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Tax 101: Undisclosed Offshore Accounts, Are You Eligible for Streamlined Procedures?

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For persons having undisclosed offshore accounts and contemplating participation in the I.R.S. voluntary disclosure program, one frequently asked question is eligibility for the streamlined procedures (“Streamlined Procedures”) announced by the I.R.S. O.V.D.I. The Streamlined Procedures are effective as of September 1, 2012 and should be considered if there are offshore tax-noncompliance issues. If an individual qualifies, the benefits are substantial: he or she will be eligible for fast-track resolution of the case, the look-back period is limited to three years of delinquent tax returns and six years of F.B.A.R.s, and he or she will avoid penalties. However, most taxpayers will not qualify as eligibility is limited to a narrow class of taxpayers where intentional tax non-compliance is unlikely to exist.

To be eligible for the Streamlined Procedures:

  • The individual must have resided outside of the U.S. since January 1, 2009.
  • The individual must be a non-filer and must not have filed a U.S. tax return for the same period. Subject to a limited exception with respect to retirement or savings plans such as certain Canadian retirement plans for which a Form 8891 is applicable, amended returns will be treated as highrisk returns and not eligible for fast-track.