# Streamlined procedure - do independently or with acountant/agent?



## MartyMcBean

Hi everyone. I know many people have found themselves in a similar situation having had a look at the forum. I've too recently found out that I was meant to file US taxes but I never have. I was born in the US but never lived there and have never had any financial or family ties in the US. It was just by chance. I grew up in Canada and have been living in the UK for almost 6 years now. I have read about the 'Streamlined Foreign Offshore procedures' and it sounds like that's what I need to do. I'm 35 so I have a few years to catch up on!! What I wanted to ask was whether anyone has done this individually/on their own or whether people recommend using an agent/accountant to file it. I have no large accounts (sadly!) and earn an average salary. I've seen a lot of advertisements for agencies who do this for expats but it's truly expensive ($1500+). Is it doable to complete it on my own or is it reasonable and advised to pay a similar fee to have the support? I just wasn't sure if the process/forms were extremely complicated or straight forward and whether it was worth the risk doing it alone to save money. If anyone has any advice or experience in a similar situation, I'd be grateful to hear what your thoughts are! Thanks in advance!


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## Bevdeforges

The first time through (i.e. filing the current year - before you do the three years of backfiling) is the most "difficult" because you have to learn how to play the game. But it's not really all that difficult. You can download software to guide you through - but you will need to know a few terms beforehand. The software for the prior years isn't free, but it's also possible to use your current year forms as a model and simply do the prior years by hand if your situation really is simple.

Best plan is to take a look at IRS publication 54 to get an overview of the process. (Skim it, don't try to read and digest every word - and even then, only look at the sections that are relevant to you.) https://www.irs.gov/publications/p54/

There is also the "other" approach of just hanging tight until somehow you reach a point where you "need" to file in the US for some reason. Basically, there's no real penalty for "late filing" if you don't owe anything and it's highly doubtful the IRS is going to be adequately funded to come after the "overseas taxpayers" on what amounts to a technical violation any time soon.

But no, I wouldn't pay anyone any huge sums to do a "streamlined" filing if you're dealing primarily with salary income (covered mostly or entirely by the Foreign Earned Income Credit) and "normal" amounts of bank account interest (say, a few hundred to a few thousand dollars worth).

The FBARs (reports listing your "foreign" bank accounts) are pretty straight forward and you can knock those off in a half an hour or hour (at most) at the computer.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> There is also the "other" approach of just hanging tight until somehow you reach a point where you "need" to file in the US for some reason.


I'd argue against that, though, for at least two reasons:

1. The IRS's overseas Streamlined Program is as attractive as it could possibly get. When the deal is that good, it's a good idea to take the deal. There's always the possibility the IRS could amend or discontinue the Streamlined Program.

2. The Streamlined Program requires that participants swear that their failure to comply was non-willful, inadvertent. Now that you are aware of the annual paperwork ritual then, if you don't come into compliance _reasonably_ soon (weeks not years), you won't be able to swear, under penalty of perjury, that your failure to comply was non-willful.

However, if you are genuinely short of time (or have some other reason to delay), then I recommend at least getting your FinCEN Form 114(s) filed, assuming you were/are required to file them/it. That's also the first step in the Streamlined Program, as it happens. There are published FinCEN Form 114-related penalties that are much easier for the U.S. Treasury Department to assess if it wishes, the published penalties are rather steep, and Treasury is starting to receive more overseas data making it easier to send "inquiry" letters. FinCEN Form 114 is a particularly easy report to file and get out of the way. It should only take a few minutes, and (fortunately) Treasury listened and got rid of the Adobe Acrobat complexity. It's just a simple, online Web form now that'll even work on a tablet or smartphone. In contrast, it's at least quite difficult to have financial problems with the IRS if you fail to file tax returns and genuinely owe zero U.S. tax -- extremely likely in your situation from your description. FinCEN Form 114, though, it more cut and dried, more "binary," if (or more likely when) Treasury chooses to step up enforcement.


