What Is the Streamlined Procedure?
The IRS allows individual expats who did not report their full income, pay all taxes or submit all required information (including FBARs) — due to non-willful conduct — to file up to three years’ worth of returns as a streamlined filing through Form 14653: Certification of U.S. Person Residing Outside of the United States.
Under the streamlined filing procedures, you are required to file three years of amended or delinquent federal tax returns and six years of FBARs. While no late filing or FBAR penalties are automatically applied to eligible nonresident taxpayers, you are not immune to criminal prosecution, if your neglect is deemed willful.
Non-willful neglect is defined by the IRS as a good faith misunderstanding of the filing requirements. Filing Form 14653 for U.S. expat tax amnesty requires providing details about the specific reasons for the failure to file correctly in the initial filing. You also need to give information specific to any professional financial advisors you worked with, as well as an explanation of the source of funds in your foreign accounts and assets, along with other pertinent details. This is necessary to obtain U.S. tax amnesty for expats.
Who Is Eligible for This Procedure?
While you should consult your expat tax advisor before filing under the streamlined foreign offshore procedures, you may be eligible if:
- You can certify under penalty of perjury that your conduct was not willful — that is, that you failed to file or completely report all income due to negligence, a mistake or a good-faith misunderstanding of the requirements.
- The IRS has not already begun a civil examination of your returns for any taxable year, regardless of whether this relates to undisclosed foreign assets.
- You have paid all previous penalty assessments that resulted from your filing of amended or delinquent tax returns.
- You have a valid Taxpayer Identification Number, which is usually your Social Security Number.
- You lived outside the United States for at least 330 days throughout the three most recent tax years.
- NOTE: These streamlined procedures for taxes for expats are available only to individuals, not business entities such as corporations or partnerships.
What to Consider Before Filing Under This Procedure
While returns submitted under the streamlined filing compliance procedures are not automatically audited, you should be aware that they may be subject to audit and verification procedures to determine accuracy and completeness. Your returns will be checked against information provided by your banks, financial advisors and other sources, and you may be subject to civil penalties and perhaps even criminal liability if the records indicate that you are not being truthful.
How Expat CPA Can Help
As you can tell from the above discussion, filing amended returns through this procedure is not a simple decision. You should always consult a qualified tax professional and be completely honest with your advisor before filing in this manner. That being said, if you truly believe that your non-filing was not willful and you have the facts to back that up, then contact us. We are happy to help eligible expats file under the streamlined filing procedures and regain the peace of mind that comes from knowing that you did the right thing.
Our Streamlined Procedure Package
- Includes 3 years of federal tax returns
- Includes 6 years of FBARs (Federal Bank Account Reports)
- No flat fee; please contact us for an estimate