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Unfiled Tax Returns – IRS Unfiled Back Taxes Help (2018 Update)

Unfiled Tax Returns –  IRS Unfiled Back Taxes Help (2018 Update)

Unfiled Tax Returns –  IRS Unfiled Back Taxes Help (2018 Update) (Golding & Golding - Certified Tax Specialist)

Unfiled Tax Returns – IRS Unfiled Back Taxes Help (2018 Update) (Golding & Golding – Certified Tax Specialist)

Unfiled Tax Returns (especially IRS Form 1040) are a common problem. There can be any number of different explanations as to why a person does not file tax returns. 

Common Issues with Unfiled Tax Returns usually include:

  • Filing Taxes Late
  • Delinquent Taxes
  • Past Due Taxes
  • Filing Back Taxes
  • Penalties for Not Filing Taxes
  • Tax Amnesty

Do not worry, many of our clients have unfiled tax returns — sometimes with many years of having not filed past taxes with the IRS.

This may lead to a person having unfiled prior year returns for one year, or possibly even multiple years.

Unfiled Tax Returns

Millions of people each year fail to file their tax returns. For some people, it is no big deal because they are below the threshold. For other people (usually those with primarily W-2 income, the IRS will file an SFR (Substituted Filed Return)

When Can You File Your Taxes?

You can file your tax return (timely) if it is no later than the April date (usually the 15th, holidays/weekend permitting) or if you properly file for extension, you have until October. If you miss the deadline, you are still required to file a return, but it is considered late. Since it is late, you may be subject to various penalties, although you may be able to get them waived if you file for amnesty or reasonable cause.

The real issue is that the time to collect a refund may expire.

IRS Tax Refund

One big motivator to get you to file your taxes is that you may be entitled to a Tax Refund. And, the carrot/stick is that if you do not file your tax returns timely, you may be estopped (prevented) from applying for the refund (typically 3-years from when the tax returns were due)

Back Tax Returns

For each year a person is required to file a tax return but fails to do (and another year passes) the person is considered to be out of tax compliance for “Back Tax Returns.”

Filing Back Taxes

In order for a person to get into tax compliance, they are required to go back and file “Back Taxes.” Since the Statute of Limitations for the IRS to audit or examine you does not begin until you have filed a tax return, you should speak with a specialist to evaluate your case, and assess your options.

Penalties for Not Filing Taxes

Depending on the facts and circumstances of your situation, you may be subject to many different types of penalties. But, you may also qualify for IRS Amnesty or Reasonable Cause, and have your penalties reduced or even abated completely.

Unfiled Tax Return Amnesty

A person can usually file unfiled tax returns with one of the Voluntary Disclosure programs, in order to report and disclose unreported/undisclosed income, assets, accounts, or investments — and safely get into compliance.

The program include:

  • Domestic Voluntary Disclosures
  • OVDP (Offshore Voluntary Disclosure Program)
  • Streamlined Filing Compliance Procedures
  • Reasonable Cause submission.

We Specialize in Filing Past Year Returns with IRS Amnesty

We have successfully handled a diverse range of IRS Voluntary Disclosure cases. Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.

Unlike other attorneys who call themselves specialists but handle 10 different areas of tax law, purchase multiple domain names, and even practice outside of tax, we are absolutely dedicated to Offshore Voluntary Disclosure.

No Case is Too Big; No Case is Too Small.

We represent all different types of clients. High net-worth investors (over $40 million), smaller cases ($100,000) and everything in-between.

We represent clients in over 60 countries and nationwide, with all different types of assets, including (each link takes you to a Golding & Golding free summary):

Who Decides to Submit for IRS Voluntary Disclosure

All different types of people submit to OVDP. We represent Attorneys, CPAs, Doctors, Investors, Engineers, Business Owners, Entrepreneurs, Professors, Athletes, Actors, Entry-Level staff, Students, and more.

You are not alone, and you are not the only one to find themselves in this situation.

…We even represent IRS Staff with getting into compliance.

Sean M. Golding, JD, LL.M., EA – Board Certified Tax Law Specialist

Our Managing Partner, Sean M. Golding, JD, LLM, EA is the only Attorney nationwide who has earned the Certified Tax Law Specialist credential and specializes in IRS Offshore Voluntary Disclosure and closely related matters.

In addition to earning the Certified Tax Law Certification, Sean also holds an LL.M. (Master’s in Tax Law) from the University of Denver and is also an Enrolled Agent (the highest credential awarded by the IRS.) 