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## celticweb

Hi MartyMcBean

I was someone that found myself exactly in your position in March of this year. In the end I completed the Streamlined Foreign offshore procedures (even with owing no tax). I could never work my head around why the advise from every single accountant I spoke to was to complete using this procedure even with owing no tax. But most accountants are following the ruling of the IRS that states that they want taxpayers to come into compliance using these procedures. So I followed that advise.

I came into compliance for the very reason that BBCWatcher said (even though I was completely off the radar), I did not want to cross the line between non-willful and willful. Also some accountants I spoke to did say to me that it will get harder and harder to prove non-willful in future with all the fuss now about Fatca. Of course they could have been looking for business but in a way, that statement does ring a bit true.

I didn't contemplate doing it on my own even with all the helpful information here on this forum. There is a wealth of knowledge here and I learned more from the forum members than from the accountants. But my main reason for using help/support is that my bank accounts do contain a decent amount of money in them and over the fbar reporting requirements and I just didn't want to take the risk of fbar penalties and mistakes on my return. Had I been under fbar filing threshold, I might have attempted on my own.

Also it is true that once you have some returns under your belt, they could be used as a model going forward. I am now somewhat able to understand the concepts whereas before I didn't.

Also I filed a few months ago and not a peep from the IRS. Not to say I won't hear back but I was told it was unlikely.

Hope this helps a bit.


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## Nononymous

Bevdeforges said:


> There is also the "other" approach of just hanging tight until somehow you reach a point where you "need" to file in the US for some reason. Basically, there's no real penalty for "late filing" if you don't owe anything and it's highly doubtful the IRS is going to be adequately funded to come after the "overseas taxpayers" on what amounts to a technical violation any time soon.


I'm a fan of the wait-and-see approach. If the US doesn't know of your existence, don't give up that anonymity lightly. 

However your doing this depends on your personal risk tolerance (or sense that one should be "honest" or "law-abiding" whatever that means) and the likelihood that you might be denied banking services in the UK due to a US birthplace, unless you sign a W-9 form or otherwise prove tax compliance. It also depends on what other citizenship you might have and what protections it affords - for example, the US cannot collect penalties or taxes owing from Canadian citizens living in Canada.


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## MartyMcBean

Thank you all for your replies. Lots of things to think about. I'm pretty positive I would owe no taxes with my financial status/salaries earned so far in my life so it's hard to decide what to do. I will look into the forms some of you suggested and go from there. If I find it complicated I suppose I can always turn to look for support too. Does anyone have any recommended agents/tax accountants in case I go down that path? Thanks again. What a helpful forum


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## celticweb

One thing that might help you decide is do you have a current US passport that you use to travel to the US now and then? do you have a US social security number? Because you will need a social security number to file. Have you actually made any use of your citizenship recently? If all the answers to these questions are no, maybe you can continue as you are for now.

However I don't know how the laws will change and there is a new president to be elected this year but I do know that it is getting harder and harder for people with a US place of birth to stay unaffected by this. Just opening up any sort of financial or bank account today requires that one fills out citizenship forms and if you have a place of birth in the USA, you will automatically be considered a US citizen unless you can prove otherwise through either a CLN or a past relinquishing act before 2004. I was born a US/UK citizen with a us birth place so in my case, I can not prove I am not a US citizen and will always be deemed to be one under US law unless I renounce.

If you send me a private message, I will let you know the name of the firm I used and my experience with them.


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## celticweb

also by relinquishing act, i mean being naturalized as a citizen of another country. a US CLN (certificate of loss of nationality) is definitely needed from 2008 onward. before 2004 you didn't need to notify the state department, between 2004 and 2008 a different set of rules apply.

so depending on your situation, you can decide. and not all banks ask this information but most are now. My sister in law just recently opened a new bank account and she was asked.


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## MartyMcBean

Celticweb I will try to message you soon but I'm new to the forum and haven't had enough posts so I don't have permission to send personal messages yet. Hopefully soon.


