Penalty Free Program for Overseas Americans Delinquent on Tax Returns
To be eligible for the program It doesn’t matter what your income level is or how long you haven’t filed — this program allows you to start with a clean slate with amnesty from penalties. The increased scope of this program has opened the door to come into compliance without fear of penalties.
3 Tax returns
+ 6 FBARs =
Current years are 2015-2017 (Tax Returns) + 2012-2017 FBARs
- Even if you have not filed for many years, this program allows you to file just the last three years, greatly reducing the burden involved.
- No failure to file or FBAR penalties
In 2014 the IRS expanded the terms of the program that allows overseas Americans to file overdue US tax returns. This program was originally announced in 2012; it allowed delinquent taxpayers living abroad an opportunity to avoid the penalties and fees by coming into compliance. 2014 changes made the already popular program even better - resulting in over 48,000 taxpayers using it.
Most importantly, the program has broadened eligibility criteria and eliminated all penalties related to late filing / late payments.
Additionally, the program may be used for filing amended returns to claim retroactive relief on qualified foreign pension plans eligible for tax deferral.
We are offering a special package price of $1,200 — saving you 27%
Our special package
The regular price for Streamlined Procedure services if purchased separately:
|3 Years of Federal Tax Returns||350 * 3 = $1,050|
|6 Years of FBARs||75 * 6 = $450|
|Analysis of situation and applicability for the program||$125|
|Preparation of the IRS Certification by U.S. Person Residing Outside of the U.S statement for the Streamlined Procedure costs||$300|
|Preparation of the IRS Certification by U.S. Person Residing in the U.S statement for the Streamlined Procedure costs||$500|
Same percent discount applies if your income is over $100,000 — the package then costs $1,400.
If your bank requires proof of US tax compliance, we can also prepare and mail them the U.S. Paid Preparer Certification and Notification. This service costs $150.
Streamlined Procedure FAQ
Do NOT contact the IRS in any sort of pre-emptive move. In the very odd case that they get in contact with you, let them know that you are working on compliance with us. Our usual turnaround is generally faster than any deadline they'll impose on you, anyway.
The best first contact to make is a completed tax return.
The problem lies on the IRS side. The current form http://www.irs.gov/pub/irs-pdf/f14438.pdf is intended to be opened in the latest version of Adobe Reader (you can't view it inside your browser).
- Download the required program from www.adobe.com/products/acrobat/readstep2.html
- Right click and save the PDF file to your desktop
- Open the file from your desktop - not from inside your browser.
In many cases not meeting all conditions for the Streamlined Foreign Offshore Procedure (i.e. having been previously contacted by the IRS) - is not a reason not to apply. There is no downside to applying for the Streamlined Foreign Offshore Procedure. If your application is rejected you will not be granted a waiver of penalties. However, you still can establish the Statute of Limitations. And - you do not give up the opportunity to get waiver of penalties if the IRS determines the facts presented on the Certification Letter satisfactory to prove the non-voluntary nature of tax delinquency.
If you happen to have factors that cross out any chance to be accepted into the program (i.e. not meeting the non-residency qualification test) - then we will help you file outside of the procedure under the same scope of filing years. As opposed to the Streamlined Procedure you will not automatically get amnesty from FBAR penalties - however, in most cases IRS does no apply penalties as long as you file voluntarily and provided full disclosure of your financial situation.
In a word - Yes.
The $1,500 per year tax limit is no longer a risk factor.
Short answer - Yes.
If you qualify for the Streamlined Procedure but have been accepted into one of the offshore voluntary disclosure programs prior to September 1, 2012, you may opt out of the offshore voluntary disclosure program and request the Streamlined Procedure.
To opt out, you need to inform the examiner of your decision in writing. This is an irrevocable election and you will receive a notification letter confirming this. The examiner assigned to your case will then be able to make a risk determination of your submission and close your case according to the Streamlined Procedure. If all submission items for the voluntary disclosure program have already been submitted to the IRS, you will not be required to make a second submission for the Streamlined Procedures.
- Yes - as long as they file jointly.
- Price is the same as for individual SP. However - if they have separate foreign accounts and need duplicate set of FBARs, this will add an extra $75 per FBAR form.
Processing of Streamlined Procedure submission normally takes between 90 to 120 days. You may, however, experience delays due to the IRS perennial high backlog.
- If you owed tax and sent full payment with the returns, then you will receive an additional bill for interest penalties if they were not included with the original payment. This is a good sign indicating that returns were processed.
- If you did not owe tax - you will not hear from the IRS. The IRS does not send letters with the confirmation of acceptance. If you don't hear from the IRS for 3 months - this is also a good sign that your application was accepted and your tax account is now in good standing.
You can check the status of your IRS tax account online: http://www.irs.gov/Individuals/Order-a-Transcript.
