Streamlined Offshore Filing Procedure
Darryl Albuquerque is our resident Streamlined Offshore Procedure Specialist
Even if you have not filed for 20 or more years, if you file for the previous 3 years and you get your foreign bank account information filed as well you can clean up your record with the IRS. All you’ve got to do is file every year going forward. The IRS has come up with this program and we are encouraging a lot of people to try and take advantage of this program while it lasts, because we really cannot say, with any degree of certainty, when the IRS may close it down. So, if you happen to be in this situation, we urge you to try and file under these procedures as soon as you can.
Some helpful advice from a genuine specialist
Do I qualify for the Streamlined Offshore Procedure?
To qualify, the IRS says that you should have the most recent 3 years of tax returns on file; so, even if you’ve not filed for more than 3 years that’s fine. All you need is the most recent three and all these need to be delinquent, so they need to be past their due date. So, currently, the years that are open for filing under Streamlined are 2020, 2021 and 2022. This is one part of the Streamlined procedures.
The second part that you probably have a Foreign Bank Account somewhere outside of the United States in the country you are residing in, or somewhere else too. Now, for this Foreign Bank Account report (or FBAR) – you need to file it on file 6 previous years! So, we’re talking about 2017 through 2022. So, that’s the second part of the filing.
The final, and probably the most important part of the filing, is a declaration, or a certificate from you in which you declare the reasons to the IRS why you did not file; and more critically, you state that your behavior in not filing these past few years was due to non-willful conduct. So, that certification goes with each of these tax returns when it is prepared and sent out, by you, to the IRS. You should not expect the IRS to acknowledge these. They do not. So, once you send it by mail or by courier that is the proof that you have sent these and so on. However, the FBARs can be electronically filed.
What is an FBAR?
The FBAR is, technically, the Form 114 which is issued by the Financial Crimes Enforcement Network (or FINCen as we call it). It’s part of the department of treasury. This form has been in existence for over 40 years now. It’s been called different things along the way. It’s a report of a foreign bank, simply put. There is no tax to pay on it, it is a separate filing from your tax return and you report bank accounts outside the United States if the maximum value or the highest values, for any reason, in a year is the equivalent of US $10,000 or more.
If you have more than one account, then you look at the highest values in aggregate. So, if you have $5,000 in one account and $5,000 in the other account and those were the highest values in the course of the year, put together, they add up to $10,000 so you need to report both those accounts. Whenever you have more than one account, usually, you do need to report them all.
Meet our specialist accountants for the Streamlined program
Senior Tax Manager
19 years of Expat Tax Experience
Mary Ann Acoba
Enrolled Agent, CPA
Senior Tax Manager
11 years of Expat Tax Experience