IRS Streamlined Offshore Disclosure is the process of getting into compliance with the U.S. government; it is designed for individuals and businesses that were non-willful in their failure to properly report/disclose their foreign accounts and/or foreign income to the United States. Streamlined Offshore Disclosure (aka Streamlined Program) is an approved method by the U.S. government for getting into compliance.
How to Qualify
The most important factor for the Streamlined Program is that you must be non-willful. While the IRS does not provide a specific definition of the term non-willful, it essentially means you did not act intentionally or deliberately in failing to report your foreign accounts or offshore income to the United States.
In other words, if you did not know you had to report the account or income information, then under almost all circumstances, you would be non-willful.
Streamlined Foreign Offshore Procedures
The Streamlined Foreign Offshore Procedures are for individuals who were non-willful and meet the Foreign Residence requirement. If you are a U.S. citizen or Legal Permanent Resident, then you must have lived outside of the United States in one of the last three tax years (not all three tax years) for at least 330 days.
You could have lived in multiple different countries during the 330-days and still qualify. In other words, the requirement is that you are outside of the United States for at least 330 days – not necessarily in any one particular country.
If you meet the Foreign Residence requirements, then you are still required to amend your U.S. tax returns (or file original returns) for the last three (3) years and report your foreign account information for the last six (6) years – but all penalties are waived and you generally receive a Foreign Tax Credit for any foreign taxes due.
Therefore, under the Streamlined Foreign Program, depending on your circumstances, you may have ZERO tax and ZERO penalty due.
*If you were only subject to U.S. tax because you were on a Visa and met the Substantial Presence Test, other rules apply.
Streamlined Domestic Offshore Disclosure
If you do not meet the foreign residence requirement under the Streamlined Foreign Offshore Procedures, you may qualify for the Streamlined Domestic Program. All the other requirements are essentially the same, except instead of receiving a penalty waiver, you must pay a small 5% penalty.
The 5% penalty is calculated by totaling the year-end value of your unreported foreign accounts and other specified assets for each year in your six-year compliance period. You then select the highest year’s year-end balance (not each year) and multiply it by 5% to get the penalty amount.
Want to Apply for the Streamlined Program?
At Golding & Golding, we represent hundreds of taxpayers each year and we limit our entire practice to IRS offshore voluntary disclosure (OVDP, FBAR, FATCA & Streamlined) – with the majority of our clients residing in foreign countries.
**Tax Law is a specialized area of law, and Offshore Disclosure is especially complex. Your FBAR Attorney should have:
- At least 15 years of experience as a practicing lawyer
- An advanced Master’s of Tax Law Degree (LL.M.); and
- Either a CPA or Enrolled Agent (EA) license.
Email us to schedule a Reduced Fee Telephone Consultation to speak with an attorney.