The Streamlined Filing Compliance Procedures are available to
both U.S. individual taxpayers residing outside the U.S. and U.S.
individual taxpayers residing in the U.S. and is premised
upon the failure to report all income, pay all tax and submit all
required information returns, including FBARs (FinCEN Form 114)
being due to non-willful conduct.
Moreover, while returns submitted under the Streamlined Filing
Compliance Procedures would not be subject to IRS audit
automatically, the IRS points out that:
"[t]hey may be selected for
audit under existing audit selection processes applicable to any
U.S. tax return and may also be subject to verification procedures
in that the accuracy and completeness of submissions may be checked
against information received from banks, financial advisors, and
other sources.Thus, returns submitted under the streamlined
procedures may be subject to IRS examination, additional civil
penalties, and even criminal liability, if appropriate. Taxpayers
who are concerned that their failure to report income, pay tax, and
submit required information returns was due to willful conduct and
who therefore seek assurances that they will not be subject to
criminal liability and/or substantial monetary penalties should
consider participating in the Offshore Voluntary Disclosure Program
and should consult with their tax professional or legal
After a taxpayer has completed the
streamlined filing compliance procedures, he or she will be
expected to comply with U.S. law for all future years and file
returns according to regular filing procedures."
Considering the IRS' efforts to combat offshore tax evasion
through the Foreign Account Tax Compliance
Act coupled with the automatic exchange of information
between various governmental tax authorities (including the
Canada Revenue Agency) and the
IRS under numerous intergovernmental agreements, the IRS has
"OVDP offers taxpayers with
undisclosed income from offshore accounts an opportunity to get
current with their tax returns and information reporting
obligations. The program encourages taxpayers to voluntarily
disclose foreign accounts now rather than risk detection by the IRS
at a later date and face more severe penalties and possible
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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