# streamlined



## Lilyflower (Jul 17, 2015)

Hello,

Canadian citizen here that worked a few years in the US and moved back to Canada 2 years ago. I learned about the international information returns 8938 and bsa Fbar upon return when I was seeking a new accountant to do my taxes. I reviewed my taxes and found many non-compliance issues with my tax filings. Looks like neither my accountant nor I saw issues with my taxes and overlooked income (interest) from an account I inherited while I was deemed a US person for tax purposes. About 1 year and a half ago , I contacted a tax lawyer that suggested OVDP. I decided no to join that program. Then, I became aware of the streamlined procedures but decided not to jump the gun and waited. My fiance who happens to be American is now thinking of going back to the US and sponsor me with a Green card. 
Any thoughts if streamlined is still a viable option?


----------



## BBCWatcher (Dec 28, 2012)

Sure, the IRS's Streamlined Program is still available as I write this.


----------



## Bevdeforges (Nov 16, 2007)

One other consideration: How much are we talking about in income you neglected to report? You don't have to tell us, but if it's a relatively trivial amount, chances are you don't need to worry about it. They don't normally scour past returns for minor issues and frankly, everyone "forgets" minor sources of income from time to time. 

If the omissions result in some significant amount of taxes due, then yes, the Streamlined program is still available (and will most likely continue to be available for some time to come), but your past returns hardly have to be perfect. (And, in fact, there is no such thing as "the" correct answer when it comes to income tax returns.)
Cheers,
Bev


----------



## ForeignBody (Oct 20, 2011)

It is relatively easy to file any outstanding FBARs. I would go ahead with that, then that part will be tidied up. It would have to be done anyway under the streamlined procedure. You may also need to consider Form 8938.

Here's a place to start with this:
Comparison of Form 8938 and FBAR Requirements


----------



## craigpellet (Aug 4, 2015)

You could also consider amending returns to correct the error, but not going through streamlined. This is not a good option if the non-reported income is more than a little bit. The IRS will say if you have reported all of your income, and your only compliance issues are disclosures (FBAR, 8938), then just fix the error by filing the correct forms, and don't enter streamlined.

Remember that the statute of limitations on foreign assets does not start to run until they are properly disclosed on Form 8938 or other appropriate form.

Finally, if your inheritance was greater than $100,000 and you were a US person, you may be required to disclose the inheritance on Form 3520.

Best of luck!
Craig Pellet, EA
John Schachter & Associates


----------



## Lilyflower (Jul 17, 2015)

Hello all,

Thanks for all your answers. Part of the problem is that I never filed form 3520 showing the bequest , and the taxable year that this form should have been filled was in 2008. For the unreported income, it would be more or less 5K-7K for each year.

Also, according the one tax lawyer I contacted, if I choose to enter Foreign Streamlined now, it would look bad, since I learned about the program some time ago, and could have entered the Domestic Streamlined, pay 5% penalty on asset, but chose not to. By waiting, I now qualify for the Foreign Streamlined , for which there is no penalty on assets. But the mere fact of waiting could be construed as a way to avoid the penalty. Another tax lawyer told me to forget about the streamlined and enter OVDP, as I can be seen as willful blind or have my non-willfulness certification be challenged...


----------



## BBCWatcher (Dec 28, 2012)

Lilyflower said:


> ....since I learned about the program some time ago, and could have entered the Domestic Streamlined, pay 5% penalty on asset, but chose not to....


Yes, but read the IRS's instructions carefully. According to my reading, the IRS requires that the underlying, "original sin" conduct was "non-willful." I don't see language that requires certifying that your effort to pursue compliance must be timely.

So.... Did you know you were supposed to report the income and/or file a financial report of your inheritance at that time? Did you choose to flout the law from the get-go? If the answer is yes, that's willful conduct, and the OVDP is an option available to you. If not, according to my read of the instructions the Streamlined Program is an option available to you. You also always have the option of traditional, standard late filing -- with standard interest and penalties, and standard installment plan and forbearance requests.


----------



## craigpellet (Aug 4, 2015)

BBCWatcher said:


> Yes, but read the IRS's instructions carefully. According to my reading, the IRS requires that the underlying, "original sin" conduct was "non-willful." I don't see language that requires certifying that your effort to pursue compliance must be timely.


The decision to do nothing could be seen as willfulness, by an aggressive revenue agent. I don't see where the IRS refers specifically to the original act. They do refer to a "failure to report all income, pay all tax, etc." The IRS could argue that a willful decision to not report all income, etc. was made when the decision not to enter streamlined was made. You can review the text of the certification that you must make on Form 14653, bottom of page 1, or the US resident form, Form 14654, bottom of page 3.

The OVDP penalty is up to 50% of the max value of the undisclosed assets now. 

That might make the risks of streamlined seem more palatable. If it were me, I would want a lawyer ready to defend me if I went ahead with streamlined. You can see from the certification that there is risk of criminal prosecution. On the other hand, your case is relatively small. It is easy to imagine them letting this one through without question.

I hope this helps!


----------



## BBCWatcher (Dec 28, 2012)

craigpellet said:


> The decision to do nothing could be seen as willfulness, by an aggressive revenue agent.


Sure, maybe. I suppose that's _possible_. All I can advise is to read the IRS's instructions and make a good faith effort to follow them, truthfully and to the best of your ability.

The default fallback if the IRS doesn't accept that you qualify for the Streamlined Program -- assuming you didn't compound any problems by lying in your submission -- is standard late, truthful filing with the standard published penalties and interest, with standard possible options for installment payment (routinely granted) and forbearance (common but more speculative). So look at the published penalties/costs with standard late, truthful filing. They're probably not that bad with the figures discussed so far. If they're not bad then the OVDP probably isn't too exciting.


----------