He is frequently called upon to lecture and write on issues involving IRS Offshore Voluntary Disclosure.

*Click Here to Learn about how Attorneys falsely market their services as “specialists.”

Less than 1% of Tax Attorneys Nationwide

Out of more than 200,000 practicing attorneys in California, less than 400 attorneys have achieved this Certified Tax Law Specialist designation.

The exam is widely regarded as one of (if not) the hardest tax exam given in the United States for practicing Attorneys. It is a designation earned by less than 1% of attorneys.

Our International Tax Lawyers represent hundreds of taxpayers annually in over 60 countries.

Unfiled Tax Returns – The Basics

IRS Unfiled Tax Returns: If you have unfiled tax returns, and are delinquent, you may need professional tax help to get back into compliance. The failure to be in tax compliance can lead to tax debt, and a looming tax bill. While you may be able to make an offer-in-compromise to remedy having not filed tax returns in the past — the statute of limitations for past returns do not begin to run — which is a bad thing, since you may be on the hook for many years to come.

What Income do I Include on a U.S. Tax Return?

Each year that a person is considered a U.S. Person and earned income anywhere in the world, they are usually required to file a U.S. Tax Return to report their worldwide income — no matter where they live, and no matter which country was the source of the income.

As an international tax law firm that focuses primarily on IRS Offshore Voluntary Disclosure, one the main questions we receive daily is how to get back into compliance when you have unfiled tax returns, and foreign money, assets, accounts and/or investments?

In this article, we will summarize the options for getting into US tax compliance when you have foreign/offshore money.

Why do you have Unfiled Tax Returns?

For one reason or another, you have foreign assets, income, investments, accounts or retirement funds, and have not filed US tax Returns with the IRS. It could be due to one of a number of different reasons, but the main question is still the same — once you are out of US tax compliance, what are your options for offshore reporting and getting back into US tax compliance…before it’s too late.

The following are a few examples of common scenarios we see the people who have unfiled returns:

*These are just examples. You cannot rely upon them in making your own independent determination of whether you were willful or non-willful.

**You should speak with an Attorney before making any affirmative representation to the IRS or entering any of the IRS Offshore Voluntary Disclosure Programs.

Unintentional Non-Filing of U.S. Tax Returns

Example 1: Not Knowing You Had to File

Michelle currently resides in the United States and is 70 years old. She collects U.S. Social Security but has no other U.S.-based income, and therefore she mistakenly believes that she was not required to file a tax return — because she thought she would have no tax liability. What Michelle did not realize was that the $120,000 a year she earns in foreign interest income from Hong Kong (which is not taxed in Hong Kong) is reportable taxable on her U.S. tax return – thereby requiring Michelle to file a US tax return. Moreover, it also results in a U.S. tax liability on her social security income.

Example 2: Not Knowing You Had to File

Many years ago, David’s wanderlust whisked him to a far-off land. It is the type of country in which taxes are not necessarily required (or enforced) by the local government. David earns all is money abroad, and has no other connections to the United States — aside from the fact that he was born and raised in California. David Earns less than $100,000 a year, and therefore would qualify under the Foreign Earned Income Exclusion (Physical Presence Test) in which all of his income would be excluded from U.S. tax. Nevertheless, David must still file a U.S. tax return.

Example 3: Not Knowing You Had to File

Danielle currently lives abroad in Australia and has been residing there for the better part of the last 20 years. When she first arrived in Australia, Danielle had attended an expat event in which she met an individual who told her that she was not required to report her Australian income to the United States, but was required to report and pay tax in Australia.

Danielle pays significant taxes in Australia, and therefore even when she goes back and reports all of the income to the IRS, by time she factors in the Foreign Earned Income Exclusion along with the additional Foreign Tax Credits she is entitled, she should have little to no U.S. tax liability. While Danielle must still file U.S. tax returns, her Australia taxes paid should offset her U.S. Tax Liability (subject to whether she received any franking credits or related tax benefits that may not cross-over into the United States).

*In the above referenced scenarios, there is a good chance that the individuals will qualify as reasonable or non-willful and avoid significant fines and penalties if they decide to voluntarily disclose (which will be discussed below).

Reckless or Intentional Non-Filing of U.S. Tax Returns

The reason we grouped together reckless and intentional is because in recent cases (2017), the threshold requirement to prove willful has been eased — for the benefit of the IRS. In other words, it is much easier for the IRS to show a person was willful without having to show they were willful or intentional, but instead only has to show reckless disregard, or willful blindness.

