Should I Wait to File the Streamlined Procedure?
If you have not filed tax returns for many years, the IRS has a specific program to help get caught up without penalty. This program is an olive branch from the IRS and TFX has helped thousands of expats get compliant with the IRS without fines or other repercussions.
Benefits of the Streamlined Program
There are two main benefits of the Streamlined Program.
Limited scope of filing
Even if you have not filed in 30 years, this program allows you to file only the last 3 years of tax returns & 6 years FBAR in order to come to compliance. The IRS waives the requirement to file all the years prior.
This program allows taxpayers to avoid the dreaded 'failure to file penalty, which can be extremely onerous. Essentially, this program allows taxpayers to get a clean slate with the IRS.
Eligibility requirements to join the Streamlined Program
There are two main eligibility requirements.
Time outside of the US
There are a multitude of programs within the Streamlined Program umbrella, but the specific program we are mentioning is the Streamlined Foreign Offshore Program. In order to participate, a taxpayer must have spent considerable time outside of the U.S.
Non-willful lack of compliance: "I did not know"
The second requirement is the lack of 'willful failure to file. In plain English, this means that you were not aware of the requirement to file and thus you did not participate in the yearly filing of your tax returns.
Why should you file SP now if you are eligible?
Taxpayers should not delay in filing the streamlined program for two main reasons:
This program is not forever, the IRS can close it at any time.
Once you find out about your requirement to file, your 'non-willful' argument holds less water
Technically, once you are aware of your filing requirements, you are no longer non-willful if you file at a later point, as you have already been made aware.
How to proceed and get compliant? Which years should you file?
The IRS provides strict guidance on how to file in this scenario.
- Request current year extension
- File streamlined procedure for the 3 most delinquent years.
TFX makes it really easy to get compliant. Once you sign up as a new client, you can easily opt-in to this program when creating your tax questionnaire.
The most common questions about the Streamlined Procedure
To find out more about the Streamlined Offshore Procedure, read our Q&A article and the webinar. Our CPA covered there everything one should know about the Streamlined Procedure.