There are some shortcomings of the Streamlined Program:
“Despite the seemingly taxpayer-friendly incentives, the streamlined program has several shortcomings. The devil is in the details! First, participants are not guaranteed immunity from criminal prosecution. Second, with respect to the Streamlined Domestic Offshore Procedures, the five-percent penalty is imposed on a broader base of foreign assets – not just those relating to FBAR reporting.
Finally, to the extent that the IRS undertakes an examination of the taxpayer’s returns and finds that the taxpayer was willful, the taxpayer could be subject to any one of the following parade of horribles. First, and most obvious, the taxpayer will be barred from participating in the streamlined program. Second, not only could the IRS refer the matter to the Department of Justice for criminal prosecution on the FBAR front, but it could also recommend prosecution for perjury, on the grounds that the taxpayer submitted a false certification.”
The question that the IRS is sure to as is, “Why did you not file your returns and/or FBAR’s in a timely manner?” Now what are your going to answer? If you are an US citizen, in reasonably good health, have all (or at least most all of) your mental faculties how are you going to PROVE to the IRS that your omission was not “willful”.
I am advising clients to stay away from the streamlined program and just do a quite compliance filing of back returns and FBAR’s. I think it is a much safer way to go.