The following are a few examples of common scenarios we see the people who have unfiled returns:

Reckless Disregard

Harry is originally from the United States but moved to Vietnam and later the Philippines to start his own businesses. Harry did not earn much money during the first few years, and therefore Harry did not file any tax returns in the United States. Up until the time that Harry relocated to the Philippines, and thereafter Vietnam, Harry was aware that he had a reporting requirement in the United States. 

In speaking with a couple different CPAs, they had informed Harry about having to report his worldwide income, along with forms 5471 as the owner of a foreign corporation. 

The fees the CPAs were going to charge were well beyond what Harry could afford, and therefore Harry did not file U.S. Tax Returns. Fast-forward 10 years later and the businesses are flourishing. Harry is getting ready to sell the businesses and return to the United States with his wife and two children. This is an example of reckless disregard to the extent that Harry knew he had a reporting requirement (and even though he had no unreported income) he did not file his returns and information returns.

Willful Blindness

Peter resides in the United States, and earned significant income abroad in Singapore. Each year, Peter visits a CPA and they discuss whether there have been any new life events or other issues that would impact his reporting requirement in the United States. Early in their relationship, the CPA had sent Peter and extensive questionnaire. Within the questionnaire, there were some questions involving whether Peter was a US person and if so whether Peter had any foreign accounts. 

Peter did not complete this portion of the questionnaire (or several other portions of the questionnaire which did not have any bearing on Peter). Thereafter, when Peter was sitting in a meeting with the CPA, the CPA went through the questionnaire with Peter and Peter made no mention of the foreign accounts. In addition, since Peter did not have much in the way of passive income, there was no requirement for Peter to file schedule B (absent part seven, involving foreign accounts), in which the CPA was never made aware.

In this scenario, Peter was probably willfully blind to the extent that while the CPA never explained the ramifications or importance of the foreign accounts to Peter, Peter intentionally omitted that section of the questionnaire and therefore the CPA may not thought there was any reason to explain the Peter foreign accounts (since he was charging hourly) since it would appear by Peter’s questionnaire responses that it had no relation with Peter.

Willful

Randy lives in Vietnam and started a business that currently earns significant money. Randy is a US green card holder and just can’t stand the idea of having to pay significant US taxes for income that he earns abroad — especially when he is not receiving any benefit of being a Legal Permanent Resident, coupled by the fact that he did not pay tax on his income in Vietnam.

Randy intends on relinquishing his green card and never stepping foot in the United States ever again. Unfortunately, Randy’s situation is very common, and while we understand not wanting to pay US tax when you are receiving literally no benefit for having a Green-Card, technically Randy committed tax fraud and tax evasion. If the IRS was to catch Randy and uncover the facts and circumstances regarding his failure to comply, the penalties can be severe.

Unfiled Tax/Information Returns and Penalties

The failure to file a U.S. Tax Return, informational returns such as a form 5471, and/or report Income can result in significant fines and penalties. Aside from under-reporting penalties, failure-to-file, and failure-to-pay penalties, if foreign income, assets or accounts are involved — it can get far more complicated.

Golding & Golding – IRS Voluntary Disclosure

At Golding & Golding, we limit our entire practice to offshore disclosure (IRS Voluntary Disclosure of Foreign and U.S. Assets). The term offshore disclosure is a bit of a misnomer, because the term “offshore” generally connotes visions of hiding money in secret places such as the Cayman Islands, Bahamas, Malta, or any other well-known tax haven jurisdiction – but that is not the case.

In fact, any money that is outside of the United States is considered to be offshore; the term offshore is not a bad word. In other words, merely because a person has money offshore (a.k.a. overseas or in a foreign country) does not mean that money is the result of ill-gotten gains or that the money is being “hidden.” It just means it is not in the United States. 

Many of our clients have assets and bank accounts in their homeland countries and these are considered offshore assets and offshore bank accounts.

4 Types of IRS Offshore Voluntary Disclosure Programs

There are typically four types of IRS Offshore Voluntary Disclosure programs, and they include:

  • Offshore Voluntary Disclosure Program (OVDP)
  • Streamlined Domestic Offshore Procedures (SDOP)
  • Streamlined Foreign Offshore Procedures (SFOP)
  • Reasonable Cause (RC)

IRS Voluntary Disclosure of Offshore Accounts

Offshore Voluntary Disclosure Tax law is very complex. There are many aspects that go into any particular tax calculation, including the legal status, marital status, business status and residence status of the taxpayer.

