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Streamlined Filing Compliance Procedures

Frequently Asked Questions

Getting compliant on your taxes

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US citizens, permanent residents (green card holders), and people with a substantial presence in the United States (i.e., if they lived in the US for 183 days or more in a three-year period according to a specific IRS formula, explained here) have to file a tax return with the IRS reporting all of their annual income, even if it is earned outside the US. The IRS refers to them as “US persons for tax purposes.”

The streamlined foreign offshore procedure is for non-resident taxpayers who the IRS has determined have been non-willful in their tax delinquency. The taxpayer must submit tax returns for all the years they failed to file and also submit six years of FBARs, or Foreign Bank Account Reports, for any accounts in foreign institutions with an aggregate value of over $10,000.

You will have to pay all the taxes and interest you owe, but the IRS will not require the taxpayer to pay penalties, including accuracy-related penalties, information return penalties, and FBAR penalties. This is one of the ways they encourage delinquent non-resident taxpayers to get compliant. But your return is still subject to examination and adjustments, which may carry various penalties if your return was incorrect.

The voluntary disclosure can be used to rectify willful noncompliance, but the program requires timely disclosure and full cooperation with the IRS in order to counter an accusation of criminal liability. Besides the potential for a criminal prosecution, there can be a substantial civil penalty for fraud levied against willfully non-compliant taxpayers. The paperwork requirements are arduous, and there are several items that are at the discretion of the examiners, providing willfully non-compliant taxpayers with an incentive to fully cooperate with the IRS and make restitution in a timely manner.

Although there is no requirement that an attorney be involved in filing your streamlined foreign offshore procedure, hiring an experienced international tax attorney would be beneficial to ensure you comply with all of the IRS’ rules and submit complete paperwork. A misstep during this process can be extremely costly and may result in adverse results for the taxpayer.

As for voluntary disclosure, the taxpayer is tremendously exposed. The IRS is already aware of the taxpayer’s noncompliance, and many people who fall into the category of willfully noncompliant are engaged in some form of criminal activity. The voluntary disclosure process is rigorous. It would be a mistake to think a layperson could successfully navigate voluntary disclosure, and the penalty for an error is loss of freedom and money. The best practice is to get a skilled and experienced attorney.

THEVOZ & Partners specializes in the area of Tax Law

This area of law is particularly complex and requires a high level of training. For this reason, our attorneys train continuously and hold a significant amount of experience in the field of tax law. THEVOZ & Partners is a law firm with offices in Austin and Lausanne specializing in the provision of tax and legal services to individuals and companies in the United States and Europe. We help clients navigate a litany of domestic and international tax issues ranging from compliance to planning and even litigation. We understand that each client has unique needs and goals, and we pride ourselves on taking a personalized approach to tailor our services to meet those needs.