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## celticweb

Hi 
I actually tried sending you a PM and I think the message got sent. see if you can reply back or at least received it.


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## celticweb

Also don't let anyone scaremonger you. I put up with a lot of that at first talking to different accountants and it affected my health right at the beginning. And I was told different things. The situation is very unlikely you are going to owe tax. 

And before you do anything, make sure that you are actually a US citizen. For example were you born a dual citizen or where you born in the USA as a US citizen and later became a Canadian citizen many years ago? It could be that you are not even a US citizen even though the US would like to claim you as one. I know this sounds ridiculous but make sure first and don't make sure through an accountant because they will bring you into compliance whether you are a citizen or not or whether you need to be in compliance or not. Also if you were born a dual citizen you are also not subject to the exit tax.

Everyone's situation is different. There are many people with cross border jobs, young people starting off on the career ladder or life ladder that see US citizenship as an asset and for them it is. For others it is not. For me I am undecided at the moment. I am not subject to the exit tax so can wait a bit to see what the new president is going to do.


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## BBCWatcher

celticweb said:


> It could be that you are not even a US citizen even though the US would like to claim you as one.


You're referring to relinquishment of U.S. citizenship as a possibility. It is possible, but it would have to be documented -- and (strangely enough) tax consequences, if any, are a separate matter. Starting very recently it costs $2350 to document relinquishment of U.S. citizenship.



> Also if you were born a dual citizen you are also not subject to the exit tax.


There's a little more to it than that. There's also a specific residence requirement to qualify for that Expatriation Tax exemption.


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## celticweb

Yes you are right about the resident aspect. I forgot that, most likely if you are a Canadian citizen at birth living in the UK then that might not apply. but from what you said in your opening post, the exit tax is unlikely to apply to you anyway

There is a lot of misconception about having loss of USA citizenship documented. It definitely applies now but in the past it depends what laws were in place when the naturalization occurred. 

There are people that became naturalied citizens of another country many years ago, even the 60s and 70s and they didn't need to document anything back then. It's ridiculous to assume that the new rules should now make them citizens again and be affecting them however much the US would like to think so. I believe there was a time in the past that dual citizenship wasn't even allowed. 

As I said, don't check with an accountant. If there are any doubts, best to check with an immigration solicitor or do research on the rules in place at the time. And also as I said, it could work the other way, many people want to be US citizens and might insist they are regardless.


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## JustLurking

celticweb said:


> There are people that became naturalized citizens of another country many years ago, even the 60s and 70s and they didn't need to document anything back then. It's ridiculous to assume that the new rules should now make them citizens again and be affecting them however much the US would like to think so. ...


Discussed fully in _Expats Live in Fear of Malevolent Time Machine_, from the Mar 2013 _International Tax Journal_.

This article was written before the US began applying its unconscionable $2,350 fee for documenting past relinquishments.


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## BBCWatcher

JustLurking made explicit what I was implicitly referring to.

As background, there have been a series of court cases and U.S. State Department administrative changes that all mean, in simple terms, that U.S. citizenship is _presumptively_ retained "no matter what" unless the citizen in question takes specific, voluntary, legally competent, well defined actions to renounce or document relinquishment. Years ago the State Department stripped alleged "communists" (for example) of their U.S. citizenships involuntarily if they (allegedly) committed relinquishing acts. That was tyrannical, truly -- hopefully everybody can agree on that point. ("Ooops, I lost my citizenship?" Ah, no.)

So, in practice, you have to document relinquishment of your U.S. citizenship explicitly nowadays. (Or renounce your U.S. citizenship and document that.) Somebody (the government) has to hear that particular tree falling in the woods, as it were. It costs $2350 to get a CLN, what the State Department claims (per Congressional "user pays" mandates) as the estimated, fully burdened, average cost to process a relinquishment or renunciation. Unfortunately the State Department is probably correct. Renunciants and relinquishers aren't penalized here, but they aren't granted any special fee breaks either. Welcome to the "user pays" club -- the same club U.S. green card applicants (for example) "enjoy."