When Do I Need to Use Voluntary Disclosure?

Voluntary Disclosure is for individuals, estates, and businesses who are out of compliance with the IRS and the Department of Treasury. What does that mean? It means that for one or more years, you were required to file a U.S. tax return, FBAR or other International Informational Return and you did not do so timely, then you are out of compliance.

Common Un-filed IRS International Tax Forms

Common un-filed international tax forms, include:

If the IRS discovers that you are out of compliance, you may become subject to extensive fines and penalties – ranging from a warning letter all the way up to tax liens, tax levies, seizures, and criminal investigations. To combat this, you can take the proactive approach and submit to IRS Offshore Voluntary Disclosure.

Golding & Golding – Offshore Disclosure

At Golding & Golding, we limit our entire practice to offshore disclosure (IRS Voluntary Disclosure of Foreign and U.S. Assets). The term offshore disclosure is a bit of a misnomer, because the term “offshore” generally connotes visions of hiding money in secret places such as the Cayman Islands, Bahamas, Malta, or any other well-known tax haven jurisdiction – but that is not the case.

In fact, any money that is outside of the United States is considered to be offshore; the term offshore is not a bad word. In other words, merely because a person has money offshore (a.k.a. overseas or in a foreign country) does not mean that money is the result of ill-gotten gains or that the money is being “hidden.”

It just means it is not in the United States. Many of our clients have assets and bank accounts in their homeland countries and these are considered offshore assets and offshore bank accounts.

The Devil is in the Details…

If you do have money offshore, then it is very important to ensure that the money has been properly reported to the U.S. government. In addition, it is also very important to ensure that if you are earning any foreign income from that offshore money, that the earnings are being reported on your U.S. tax return.

It does not matter whether your money is in a country that does not tax a particular category of income (for example, many Asian countries do not tax passive income). It also does not matter if you are a dual citizen and/or if that money has already been taxed in the foreign country.

Rather, the default position is that if you are required to file a U.S. tax return and you meet the minimum threshold requirements for filing a U.S. tax return, then you have to include all of your foreign income. If you already paid foreign tax on the income, you may qualify for a Foreign Tax Credit. In addition, if the income is earned income – as opposed to passive income – and you meet either the Bona-Fide Resident Test or Physical-Presence Test, then you may qualify for an exclusion of that income; nevertheless, the money must be included on your tax return.

What if You Never Report the Money?

If you are in the unfortunate position of having foreign money or specified foreign assets that should have been reported to the U.S. government, but which you have not reported —  then you are in a bit of a predicament, which you will need to resolve before it is too late.

As we have indicated numerous times on our website, there are very unscrupulous CPAs, Attorneys, Accountants, and Tax Representatives who would like nothing more than to get you to part with all of your money by scaring you into believing you are automatically going to be arrested, jailed, or deported because you have unreported money. While that is most likely not the case (depending on the facts and circumstances of your specific situation), you may be subject to extremely high fines and penalties.

Moreover, if you knowingly or willfully hid your foreign accounts, foreign money, and offshore assets overseas, then you may become subject to even higher fines and penalties…as well as a criminal investigation by the special agents of the IRS and/or DOJ (Department of Justice).

Getting into Compliance

There are five main methods people/businesses use to get into compliance. Four of these methods are perfectly legitimate as long as you meet the requirements for the particular mechanism of disclosure. The fifth alternative, which is called a Quiet Disclosure a.k.a. Silent Disclosure a.k.a. Soft Disclosure, is ill-advised as it is illegal and very well may result in criminal prosecution.

5 IRS Methods for Offshore Compliance

  • OVDP
  • Streamlined Domestic Offshore Procedures
  • Streamlined Foreign Offshore Procedures
  • Reasonable Cause
  • Quiet Disclosure (Illegal)

We are going to provide a brief summary of each program below. We have also included links to the specific programs. If you are interested, we have also prepared very popular “FAQs from the Trenches” for FBAR, OVDP and Streamlined Disclosure reporting. Unlike the technical jargon of the IRS FAQs, our FAQs are based on the hundreds of different types of issues we have handled over the many years that we have been practicing international tax law and offshore disclosure in particular.

