# How to back out of the Streamlined Procedures



## iota2014

I think I've at last worked out which bits of the US tax law apply to my entirely non-US income, so now I'm ready to file five years of returns - after which I'll be all set to certify that everything has been submitted and no tax is owed, and thus exit the US tax system permanently next January - February.

But now I wonder if I actually need the Streamlined Procedures. There's no tax due. Trouble is, I've already e-filed the six FBARs, ticking the Streamlined option.

Can I amend my FBARs by resubmitting them without mentioning Streamlined, and then just send in the 1040s even though they're "late"? Anyone have a view on this? It would be a lot simpler if it's not going to upset the IRS.


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## BBCWatcher

Whether you need the Streamlined Program or not, you can still participate in it. Moreover, I don't see any impediment to _exceeding_ the Streamlined Program's requirements -- by filing an older tax return not required under that program, for example -- if that's what you want to do.

Am I missing something?


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## iota2014

I got to the point of examining the certification form and my soul baulked at putting my name to such rubbish. But afterwards I stumbled across a page which says that a substitute certification is acceptable as long as all the information is included.



> *Streamlined Certification* - The taxpayer is required to attach a complete self-certification with a Streamlined package. The required certification depends on the type of filing. Taxpayers residing outside of the United States use Form 14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures. Taxpayers Residing in the United States use Form 14654, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures. The items required for a complete certification are:
> 
> For a Streamlined Foreign Offshore filing:
> 1 - Statement certifying that the taxpayer meets the eligibility requirements for the Streamlined filing procedures.
> 2 - Explanation of the specific reasons for the failure to comply with tax and financial account reporting obligations.
> 3 - Taxpayer(s) signature(s) on the certification under a jurat.
> [..]
> *Note:*
> A substitute certification form is acceptable as long as it contains all of the relevant information listed above including a signature under a jurat.


https://www.irs.gov/irm/part3/irm_03-022-003r.html#d0e1094

So I'll stick with the programme and just write my own certification.


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## BBCWatcher

What part(s) of IRS Form 14653 do you object to? Is there anything on that form that does not reflect the facts at hand?

If the form accurately represents the facts, I'd be inclined to use it, even if seeing them in that particular black and white form is uncomfortable. The IRS (and Treasury) aren't actually _required_ to let you off the hook for the late FBARs, so when begging forgiveness it's generally best to do so as politely as possible.


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## iota2014

BBCWatcher said:


> What part(s) of IRS Form 14653 do you object to? Is there anything on that form that does not reflect the facts at hand?


Yes. 

I haven't failed to file. The US didn't bother to tell me they wanted me to.
I haven't failed to report my entirely UK income to America. America never asked.
I haven't failed to pay any tax due. No tax was due.



> The IRS (and Treasury) aren't actually _required_ to let you off the hook for the late FBARs, so when begging forgiveness it's generally best to do so as politely as possible.


That's why the form doesn't work, you see - completely different worldviews.

I'm not "on the hook", not having broken any laws or committed any crimes or any sins of omission or commission with regard to FBARs, American tax, or financial secrecy. And definitely not "begging forgiveness" given that as far as I'm concerned it's me that's the wronged party here. Not that I expect the US to see it that way.

I'm not proposing to be impolite, certainly not. That would be childish. I agree, a substitute form may draw their attention and result in closer scrutiny, but I'm not really worried about that possibility- they wouldn't find anything because there's nothing for them to find. 

What does cause me concern is the possibility that they could decide I hadn't met the requirements of the streamlined programme, and set about trying to apply punitive penalties. But could they do that, I wonder? Depends on the wording of whatever legal arrangement gives them the authority to offer the streamlined programme, I guess.

Sigh. More research needed. Thanks for the comments.


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## iota2014

Actually, I think I'm wrong.

Looking at it further, I think my first instinct was right - I need to back out of this programme. I think I misread the eligibility requirements.



> *Eligibility for the Streamlined Foreign Offshore Procedures*
> In addition to having to meet the general eligibility criteria described above, individual U.S. taxpayers [..] seeking to use the Streamlined Foreign Offshore Procedures described in this section must:
> 
> (1) meet the applicable non-residency requirement described below [..]
> 
> and
> 
> (2) have failed to report the income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) with respect to a foreign financial account, and such failures resulted from non-willful conduct.


I meet (1) but not (2). When I read these criteria initially, I thought that I was covered by paragraph (2), because I hadn't filed either returns or FBARs, never knowing I had to. But now that it turns out no tax is due or would have been due during any of the years not covered by the Statute of Limitations, it appears to me that I fall out of eligibility (because it doesn't say "and _may_ have failed to pay tax due").

If so, that means I must "quietly disclose" as there's no other way to do it.

And my objections to the certification form were ill-founded, as it's not meant for those in my position. 

I hope I'm interpreting this correctly.


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## BBCWatcher

iota2014 said:


> I haven't failed to file. The US didn't bother to tell me they wanted me to.


You're ascribing meaning to "failed to file" that doesn't exist. Are you suggesting somebody had to tell you to make your bed this morning in order for you to fail to make your bed, even if you live alone? "Failed to file" simply means you did not file -- the absence of action. "I failed to finish my hamburger at dinner yesterday."

Not that it matters, but every United States passport happens to include written notice of these obligations.



> I haven't failed to report my entirely UK income to America. America never asked.


See above.



> I haven't failed to pay any tax due. No tax was due.


See above, plus "any tax due." Yes, you failed to pay zero. You also did not fail to pay zero. Both statements are logically true. But what this really means is that _if you owe tax_ obviously you failed to pay it. The IRS decides whether you owe tax, not you. (Though I trust the IRS will agree with you.)