Per the 2008 act, renunciation or relinquishment (in documented fact) is merely a prerequisite for a U.S. citizen to check out of the U.S. tax system. A CLN doesn't quite get you checked out. Then, to check out of the U.S. tax system -- to complete your obligations, more precisely -- you file IRS Form 8854 (plus any other requirements, but at least that one). Which is to say that you can have your renunciation or relinquishment documented but not yet be "checked out," fully.

It's substantially the same process/system for long-term U.S. permanent residents: terminate/document termination of your status, then file Form 8854 (plus whatever else you have to file/pay).

This explanation is a slight oversimplification, but it's the basic idea.

The "horror" scenarios that article describes really aren't operable for one basic reason: the IRS's Streamlined Program. Participation in the Streamlined Program requires 6 FinCEN Form 114s plus current, and 3 tax returns plus current. Not tax returns back to 1974 or whatever. That was a bit of hyperbole, I'd say.


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## celticweb

Yes I agree on your points and I am by no means an expert on this. 

But remember the facts are different for everyone. it depends what country they are naturalised in and if that country even accepts dual citizenship. Many people relinquished years ago with the intend to relinquish. I am not talking about people today who conveniently now claim that they relinquished 17 years ago on hearing of Fatca but meanwhile have been voting.

I mean people who generally intended to relinquish at the time, way back 50 years ago when no one was notifying. they didn't reapply for passports end of story.

and another reason of what is fundamentally wrong with Fatca. It is making banks play the role of citizenship solicitors, IRS agents and what not. 

I have been doing research when this whole thing came up for me and there are many people who felt that they aren't US citizens from a long time ago and suddenly have to prove that. It's one thing to have to prove it but another thing if the laws of 2016 are forced on you re the exit tax.


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## BBCWatcher

Right, but unless such an individual has documented his/her relinquishment of U.S. citizenship the U.S. State Department -- and other agencies, like the IRS -- assumes that individual is still a U.S. citizen. (Understandably!) Moreover, the article is correct about the 2008 act and how the U.S. tax system works. You can indeed be a former U.S. citizen (or former long-term permanent resident) and still be subject to U.S. tax jurisdiction on foreign source income. The 2008 act means your exit has to be done a certain way, explicitly.

The State Department does not have a psychic bureau to hear what was (or was not) in your head when you naturalized as a citizen of Cameroon (or whatever). Nor would any rational person want a government agency to attempt to read individuals' minds to strip them of their citizenships. That's a bad, bad place for governments to try to go. Demonstrably so back in the "Red Scare" years. I don't think this point is particularly hard to understand, that there's just no other reasonable way to treat individuals in a free society. You have to make sure individuals have agency in/with their citizenship(s). It's quite radical and dangerous, I think, to try to put government back in the business of reading minds.


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## JustLurking

The problem for some, BBCWatcher, is retro-activity of even the $2,350 fee for documenting relinquishment. HEART in 2008 may mean that _current_ relinquishment or renunciation needs to be done a certain way, but before that different rules applied.

For example, in the Vietnam era of the 1970s folk who moved to Canada _automatically_ lost their US citizenship on becoming Canadians. At the time this was an established legal fact, with neither need nor ability to formally document it with US government paperwork.

Fast forward to 2016. Under FATCA a number of non-US banks require a CLN before handling any individual with a US place of birth. Because people who relinquished under the established rules of the 1970s likely have no CLN, they now must go out and get one in order to live normal financial lives in their own home country.

So people who understandably -- and correctly, at the time -- assumed that they had washed their hands of the US _irrevocably and entirely_ suddenly find themselves decades later having to stump up money to prove it.

Peter Spiro's idea of a US anti-passport certifying _non_-citizenship suddenly seems like a good one.