After reading this webpage, we hope you develop a basic understanding of each offshore disclosure alternative and how it may benefit you to get into compliance. We do not recommend attempting to disclose the information yourself as you may become subject to an IRS investigation insofar as you will have to answer questions directly to the IRS, which you can avoid with an attorney representative.

If you retain an attorney, then you will get the benefit of the attorney-client privilege which provides confidentiality between you and your representative. With a CPA, there is a relatively small privilege which does provide some comfort, but the privilege is nowhere near as strong as the confidentiality privilege you enjoy with an attorney.

Since you will be dealing with the Internal Revenue Service and they are not known to play nice or fair – it is in your best interest to obtain an experienced Offshore Disclosure Attorney.

1. OVDP 

OVDP is the Offshore Voluntary Disclosure Program — a program designed to facilitate taxpayer compliance with IRS, DOT, and DOJ International Tax Reporting and Compliance. It is generally reserved for individuals and businesses who were “Willful” (aka intentional) in their failure to comply with U.S. Government Laws and Regulations.

The Offshore Voluntary Disclosure Program is open to any US taxpayer who has offshore and foreign accounts and has not reported the financial information to the Internal Revenue Service (restrictions apply). There are some basic program requirements, with the main one being that the person/business who is applying under this amnesty program is not currently under IRS examination.

The reason is simple: OVDP is a voluntary program and if you are only entering because you are already under IRS examination, then technically, you are not voluntarily entering the program – rather, you are doing so under duress.

Any account that would have to be included on either the FBAR or 8938 form as well as additional income generating assets such as rental properties are accounts that qualify under OVDP. It should be noted that the requirements are different for the modified streamlined program, in which the taxpayer penalties are limited to only assets that are actually listed on either an FBAR or 8938 form; thus the value of a rental property would not be calculated into the penalty amount in a streamlined application, but it would be applicable in an OVDP submission.

An OVDP submission involves the failure of a taxpayer(s) to report foreign and overseas accounts such as: Foreign Bank Accounts, Foreign Financial Accounts, Foreign Retirement Accounts, Foreign Trading Accounts, Foreign Insurance, and Foreign Income, including 8938s, FBAR, Schedule B, 5741, 3520, and more.

What is Included in the Full OVDP Submission?

The full OVDP application includes:

  • Eight (8) years of Amended Tax Return filings;
  • Eight (8) Years of FBAR (Foreign Bank and Account Reporting Statements);
  • Penalty Computation Worksheet; and
  • Various OVDP specific documents in support of the application.

Under this program, the Internal Revenue Service wants to know all of the income that was generated under these accounts that were not properly reported previously. The way the taxpayer accomplishes this is by amending tax returns for eight years.

Generally, if the taxpayer has not previously reported his accounts, then there are common forms which were probably excluded from the prior year’s tax returns and include 8938 Forms, Schedule B forms, 3520 Forms, 5471 Forms, 8621 Forms, as well as proof of filing of FBARs (Foreign Bank and Financial Account Reports).

OVDP Penalties

The taxpayer is required to pay the outstanding tax liability for the eight years within the disclosure period – as well as payment of interest along with another 20% penalty on that amount (for nonpayment of tax). To give you an example, let’s pick one tax year during the compliance period. If the taxpayer owed $20,000 in taxes for year 2014, then they would also have to include in the check the amount of $4,000 to cover the 20% penalty, as well as estimated interest (which is generally averaged at about 3% per year). This must be done for each year during the compliance period.

Then there is the “FBAR/8938” Penalty. The Penalty is 27.5% (or 50% if any of the foreign accounts are held at an IRS “Bad Bank) on the highest year’s “annual aggregate total of unreported accounts (accounts which were previously reported are not calculated into the penalty amount).

For OVDP, the annual aggregate total is determined by adding the “maximum value” of each unreported account for each year, in each of the last 8 years. To determine what the maximum value is, the taxpayer will add up the highest balances of all of their accounts for each year. In other words, for each tax year within the compliance period, the application will locate the highest balance for each account for each year, and total up the values to determine the maximum value for each year.

Thereafter, the OVDP applicant selects the highest year’s value, and multiplies it by either 27.5%, or possibly 50% if any of the money was being held in what the IRS considers to be one of the “bad banks.” When a person is completing the penalty portion of the application, the two most important things are to breathe and remember that by entering the program, the applicant is seeking to avoid criminal prosecution!

