In addition to having to meet the general eligibility criteria described above, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Domestic Offshore Procedures described in this section must:
(1) fail to meet the applicable non-residency requirement described (for joint return filers, one or both of the spouses must fail to meet the applicable non-residency requirements. In other words they must be able to prove they are bona fide U.S. residents;
(2) have previously filed a U.S. tax return (if required) for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed;
(3) have failed to report gross income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) and/or one or more international information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) with respect to the foreign financial asset, and (4) such failures resulted from non-willful conduct. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.
Basically, once a U.S. taxpayer establishes that they are eligible to use the Streamlined Domestic Offshore Procedures must:
(1) for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed (the “covered tax return period”), file amended tax returns, together with all required information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621),
(2) for each of the most recent 6 years for which the FBAR due date has passed (the “covered FBAR period”), file any delinquent FBARs (FinCEN Form 114, previously Form TD F 90-22.1), and
(3) pay a Title 26 miscellaneous offshore penalty. The full amount of the tax, interest, and miscellaneous offshore penalty due in connection with these filings should be remitted with the amended tax returns.
It should be noted the procedures governing Streamlined Voluntary Disclosure Eligibility are still evolving and are subject the change. The most current version of the detailed procedure guide may be located on the IRS’s website.
Have questions regarding Streamlined Voluntary Disclosure Eligibility? Please contact our office for further assistance.
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Last updated: June 3, 2023
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