Streamlined Filing Compliance Procedures
                     
Webinar Overview:
Who is a U.S. Getting to know 
Taxpayer? Form Streamlined Foreign
5471
Responsibility of US Streamlined Foreign 
Form 
Citizen and Offshore Procedures
8865
Residents
Foreign Assets Disclosure Streamlined Domestic 
and Reporting FBAR Offshore Procedures
Form 3520 Form Trap for the 
Unwary
8938
Form 926 Streamlined Programs: Who Is 
Remediation Eligibility Ineligible?
& much more!
Who is a U.S. Taxpayer?
• U.S. Citizens
• Lawful permanent residents – Green Card holder
• Those satisfying the substantial presence test of IRC section 7701(b)(3).
To meet this test, a person must be physically present in the United States on at least:
1.  31days during the current year, and
2.  183 days during the 3-year period that includes the current year and the 2 years 
immediately before that, considering:    
- All the days a person was present in the current year, and    
- One -Third (1/3) of the days a person was present in the first year before the current year, 
and    
- One - Sixth (1/6) of the days a person in the second year before the current year.
Responsibility of US Citizen 
and Residents
• File income tax returns reporting worldwide income (Form 1040)
• File required US international informational tax returns
• File FBARs on FinCen Form 114
Foreign Assets Disclosure and 
Reporting 
• Form 3520 Annual Return to report transactions with foreign trust and receipt of certain foreign gift
• Form 926 Return by a U.S Transferor of property to a foreign corporation
• Form 5471 Information Return of U.S. persons with respect to certain foreign corporations
• Form 8865 Return of U.S. person with respect to certain foreign partnerships
• Form 8621 PFICs
• FBAR
• Form 8938 Foreign Financial Assets
Form 3520
Annual Return to Report Transactions With Foreign 
Trusts and Receipt of Certain Foreign Gifts
• Under IRC 6048, taxpayers must report various transactions involving foreign trusts, 
including the creation of a foreign trust by a United States person, transfers of property 
from a United States person to a foreign trust, and receipt of distributions from foreign 
trusts.
• This return also reports the receipt of gifts from foreign entities under IRC 6093F.
• The penalty for returns reporting gifts is five percent of the gift per month, up to a 
maximum penalty of 25 percent of the gift.
Form 926
Return by a U.S. Transferor of Property to a Foreign 
Corporation
• Under IRC 6038B, taxpayers must report transfers of property to foreign corporations and other 
information. 
• The penalty for failing to file each one of these information returns is ten percent of the value of the 
property transferred, up to a maximum of $100,000 per return, with no limit if the failure to report the 
transfer was intentional.
Form 5471
Information Return of U.S. Persons with Respect to 
Certain Foreign Corporations
• Under IRC $ 6035, 6038 and 6046, certain United States persons who are officers, directors or 
shareholders in certain foreign corporations (including International Business Corporations) must 
report information. 
• The penalty for failing to file each one of these information returns is $10,000, with an additional 
$10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified 
of the delinquency, up to a maximum of $50,000 per return.
Form 8865
Return of U.S. Persons with Respect to Certain 
Foreign Partnerships
• Under IRC $ 6038, 6038B, and 6046A, United States persons with certain interests in foreign 
partnerships must report interests in and transactions of these foreign partnerships, transfers of 
property to these foreign partnerships, and acquisitions, dispositions and changes in foreign 
partnership interests. 
• Penalties include $10,000 for failure to file each return, with an additional $10,000 added for each 
month the failure continues beginning 90 days after the taxpayer is notified of the delinquency. 
• The penalty is capped at $50,000 per return, and ten percent of the value of any transferred property 
that is not reported, subject to a $100,000 limit.
FBAR
Who Must Report?
Individuals Must Must File FBARs if they Have: 
• Financial Interest in, Signatory Authority or Other Authority Over One or More Accounts 
(Bank Accounts, Brokerage Accounts, Mutual Fund Accounts) in a Foreign Country
Penalty
A person who willfully fails to file an FBAR or files an incomplete or incorrect FBAR, may be 
subject to a civil monetary penalty of $100,000 or 50% of the balance in the account at the 
time of the violation, whichever is greater. Willful violations may also be subject to criminal 
penalties.
Form 8938
A specified foreign financial asset (SFFA) 
• Any financial account maintaiisn:ed by a foreign financial institution
– Foreign bank accounts
– Foreign mutual funds 
– Foreign hedge funds 
– Foreign private equity funds 
– Certain foreign insurance products
Penalty
• In general, Form 8938 penalties will be $10,000 per 
year.