> I'm not "on the hook", not having broken any laws or committed any crimes or any sins of omission or commission with regard to FBARs....


So why did you file late FBARs if you weren't legally required to file them?



> What does cause me concern is the possibility that they could decide I hadn't met the requirements of the streamlined programme, and set about trying to apply punitive penalties. But could they do that, I wonder?


If you were legally required to file FBARs, they could charge a late filing penalty, yes. Treasury is not required to forgive that particular oversight.


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## iota2014

BBCWatcher said:


> You're ascribing meaning to "failed to file" that doesn't exist. Are you suggesting somebody had to tell you to make your bed this morning in order for you to fail to make your bed, even if you live alone?


Certainly. It's a lifestyle choice, not a failure. Reason duvets were invented. 



> Not that it matters, but every United States passport happens to include written notice of these obligations.


Not until the mid-eighties, actually. Not that it matters, I agree. 



> If you were legally required to file FBARs, they could charge a late filing penalty, yes.


No, the FBARs have been filed. I was thinking about what they might do if they took the view that by using a substitute certification form I had failed to satisfy the requirements of the Streamlined Programme. However, per my intervening post, it's dawned on me that the certification form is probably not designed for use by those who owe no tax, so all else is semantics. Many thanks for your comments, I do find them very helpful.


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## BBCWatcher

I just checked one popular English language dictionary, and one of the listed meanings of the verb "fail" (followed by an infinitive) is this one: "neglect to do something." That's clearly the IRS's meaning here, and it's a perfectly reasonable, standard English language usage.

Did this word inadvertently trigger a bad memory -- "failing" high school chemistry, for example?


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## iota2014

BBCWatcher said:


> Did this word inadvertently trigger a bad memory -- "failing" high school chemistry, for example?


Nope. I was always particularly good at chemistry. 

But what is your opinion on the eligibility question?


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## iota2014

You see, I'm inclined to think that since the aim of these procedures is to try to persuade people who owe tax to pay it, that's why the first two criteria (failed to report income, failed to pay tax due) are determinative, while the third is not. That show that those who failed to file either or both are eligible. If they wanted the procedures to be used by those who owe no tax, they could have said "failed to report income, and may have failed to pay tax due, and may have failed to file FBARs"

It may seem like splitting hairs, but it matters, to me, as it has to be sworn to under penalty of perjury. I don't want to use these procedures if they're not meant to be used by me, now that I'm so near the finishing line.


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## BBCWatcher

It's quite correct that you failed (neglected) to pay any tax due. You didn't pay anything, so if any tax is due, you failed to pay it. That all makes perfect sense to me.

You still seem to be thinking that the word "fail" requires some intent or forethought -- some conscious act. No, not here, and not according to the dictionary. The IRS itself makes this meaning quite clear in the form when it elaborates that the conduct must have been "non-willful."

I don't see any problem whatsoever here.


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## iota2014

OK, thanks. You may be right, I may be overthinking. I'll consider.


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## iota2014

Happy days, I found clear instructions from the IRS! 


> Among the various requirements contained in IRC 877 and 877A, individuals who renounced their US citizenship or terminated their long-term resident status for tax purposes after June 3, 2004 are required to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation. If all federal tax requirements have not been satisfied for the 5 years prior to expatriation, the individual will be subject to the IRC 877 and 877A expatriation tax provisions even if the individual does not meet the monetary thresholds in IRC 877 or 877A.
> Individuals who have expatriated should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. All payment plans require continued compliance with all filing and payment responsibilities after the plan is approved.
> For more detailed information on what to do if you have not filed your required federal income tax returns, refer to Filing Past Due Tax Returns.


https://www.irs.gov/Individuals/International-Taxpayers/Expatriation-Tax

And the "Filing Past Due Tax Returns" page says:


> File all tax returns that are due, regardless of whether or not you can pay in full. File your past due return the same way and to the same location where you would file an on-time return.


https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Filing-Past-Due-Tax-Returns

Thanks, BBCWatcher, for your comments.


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## BBCWatcher

Right, but you still have the option of participating in the Streamlined Program. I can't see any harm in doing so, but there is a potential benefit: even stronger odds of waiving the published FBAR late filing penalties. I don't think you'll be assessed those penalties either way, but the Streamlined Program doesn't hurt.

The Streamlined Program is a standing amnesty program. You are in need of amnesty: waiver of the FBAR penalties. So you might as well ask for the maximum forgiveness. Why not?


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## iota2014

BBCWatcher said:


> Right, but you still have the option of participating in the Streamlined Program. I can't see any harm in doing so, but there is a potential benefit: even stronger odds of waiving the published FBAR late filing penalties. I don't think you'll be assessed those penalties either way, but the Streamlined Program doesn't hurt.


I was surprised when I found the IRS telling expatriating individuals to use quiet disclosure, but it makes sense when you think about it. 

The aim of the Streamlined Procedures is to tempt individuals into compliance by offering to waive penalties. But expatriates are easy to identify, thanks to the 8833. No need to offer the carrot of reduced penalties. And FBAR penalties must pale into insignificance (well, maybe not insignificance, but at any rate a whiter shade of pale) next to the potential ongoing goodies of the exit tax. 



> The Streamlined Program is a standing amnesty program. You are in need of amnesty: waiver of the FBAR penalties. So you might as well ask for the maximum forgiveness. Why not?


The IRS as religious cult? It's all too plausible. Sci*******ists, presumably.


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## iota2014

iota2014 said:


> ...thanks to the 8833.


8854 I should have said.


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