Taxpayers In Louisiana, Texas, And Mississippi Should Consider IRS’s Streamlined Compliance Procedure Program

IRS’s Streamlined Compliance Procedure Program

On November 30, 2021, the United States Court of Appeals for the Fifth Circuit issued its opinion in U.S. v. Bittner.  Contrary to decisions of other federal courts, the Fifth Circuit concluded that it was proper for the IRS to impose non-willful FBAR penalties against the taxpayer, Mr. Bittner, on a per-account, rather than a per-year, basis.  The Fifth Circuit further concluded that Mr. Bittner had failed to establish reasonable cause for abatement of the penalties.

To be sure, the recent decision in Bittner is not taxpayer-friendly.  Indeed, all taxpayers who currently reside in the Fifth Circuit—i.e., those in the States of Texas, Louisiana, and Mississippi—should take a careful watch of the decision, particularly if they have undisclosed foreign bank accounts.  Because the civil penalties can now be quite large under the rationale of Bittner, taxpayers should consider whether it is appropriate to enter into the IRS’s Streamlined Filing Compliance Procedures to mitigate their exposure to potential civil penalties.

Facts of Bittner’s Case

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A Summary Of The IRS’ Streamlined Filing Compliance Procedures

The IRS’ streamlined filing procedures were first offered by the IRS on September 1, 2012.  Since that time, the IRS has made several revisions.  A current summary of the IRS’ Streamlined Filing Compliance Procedures is discussed below.

Do I Qualify for the IRS’ Streamlined Filing Compliance Procedures?

To qualify for the IRS’ Streamlined Filing Compliance Procedures (either Domestic or Foreign), taxpayers must meet the following initial requirements:

  1. The taxpayer must be an individual taxpayer or an estate of an individual taxpayer.
  2. The taxpayer must certify in a narrative under penalties of perjury that the conduct was not willful. The relevant conduct requiring certification relates to not only the failure to report income and/or pay tax, but also to submit all required information returns, including FBARs (e., FinCEN Form 114).
  3. The IRS must not have initiated a civil and/or criminal investigation of the taxpayer for any tax year.
  4. The taxpayer must have a valid Taxpayer Identification Number (e., TIN).

For streamlined filings under the IRS’ Domestic procedure, the taxpayer must also meet the following requirements:

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A Summary Of The IRS’ Streamlined Filing Compliance Procedures

The IRS’ streamlined filing procedures were first offered by the IRS on September 1, 2012.  Since that time, the IRS has made several revisions.  A current summary of the IRS’ Streamlined Filing Compliance Procedures is discussed below.

Do I Qualify for the IRS’ Streamlined Filing Compliance Procedures?

To qualify for the IRS’ Streamlined Filing Compliance Procedures (either Domestic or Foreign), taxpayers must meet the following initial requirements:

  1. The taxpayer must be an individual taxpayer or an estate of an individual taxpayer.
  2. The taxpayer must certify in a narrative under penalties of perjury that the conduct was not willful. The relevant conduct requiring certification relates to not only the failure to report income and/or pay tax, but also to submit all required information returns, including FBARs (e., FinCEN Form 114).
  3. The IRS must not have initiated a civil and/or criminal investigation of the taxpayer for any tax year.
  4. The taxpayer must have a valid Taxpayer Identification Number (e., TIN).

For streamlined filings under the IRS’ Domestic procedure, the taxpayer must also meet the following requirements:

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Venar Ayar - IRS Streamlined Filing

Many people may wonder what constitutes the IRS streamlined filing compliance procedures. The IRS streamlined filing compliance procedures are a system of procedures which allows US taxpayers the ability to acknowledge their failure to  report all of their foreign assets, as well as to certify that this failure to report all foreign financial assets, and the associated taxes due, was not due to a willful attempt to deceive the IRS. These procedures are designed to provide eligible taxpayers:

  • An easy, streamlined procedure for the filing of delinquent or amended tax returns.
  • Terms for filing and resolving their amended or delinquent returns, including relevant penalties.
  • Terms for resolving any tax or penalty obligations.
Eligibility For Streamlined Filing Compliance Procedures

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