Efforts by IRS
• IRS’s latest efforts is to promote tax compliance and to crack down on offshore tax evasion
• These program will ease the financial and legal pain for expatriate Americans who live and 
work abroad
• They relax the penalties that a taxpayer with an overseas account might otherwise face for 
failing to disclose a foreign account
What Does the IRS Know?
Never Underestimate What Information The IRS Can Find Out on its Own:
• Tax Return Preparer Must Forewarn Clients About the Increasing Breadth of Information 
That Can Be Gathered by IRS, and Department of Justice (DOJ) on Noncompliant Taxpayers 
Through Social Media
• Foreign Bankers Are Often meticulous in Keeping Notes of Prior Phone Calls and Meetings 
with Clients or Advisors
• No Such Thing as a Secret Account
• Taxpayer Must be prepared to Credibly Explain to IRS Why They Failed to Disclose Foreign 
Accounts and Why They Did Not Make a Voluntary Disclosure?
Streamlined Programs: 
Remediation Eligibility
• Streamlined Programs Initiated in 2012
• Technically Two Programs
1. Streamlined Domestic Offshore Procedures 
2. Streamlined Foreign Offshore Procedures
• Common Theme of Both Programs is Requirement That Taxpayer Certify Under Penalty of 
Perjury That His Conduct Was Not Willful – Conduct was due to negligence, or mistake or 
conduct that is the result of good faith misunderstanding of the requirements of the law, 
accidental failure to report
• IRS does not explicitly define “non-willful”. They review each case on an individual basis
• Only available to Individual and Estate (Not entities)
• Always include a certification narrative (reasonable cause statement) and attach Form 14654 
or 14653
• Failed to report foreign financial assets and pay taxes
Streamlined Domestic 
Offshore Procedures
• IRS extended streamline procedure to American Living in the U.S. with undisclosed foreign 
accounts who previously were ineligible from participating in the streamlined procedure
• Such person who come forward now will owe back taxes, interest, and a reduce 
“miscellaneous offshore penalty” equal to five percent of their undisclosed foreign financial 
assets. 
• Taxpayers Residing In US Requires Taxpayer to Have Filed Prior US Tax Returns for Most 
Recent 3 Years AND 
• Limited to Filing Amended Returns (No Original Returns Permitted if None Originally Filed), 
AND
• Carries a Potential 5%  Miscellaneous Penalty for Unreported Account/Assets
Getting to Know 
Streamlined Domestic
What must I submit?
• For each of the most recent three years for which the U.S. tax return due date – or extended 
due date - has passed (the "covered tax return period"), file amended tax returns, together 
with all required information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 
8621); 
• For each of the most recent six years for which the FBAR due date has passed (the "covered 
FBAR period"), file any delinquent FBARS; and
• Pay a miscellaneous offshore penalty. The full amount of the tax, interest, and 
miscellaneous offshore penalty should be submitted with the amended tax returns. 
Miscellaneous Offshore Penalty 
for Streamlined Domestic
1. How is the miscellaneous offshore penalty calculated?
— It is equal to 5 percent of the highest aggregate balance of the taxpayer’s foreign financial 
assets that are subject to the penalty during the years in the covered tax return period and the 
covered FBAR period.
2. How is the highest aggregate balance determined?
— By tallying the year-end account balances and year-end asset values of all the foreign financial 
assets subject to the penalty for each year in the covered tax return period and the covered FBAR 
period and selecting the highest aggregate balance from among those years.
Streamlined Foreign Offshore 
Procedures
• U.S. taxpayers must satisfy the following requirements:
• The applicable non-residency requirement (for joint return filers, both spouses 
must satisfy the non-residency requirement); and 
• Have failed to file an FBAR with respect to a foreign financial account; OR foreign 
investment related informational forms, and 
• The failure to file an FBAR/Foreign investment related forms must have resulted from 
non willful conduct.
• U.S. Taxpayer living abroad who disclose their foreign accounts and settle their tax bills 
under Streamlined Foreign Offshore Procedure won’t be charged any penalties. 
Instead, they will simply owe back taxes and interest.
• File 3 years of delinquent or amended tax or information return and pay tax and interest
• File 6 years of delinquent FBARs
Getting to know 
Streamlined Foreign
The non-residency requirement has two strands:
• First, the taxpayer must have a non-U.S. abode.
• Second, the taxpayer must have lived outside of the U.S. for 330 full days or more in at least 
one of the most recent three years for which the U.S. tax return due date (or properly applied 
for extended due date) has passed.
