Streamlined Compliance Procedures for Offshore Account Holders

Streamlined Compliance Procedures for Offshore Account Holders

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In June the IRS established a new program for U.S. taxpayers with offshore bank accounts.  This is an excellent opportunity for delinquent taxpayers to come forward voluntarily, avoid significant penalties and, most of all, avoid criminal tax charges.

Streamlined Domestic Offshore Procedures: The Alternative to the 2014 OVDI/OVDP

U.S. residents who meet certain requirements may use the Streamlined Domestic Offshore Compliance Program to correct their previously filed returns for unreported income and disclose their foreign bank accounts.  Participants must pay the tax due on their unreported income in the past three years, plus interest and an offshore penalty equal to 5% of the maximum annual aggregate balance of their unreported foreign accounts in the last six years.

Streamlined Domestic Offshore Procedure: The Qualification Requirements

To qualify under the new Streamlined Domestic Offshore Compliance Program the taxpayer must meet the following eligibility requirements:

  1. You failed to meet the non-residency requirements for the Foreign Domestic Offshore Procedure.  
  2. You have filed all required U.S. tax returns for each of the last three years.  
  3. You failed to report income from a foreign financial asset and pay tax on that income. 
  4. Your failure to pay tax on your foreign income and report your foreign assets must have resulted from non-willful conduct

Streamlined Domestic Offshore Procedure: Submission requirements

The new streamlined OVDP / OVDI program is far simpler and less burdensome than the standard voluntary disclosure program.

  1. Prepare and File Amended Income Tax Returns:
  2. Submit Full Payment With Interest of Amended Income Tax Return balance due:
  3. Complete and File Certification of Non Willfulness Statement
  4. Submit Full Payment of  5% offshore bank account penalty

In addition to mailing all the documents listed above to the designated address in Austin, you must also file all delinquent FBARs (now known as FinCen form 114) for the past six years.  These must be filed online through the FinCen website.

About Peter Pappas

Peter is a tax attorney and certified public acccountant with over 20 years experience helping taxpayers resolve their IRS and state tax problems.

He has represented thousands of taxpayers who have been experiencing difficulty dealing with the Internal Revenue Service or State tax officials.

He is a member of the American Association of Attorney-Certified Public Accountants, the Florida Bar Association and The Florida Institute of Certified Public Accountants and is admitted to practice before the United States Tax Court, the United States Supreme Court, U.S. District Courts - Middle District of Florida