                         

2. Streamlined Domestic Offshore Disclosure

The Streamlined Domestic Offshore Disclosure Program is a highly cost-effective method of quickly getting you into IRS (Internal Revenue Service) or DOT (Department of Treasury) compliance.

What am I supposed to Report?

There are three main reporting aspects: (1) foreign account(s), (2) certain specified assets, and (3) foreign money. While the IRS or DOJ will most likely not be kicking in your door and arresting you on the spot for failing to report, there are significantly high penalties associated with failing to comply.

In fact, the US government has the right to penalize you upwards of $10,000 per unreported account, per year for a six-year period if you are non-willful. If you are determined to be willful, the penalties can reach 100% value of the foreign accounts, including many other fines and penalties… not the least being a criminal investigation.

Reporting Specified Foreign Assets – FATCA Form 8938

Not all foreign assets must be reported. With that said, a majority of assets do have to be reported on a form 8938. For example, if you have ownership of a foreign business interest or investment such as a limited liability share of a foreign corporation, it may not need to be reported on the FBAR but may need to be disclosed on an 8938.

The reason why you may get caught in the middle of whether it must be filed or not is due largely to the reporting thresholds of the 8938. For example, while the threshold requirements for the FBAR is when the foreign accounts exceed $10,000 in annual aggregate total – and is not impacted by marital status and country of residence – the same is not true of the 8938.

The threshold requirements for filing the 8938 will depend on whether you are married filing jointly or married filing separate/single, or whether you are considered a US resident or foreign resident.

Other Forms – Foreign Business

While the FBAR and Form 8938 are the two most common forms, please keep in mind that there are many other forms that may need to be filed based on your specific facts and circumstances. For example:

  • If you are the Beneficiary of a foreign trust or receive a foreign gift, you may have to file Form 3520.
  • If you are the Owner of a foreign trust, you will also have to file Form 3520-A.
  • If you have certain Ownerships of a foreign corporation, you have to file Form 5471.
  • And (regrettably) if you fall into the unfortunate category of owning foreign mutual funds or any other Passive Foreign Investment Companies then you will have to file Form 8621 and possibly be subject to significant tax liabilities in accordance with excess distributions.

Reporting Foreign Income

If you are considered a US tax resident (which normally means you are a US citizen, Legal Permanent Resident/Green-Card Holder or Foreign National subject to US tax under the substantial presence test), then you will be taxed on your worldwide Income.

It does not matter if you earned the money in a foreign country or if it is the type of income that is not taxed in the country of origin such as interest income in Asian countries. The fact of the matter is you are required to report this information on your US tax return and pay any differential in tax that might be due.

In other words, if you earn $100,000 USD in Japan and paid 25% tax ($25,000) in Japan, you would receive a $25,000 tax credit against your foreign earnings. Thus, if your US tax liability is less than $25,000, then you will receive a carryover to use in future years against foreign income (you do not get a refund and it cannot be used against US income). If you have to pay the exact same in the United States as you did in Japan, it would equal itself out. If you would owe more money in the United States than you paid in Japan on the earnings (a.k.a. you are in a higher tax bracket), then you have to pay the difference to the U.S. Government.

                           

3. Streamlined Foreign Offshore Disclosure

What do you do if you reside outside of the United States and recently learned that you’re out of US tax compliance, have no idea what FATCA or FBAR means, and are under the misimpression that you are going to be arrested and hauled off to jail due to irresponsible blogging by inexperienced attorneys and accountants?

If you live overseas and qualify as a foreign resident (reside outside of the United States for at least 330 days in any one of the last three tax years or do not meet the Substantial Presence Test), you may be in for a pleasant surprise.

Even though you may be completely out of US tax and reporting compliance, you may qualify for a penalty waiver and ALL of your disclosure penalties would be waived. Thus, all you will have to do besides reporting and disclosing the information is pay any outstanding tax liability and interest, if any is due. (Your foreign tax credit may offset any US taxes and you may end up with zero penalty and zero tax liability.)

*Under the Streamlined Foreign, you also have to amend or file 3 years of tax returns (and 8938s if applicable) as well as 6 years of FBAR statements just as in the Streamlined Domestic program.

                      

4. Reasonable Cause

Reasonable Cause is different than the above referenced programs. Reasonable Cause is not a “program.” Rather, it is an alternative to traditional Offshore Voluntary Disclosure, which should be considered on a case by case basis, taking the specific facts and circumstances into consideration.

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