US Resident Taxpayer IRS Streamlined Disclosure – 3 Submission Tips
At Golding & Golding, we specialize exclusively in IRS Offshore Disclosure. One important aspect of making a formal disclosure to the Internal Revenue Service about your foreign accounts, assets, investments, and income is whether or not you may qualify for the “Streamlined Programs.”
And, with the Streamlined Disclosure Program existing on borrowed time, it is important that if you are considering making an offshore disclosure, that you consider whether you qualify for this program, and if so — to make sure you make a “proper submission.”
- 1 3 Important Tips when preparing your Streamlined Disclosure
- 2 Older Streamlined Arguments may no longer be effective
- 3 Make Sure you make a Full Streamlined Domestic Disclosure
- 4 Streamlined Domestic Penalty Does Not Penalize All Assets
- 5 Getting Into IRS Offshore Compliance
- 6 Golding & Golding, Board Certified in Tax Law
3 Important Tips when preparing your Streamlined Disclosure
Here are some important tips to keep in mind:
Older Streamlined Arguments may no longer be effective
Prior to the IRS bringing offshore compliance into the limelight, taxpayers had more in their arsenal when it came to proving non-willfulness.
For example, a common position a taxpayer may have taken 5 years ago (at the outset of the program) what they were “unaware that an account in their home country was considered foreign.”
While this position may still be valid, it is important to note that many banks have been proactive in contacting taxpayers regarding U.S. account holder status. Therefore, the amount of time between receiving this notice (usually a FATCA Letter) and making your submission, is important.
Make Sure you make a Full Streamlined Domestic Disclosure
More than 110 countries and over 300,000 foreign financial institutions (FFI) have already begun reporting U.S. account holders to the IRS. Therefore, the IRS may already have your information — even if they have not acted on it.
Thus, when it is time to make your streamlined disclosure, be sure that you include all your accounts.
Even the accounts at the “one small bank that you can’t imagine you would ever report you to the IRS.” Sure, maybe that bank won’t report — but if the bank is bought over by a bigger institution, you may be in trouble.
Streamlined Domestic Penalty Does Not Penalize All Assets
Yes, the majority of assets will get hit with a 5% penalty — but not all of them. For example: some (not all) Canadian retirement assets may be exempt:
“Under § 4.02 of Rev. Proc. 2014-55, you are treated as having made the election. See Rev. Proc. 2014-55, § 7.
Your Canadian retirement plan will not be included in the 5-percent penalty base. In the narrative statement of facts on Form 14654, please state that you are an “eligible individual” under Rev. Proc. 2014-55.”
Getting Into IRS Offshore Compliance
It is human nature to want to avoid making a proactive submission to a government agency such as the IRS before the IRS ever discovers the non-compliance. But, typically that is best path forward.
Moreover, if you realize you are out of compliance and begin researching online, you may begin to feel as though it is hopeless. Some of these attorneys and CPAs make it appear that everyone with unreported assets or income is going to be severely penalized and shipped off to prison.
That is simply not the case.
You have options, and depending on the facts and circumstances of your situation, your options may include the streamlined program, reasonable cause, or the delinquency procedures – which may result in significantly reduced fines and penalties (and may even receive a penalty waiver).
Golding & Golding, Board Certified in Tax Law
We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.
Golding & Golding is the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.