Most state tax departments also offer this option. For example, if you filed a NY state return you can create account at http://www.tax.ny.gov/online and check your account status there.
IRS no longer sends the Streamlined Program acceptance letters (they have done so in the past). So the best news you can have is not hearing anything from them.
If IRS needs additional documentation, the request will arrive approximately within 2 months after your filing.
IRS has two programs for taxpayers who are currently non-compliant with tax returns and FBARs - Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Procedure (SP). Most attorneys will recommend the OVDP while tax practitioners to favor the SP. We believe that most clients are significantly better served by the Streamlined Procedure.
OVDP - which does require a lawyer's assistance, means a huge expense for the client. It involves filing 8 years of tax returns, paying tax and penalties due for all years, paying FBAR civil penalties, and paying lawyer fees for OVDP assistance. In other words - it's a much better deal for the attorney involved than the client.
Streamlined Procedure, on the other hand, only involved filing 3 years of returns and 6 years of FBARs. Most importantly - the fees are automatically waived. The cost involved is also significantly cheaper (attorney cost alone for OVDP starts at $10,000 - on top of the tax preparation fees).
The only occasion where OVDP is preferred, is when the IRS has already started a civil investigation. In such case OVDP serves to keep the consequent penalties at bay.
The US treasury requires that US Citizens/GC Holders remain current and compliant with FBAR requirements for the last 6 years. Your filing option depends on whether you had non-reported interest from foreign bank accounts and whether you are subject to additional reporting requirements.
- If interest from foreign bank accounts was reported on the original returns - File FBAR through the Delinquent FBAR Submission Procedure http://www.irs.gov/Individuals/International-Taxpayers/Delinquent-FBAR-Submission-Procedures without amending tax returns. Cost - $500 for 6 years of filing (up to 5 accounts per year).
- If interest from accounts was not reflected on the tax returns, file amended returns and FBAR reports through the Streamlined Foreign Offshore Procedure: http://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States. Cost - $1200 (or $1400 if over $100k income) + $240 (3 years of amended returns, discounted by 20%) and $300 for Streamlined Certification Letter
- If form 8938 (Statement of Specified Foreign Asssets) aka FATCA was required, but not produced, file amended returns, FATCA and FBAR reports through the Streamlined Foreign Offshore Procedure: http://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States. $1,400 for the SP + $240 ($100 X 3 * 20% discount for multiple years) for FATCA (8938) and $300 for streamlined certification letter.
- There is a special program for this - the Delinquent Informational Return Program. This program is also utilized for failure to report other informational returns (ie - Foreign Trust 3520-A)
- Participating in this program would entail 3 amended returns for each of the past 3 years (assuming you have not filed the informational return for all three years), and forms 5471 (assuming that is the missing form) for each year. Finally, a reasonable cause statement must be attached.
- Potential for filing FATCA (form 8938) if the balance on the company accounts (previously unreported) puts the taxpayer over the threshold
If you are at least a 10% shareholder in a foreign corporation, you have a requirement to file 5471. Failure to do so can carry very stiff penalties. http://www.taxesforexpats.com/we-help/small-business-owners.html
- have not filed one or more required international information returns,
- have reasonable cause for not timely filing the information returns,
- are not under a civil examination or a criminal investigation by the IRS, and
- have not already been contacted by the IRS about the delinquent information returns
Pricing - in addition to fee for form 5471 (see below)
- $100 for form 1040x if there was no income distribution from the corporation at all and the 1040
does not need to be touched.
- $100 for form 1040X if there was income distribution from the corporation reported as salary (or dividends) but form 5471 was not filed
- $450/$550 (if over $100k) if there is unreported income distribution from the corporation, which requires re-work of the 1040.
- $450/$550 (if over $100k) if income from corporation was reported as self-employment, but this is salary and form 1040 needs to be re-worked.
Example: Joe Smith owns corporation which is incorporated in France. He has failed to report this on form 5471, and has reported this as Self-employment income on Schedule C instead. It would cost him $600 per year to fix (subject to further multiple year discount of 20% for filing 3 years at the same time): $100 for the form 1040x and $500 for form 5471.
Total price for 3 years of corrections would be $600* 3 *.8 = $1,440.
|Foreign Corporation Form 5471|
|Form 5471 base price||$500|
|Additional U.S. shareholders (TFX clients) reported on same form||$50|
|Subpart F income calculation||$200|
|Second form 5471 for related company||50% discount|
|Dormant Corporation |
(meaning there was no activity during the year).
Please note that there are no 'almost-dormant' corporations (just like one can not be almost pregnant). Any business activity occurring during the year would make it non-dormant and require preparation of a complete Form 5471.
|Final 5471 with distribution of previously untaxed income||$1000|