IRS Streamlined Filing Compliance Procedures FAQs

The IRS Streamlined Filing Compliance Procedures are designed to help certain taxpayers who failed to report foreign financial assets, foreign-source income, or required international information returns come into compliance with their U.S. tax obligations.

The procedures are intended for taxpayers whose noncompliance was non-willful. Determining whether a taxpayer qualifies requires a careful analysis of the facts and applicable legal standards.

The IRS established the Streamlined Filing Compliance Procedures to encourage eligible taxpayers to voluntarily correct prior filing failures while promoting compliance with U.S. international tax reporting requirements.

The procedures recognize that some taxpayers may have failed to comply because of negligence, inadvertence, mistake, or a good-faith misunderstanding of the law.

Yes. The Streamlined Filing Compliance Procedures remain available, although the IRS may modify or discontinue the program in the future. Eligibility requirements and filing procedures are subject to change.

Eligibility depends on numerous factors, including whether the taxpayer’s prior noncompliance was non-willful and whether all other program requirements are satisfied.

Each case should be evaluated individually before making a submission to the IRS.

Generally, non-willful conduct includes conduct resulting from negligence, inadvertence, mistake, or a good-faith misunderstanding of the law.

Whether conduct was non-willful is often one of the most important—and most heavily scrutinized—issues in a Streamlined submission.

The IRS considers the totality of the facts and circumstances. Relevant factors may include:

• The taxpayer’s background and experience
• Communications with tax professionals
• Prior tax filings
• Foreign account activity
• The taxpayer’s knowledge of U.S. reporting obligations
• Steps taken after learning of the filing requirements

No single factor determines the outcome.

Possibly.

Many dual citizens have successfully used the Streamlined Filing Compliance Procedures, but eligibility depends on the particular facts and the applicable requirements.

Yes.

Separate Streamlined procedures are available for certain taxpayers residing outside the United States.

Depending on the applicable procedures, taxpayers generally submit:

• Amended or delinquent federal income tax returns
• Required international information returns
• FBARs (Reports of Foreign Bank and Financial Accounts)
• A certification describing why the prior noncompliance was non-willful
• Any applicable tax, interest, and penalties

The precise filing requirements depend on the taxpayer’s circumstances.

Yes.

Eligible taxpayers generally submit delinquent FBARs as part of the Streamlined Filing Compliance Procedures.

They may be.

Depending on the taxpayer’s reporting obligations, the Streamlined submission may include one or more international information returns that were previously omitted or filed incorrectly.

A taxpayer seeking relief under the Streamlined Filing Compliance Procedures must certify, under penalties of perjury, that the prior reporting failures resulted from non-willful conduct.

The certification is often the most significant component of the submission.

The certification is critical.

The IRS evaluates both the certification and the surrounding facts when determining whether the submission satisfies the requirements of the Streamlined procedures.

An incomplete or inaccurate certification may jeopardize the submission and could have serious consequences.

The certification should be prepared carefully and accurately.

Because the certification is signed under penalties of perjury and may be reviewed in the context of a civil examination or criminal investigation, many taxpayers seek legal advice before submitting it.

No.

Submitting under the Streamlined Filing Compliance Procedures does not guarantee acceptance. The IRS may review the submission, request additional information, or initiate an examination if appropriate.

Yes.

The IRS retains the authority to examine returns submitted through the Streamlined Filing Compliance Procedures.

If the IRS determines that a taxpayer was not eligible for the Streamlined Filing Compliance Procedures, the taxpayer may be subject to additional tax, interest, civil penalties, or other enforcement actions, depending on the facts.

No.

Depending on the facts, other options may be available. The appropriate approach depends on the taxpayer’s reporting history, the nature of the noncompliance, and potential civil or criminal exposure.

The procedures serve different purposes.

The Streamlined Filing Compliance Procedures are intended for eligible taxpayers whose conduct was non-willful. The IRS Voluntary Disclosure Practice is generally designed for taxpayers with potential criminal tax exposure or willful noncompliance.

Selecting the appropriate compliance path is a significant legal decision.

Some taxpayers consider filing amended returns or delinquent information returns outside of an established IRS compliance program. Whether that approach is appropriate depends on the facts and carries important legal and strategic considerations.

Possibly.

Inherited foreign financial accounts frequently raise reporting issues involving FBARs, Form 8938, and foreign-source income. Eligibility for the Streamlined Filing Compliance Procedures depends on the particular facts.

Not necessarily.

Many taxpayers first become aware of their offshore reporting obligations years after the reporting failures occurred. Whether the Streamlined Filing Compliance Procedures remain appropriate depends on the circumstances and whether the IRS has already initiated contact.

In many cases, once the IRS has initiated an examination of the relevant issues, the Streamlined Filing Compliance Procedures may no longer be available. Prompt legal advice is important if you have already been contacted by the IRS.

The time required varies depending on the complexity of the taxpayer’s offshore activities, the records involved, and the preparation of the required filings and certification.

A Streamlined submission involves much more than preparing amended tax returns. It requires evaluating eligibility, analyzing whether the taxpayer’s conduct was non-willful, preparing a comprehensive certification, and ensuring that all required international information returns are properly completed.

Ben-Cohen Law Firm represents taxpayers in complex offshore compliance matters involving FBARs, FATCA reporting, foreign trusts, foreign corporations, inherited foreign assets, and IRS voluntary disclosure matters. We work closely with clients to evaluate available compliance options, minimize unnecessary risks, and develop a strategy tailored to their particular circumstances.