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IRS Streamlines its Streamlined Offshore Procedures with More User Friendly Forms

The IRS has just recently updated the Streamlined Procedure forms for both its “foreign” (SFOP) and “domestic” (SDOP) procedures. All of the information can now be typed directly into the fields. The statement of facts can be cut and pasted directly onto the Form, which should help simplify the process.

The forms can be found by clicking on the links below:

  • Form 14653–Certification by U.S. Persons Residing Outside of the United States for Streamlined Foreign Offshore Procedures
  • Form 14654–Certification by U.S. Persons Residing in the United States for Streamlined Domestic Offshore Procedures.

The streamlined filing compliance procedures are designed for only individual taxpayers, including estates of individual taxpayers. The streamlined procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States.

In order to enter the streamlined offshore procedures, the taxpayer must officially certify that their failure to report all income, pay all tax, and file all required information was due to non-willful conduct. The IRS’ two new forms simplify this certification process, Forms 14653 and 14654. Form 14653 is to be filed by U.S. persons residing outside of the United States, while Form 14654 is to be filed by U.S. persons residing within the United States.

In conjunction with filing the appropriate certification form, a taxpayer entering the streamline program must submit delinquent and/or amended tax returns for each of the most recent three tax years. Delinquent FBARs for the prior six tax years must also be filed. These returns must be complete and accurate, and accompanied by full payment of taxes, interest, and applicable penalties.

The new forms (the old forms were basic PDF text documents) will likely standardize the IRS’ review process for Streamline program eligibility and guide the IRS examiner in spotting issues.

In spite of the standardization of the forms, very careful drafting and persuasive legal advocacy of a taxpayer’s particular circumstances are still recommended for a clear demonstration of non-willfulness.