
Offshore Disclosure — Flat-Fee, Full-Service
All Non-Willful cases should be Flat-Fee, Full-Service for both Tax and Legal.
*If you were willful in not submitting the FBAR, the submission and analysis is much different depending on whether the IRS has contacted you yet, if you are under investigation, etc. — and you should speak with experienced counsel.
Need a Second Opinion about going Streamlined?
Lately, with rumblings of the Streamlined Disclosure Program, aka Streamlined Voluntary Disclosure aka Streamlined Filing Compliance Procedures coming to an end, some younger and inexperienced attorneys are in disarray — and handing out terrible advice to make a quick buck — and putting clients at risk.
If you are unsure about advice you received about the Streamlined Disclosure program, let Golding & Golding offer you a second opinion, with a reduced-fee initial consultation.
Contact Us Today; Let us Help You.
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, and has also earned the prestigious Enrolled Agent credential. Mr. Golding is also a Board Certified Tax Law Specialist Attorney (A designation earned by Less than 1% of Attorneys nationwide.)
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