Tax Law Center Blog

By Parag P. Patel, Esq. | Updated December 22, 2012

I just returned from the American Bar Association Section of Taxation’s annual National Institute on Criminal Tax Fraud in Las Vegas.

A topic of discussion was the relatively new New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers (see IRS Instructions here).

David Horton, a senior official from the IRS, made some interesting statements about Non-Low Risk Account Holders Applying Under Streamlined Procedures.

Below are some of my notes:

–      Taxpayers who do not necessarily meet all the factors under the IRS’s streamlined filing compliance procedures for previously unreported offshore accounts should nonetheless apply to the program if they are low-risk account holders.

–      The streamlined program, introduced August 31, was meant as a way to allow low-risk, noncompliant account holders to come clean to the government. It introduced a $1,500 threshold for tax due in a year, as well as factors that would increase a taxpayer’s risk. Those taxpayers that had no risk factors and met the $1,500 threshold would have their applications “processed in a streamlined manner”.

–      Just because a taxpayer fails to qualify under the criteria as being low risk is not a reason to avoid applying to the program. Missing one of the factors only means that a revenue agent will review the taxpayer’s application.

–      A Non-“Low Risk” Account Holders is NOT a necessarily a high risk Non-Low Risk Account Holders. “That does not mean there’s going to be an audit.” “It means it’s going to be reviewed and could be subject to examination.”

–      The IRS “will not necessarily beat up on a taxpayer just because he’s a little bit over or doesn’t meet one of the criteria,” said Christopher Sterner, IRS deputy chief counsel (operations). “It’s just we’re not guaranteeing that the returns will just be processed without any further inquiry from the Service.”

–      The IRS does not have any plans to revisit the $1,500 threshold or the risk criteria.

In spite of all restrictive eligibility criteria, our law firm believes that the New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers is an excellent alternative to OVDP for Non-Resident U.S. Taxpayers.

The IRS’ New Filing Compliance Procedures for Non-Resident U.S. Taxpayers seems to be a new EZPASS or express OVDP without any penalties.   We are comprehensively exploring this alternative for our clients and expect to aggressively advocate for a very wide new EZPASS or express OVDP lane for entrants.

Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign accounts.

About the Author

Parag P. Patel, Esq. brings over three decades of experience to individuals and businesses facing complex tax problems. Holding advanced degrees from Georgetown University Law Center (J.D.) and New York University School of Law (LL.M. in Tax Law), the nation’s top tax programs, Mr. Patel delivers sophisticated and creative strategies in complicated federal and state audits, penalty abatements, and foreign asset/income reporting. His practice emphasizes international tax matters, specifically foreign financial account reporting (FBAR), voluntary disclosures, and penalty defense.

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