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## Pacifica

Taking note of changes in US law, Canada Revenue Agency’s FATCA Guidance has the following provision for those persons, lacking a CLN, who relinquished prior to the _AJCA_ law (precursor of _HEART_) coming into effect in 2004 

CRA Guidance on enhanced financial accounts information reporting – S. 8.28

_“The CRA’s views of what may be accepted as a reasonable explanation for not having a CLN despite relinquishing U.S. citizenship for purposes of Part XVIII and the Agreement are informed by certain practical realities and how changes in law over time would have influenced reasonable courses of actions taken by individuals. 

Generally, it is the CRA’s view that an explanation demonstrating a relinquishment of U.S. citizenship (other than by a renunciation before a U.S. consular or diplomatic official) before June 4, 2004, and in accordance with the U.S. Immigration and Nationality Act (Title 8 of the U.S. Code) as it existed at the time of relinquishment, is sufficient to demonstrate a reasonable explanation as to why an account holder does not have a CLN. Financial institutions are not expected to be experts in U.S. nationality law; any such explanation accepted by a financial institution is accepted for the purposes of Part XVIII and the Agreement only and is not finally determinative of tax or nationality status.”_


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## Nononymous

Pacifica said:


> _Generally, it is the CRA’s view that an explanation demonstrating a relinquishment of U.S. citizenship... is sufficient to demonstrate a reasonable explanation as to why an account holder does not have a CLN. Financial institutions are not expected to be experts in U.S. nationality law..._


This gets to the heart of the "persuade the bank" approach. If you wish to remain safely non-compliant, all you need to do is convince financial institutions that you are not a US person. Which may be easy or difficult, depending on your country of residence, place of birth and other circumstances.


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## celticweb

Which bring us back to the point (dare I even mention it) is that CBT is the real issue that needs to be addressed by Congress and the new president. Without CBT we would not be discussing the "having to convince your bank", the anti-passport which I agree is a good idea and all the rest of this nonsense. All these issues are symptoms of the real issue, CBT.

And my point to the original poster was not to be told to come into compliance by a compliance accountant unless they knew 100% that they are actually US citizens. No matter how ridiculous as this might sound, this is the most important question. Am I a US citizen? Then decide what to do. Maybe one knows the answer to that question but it is not always clear. 

I was always aware of being a dual citizen but after we left the USA when I was young, i saw America as part of my heritage and place of birth. I was not part of American society and nor did I suspect that meant I had to pay my fair share of anything in a place I wasn't living as part of their community or society. and I never would have suspected that meant that some day i would have to either come into compliance at great expense, or hide out like a criminal in a country that I am also a citizen of.


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## LC3622

celticweb said:


> Which bring us back to the point (dare I even mention it) is that CBT is the real issue that needs to be addressed by Congress and the new president. Without CBT we would not be discussing the "having to convince your bank", the anti-passport which I agree is a good idea and all the rest of this nonsense. All these issues are symptoms of the real issue, CBT.
> 
> And my point to the original poster was not to be told to come into compliance by a compliance accountant unless they knew 100% that they are actually US citizens. No matter how ridiculous as this might sound, this is the most important question. Am I a US citizen? Then decide what to do. Maybe one knows the answer to that question but it is not always clear.
> 
> I was always aware of being a dual citizen but after we left the USA when I was young, i saw America as part of my heritage and place of birth. I was not part of American society and nor did I suspect that meant I had to pay my fair share of anything in a place I wasn't living as part of their community or society. and I never would have suspected that meant that some day i would have to either come into compliance at great expense, or hide out like a criminal in a country that I am also a citizen of.




Well said. However, the whole "pay my fair share" is a BS imposed by the politicians to cover up totally tyrannical laws. Half of the US households do not pay any federal income tax at all! What is their fair share? To use infrastructure, roads, hospitals, services paid for by citizens living and working overseas and double taxed? Yes, right - "the greatest democracy on earth" BS!


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