by Patrick Hoza, US Tax & Financial Services
While the Streamline Program has been around for quite a few years, it’s worth mentioning again for those US persons that have still not filed their returns or corrected past mistakes but were not aware of the program. The IRS accepts that taxpayers should not be exposed to extremely harsh penalties for a non-wilful failure to comply with all the various tax reporting requirements. The IRS Streamlined Voluntary Disclosure program is specifically for taxpayers who can certify that their failure to file all information, report all income and pay tax was due to ‘non-wilful conduct’ – that is, due to negligence, inadvertence and mistake, or good faith misunderstanding of these legal obligations.
The program is applied differently for US Persons that can qualify under the offshore version of the program, and those that must use the US resident program. We speak to the offshore version below.
Are you eligible?
To be eligible for the Offshore Procedure the taxpayer must meet a non-residency requirement. This requirement is met if:
- in any one or more of the most recent three years for which the US tax return due date, or properly applied for extended due date, has passed (the ‘covered tax period’)
- the individual did not have a US abode and was physically outside the United States for at least 330 full days
File the returns, pay the tax
For each of the most recent three years for which the US tax return due date (or properly applied for extended due date) has passed, the procedure requires that the taxpayer:
- file delinquent or amended tax returns, together with all required information returns
- file any delinquent FBARs (for each of the most recent 6 years for which the FBAR* due date has passed)
- pay the full amount of tax and interest due with the delinquent or amended returns
Coming forward has its benefits
If accepted into the foreign streamline program, no penalties will be levied on the tax returns or FBARs filed under the program. Only interest is due if you owe tax on the returns filed.
Alternative Streamline Program
It should be noted that since September 2019, the IRS offers a new streamline filing program. This program is geared towards individuals that have already expatriated (given up US citizenship) and have not previously filed any US tax forms. If you would like to know more about this program, you can read our blog on it here.
* FBAR = Report of Foreign Bank and Financial Accounts
Author bio
Since 1990, Patrick Hoza has many years of experience with US individual expatriate taxation under his belt, including High Net Worth Individuals, streamline/voluntary disclosure filings and tax consulting, as well as working with large multinationals like Novartis, BP, Hewlett Packard and General Electric. He has extensive knowledge in serving both US expatriates and resident and non-resident aliens with their US tax-related issues. Patrick Hoza is a Tax Director at US Tax & Financial Services, with extensive experience in all aspects of Individual US tax and Expatriation, including Hight Net Worth Individuals and large multinationals.
Patrick started his career in 1990 in California, with Westpro Ltd., as a Senior Tax Consultant, then spent the middle part of his career working at KPMG and Ernst & Young. During his time with Ernst & Young, he worked and lived in Russia, France and finally Switzerland. He has gained a valuable working knowledge of the respective income tax regulations in all of these countries.
Patrick holds a B.A. in International Relations from the University of Colorado, is a member of the National Association of Enrolled Agents and is a Certified Acceptance Agent.