A helpful formula that illustrates the extreme 
Up to 365 days in the U.S. isn cyeanr aonreio (:or 
any other year of the look-back period)
(+ Up to 365 days in the U.S. in year two (or 
any other year of the look-back period)
) At least 330 days (or more) outside of the 
(+ U.S. in year three (or any year of the look-
) back period). 
Satisfaction of non-residency requirement.
Getting to Know Streamlined 
Foreign
Example 
•  A ta#xp2ay:er who spends 36 days in the U.S. in year one, 36 days in the U.S. in year two, and 
36 days in the U.S. in year three fails the nonresidency requirement. 
• Why? Because there are 365 days in a year and in no year could he have spent at least 330 
days outside of the United States. Instead, the maximum number of days that he spent 
outside of the U.S. in each year was 329 days, one day shy of the 330-day threshold. 
• As you can see, the rigid requirements of the nonresidency requirement can play the role of 
“spoiler” to well intentioned taxpayers wanting to "get right” with the IRS.
Getting to Know Streamlined 
Foreign
Interesting question to ponder:
• Is the taxpayer in example 2 who is deemed ineligible for streamlined foreign, eligible for 
streamlined domestic? 
• Only if he has filed his U.S. tax returns for each of the most recent three years for which 
the U.S. tax return due date - or extended due date - has passed (a key requirement for 
streamlined domestic)
• If the taxpayer in example 2 filed U.S. tax returns in two of the most recent three years for 
which the U.S. tax return due date has passed, but neglected to do so in just one year, not 
only would he be ineligible for streamlined foreign but he would also be ineligible for 
streamlined domestic!
Getting to Know Streamlined 
Foreign
Remaining Requirements
• U.S. taxpayer must file delinquent or amended tax returns, together with all required 
information returns (e.g, Forms 3520, 5471, and 8938) for each of the most recent three 
years for which the U.S. tax return due date – or extended due date – has passed; and 
• File any delinquent FBARs for each of the most recent six years for which the FBAR due date 
has passed.
Polling Question:
How Many years of delinquent FBAR needs to be 
filed in Streamline Compliance Procedure? 
A. 3 Years
B. 6 Years
Streamlined Assets
• Streamlined Assets refers to the assets which are reportable either on FBAR or Form 8938.
• Some assets like personal real estate investment in foreign country are not included
• Other assets such as Canadian RRSP (Registered Retirement Saving Plan) is included on the 
FBAR and Form 8938 but NOT computed as part of the penalty. (Elect income deferral on 
retirement plans permitted by Treaty)
IRS Audit and Verification
Returns submitted under either the foreign or domestic offshore procedures are not 
automatically selected for audit. Instead, they are subject to “verification.”
• Through verification, the examining agent can request account statements and other 
relevant documents to verify the information reported. 
• However, this does not mean that an examination is impossible. On the contrary, such 
returns may be selected for audit under the existing audit selection processes applicable to 
any U.S. tax return
Taxpayers who are eligible to use the streamlined procedures and who follow all of the 
instructions are not subject to failure-to-file and failure-to-pay penalties, accuracy-related 
penalties, information return penalties, or FBAR penalties, even if their returns are 
subsequently selected for audit.
• First, any previously assessed penalties relating to the years that are selected for audit will 
not be abated. 
• Second, to the extent that the IRS determines an additional tax deficiency for a return 
submitted under these procedures, it can assert additional tax and penalties relating to 
that additional deficiency.
• Finally, the IRS will unleash the full arsenal of penalties if it determines that the original tax 
noncompliance was due to fraud and/or that the FBAR violation was willful.
IRS Audit and Verification
• Tax returns will be processed no different than any other returns submitted to the IRS. 
Reading between the lines, what the IRS seems to suggest is not to expect confirmation for 
receipt of the returns.
• Assuming a taxpayer's streamlined submission is rejected, the only remaining option for 
coming into compliance with one's U.S. tax obligations is to file amended 1040s and 
delinquent international returns in what is known as a “quiet disclosure.”
• With respect to the Streamlined Domestic Offshore Procedures, the five-percent 
miscellaneous penalty is imposed on a broader base of foreign assets - not just those 
relating to FBAR reporting.
Who Is Ineligible?
• Those taxpayers who cannot certify that their failure to report all income, pay all tax, and 
submit all required information returns was due to nonwillful conduct.
• Those taxpayers who are under criminal investigation by IRS Criminal Investigation.
• Those taxpayers who are undergoing a civil examination, regardless of whether that 
examination relates to unreported foreign assets.
Polling Question:
Is late filing and late payment penalties applicable 
for tax returns filed under Streamlined Filing 
Procedures?
A. Yes
B. No
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