“Streamlined” Procedure

Perceiving the various problems with the aforementioned options, the Internal Revenue Service announced the “Streamlined Procedure” – a friendlier and less costly approach to bring non-compliant Americans living overseas back into the tax filing system.

Here are the major points:

• Taxpayers will be required to file only 3 years of back tax returns and 6 years of FBARs, and if IRS agrees that the taxpayer is eligible for the Streamlined Procedure, no penalties will be assessed for the late filings.

• A simplified method of obtaining tax treaty relief will be available for certain foreign retirement plans held by the taxpayer.

• Taxpayers will be classified by the IRS as either “low” risk or “high” risk and such classification will affect both the level of IRS review and potential penalty assessment.

• Payment of any federal tax and interest due must accompany the submission.

• This procedure will not provide protection from criminal prosecution if the IRS and Department of Justice determine that the taxpayer’s particular circumstances warrant such prosecution. Taxpayers who are unsure of their potential for criminal sanctions should seek advice from a qualified US tax attorney and most importantly, make sure they preserve the attorney-client privilege. You can read more here see the section titled “Delinquent Tax Returns and FBARs.”

Part V will discuss “High” or “Low” Risk Classifications

See Part I, Part II and Part III

In accordance with Circular 230 Disclosure