The IRS Streamlined Filing Compliance Procedures are designed to help taxpayers who have failed to report foreign assets and income to come into compliance with their tax obligations. If you are a U.S. taxpayer who has foreign assets and income that you have not reported, the streamlined filing procedures can be an excellent option for bringing yourself into compliance and avoiding penalties.

In this post, we will cover everything you need to know about preparing for IRS Streamlined Filing Compliance Procedures.

What Are the IRS Streamlined Filing Compliance Procedures?

The IRS Streamlined Filing Compliance Procedures are a set of procedures that allow eligible taxpayers to come forward voluntarily and disclose their unreported foreign assets and income. The program is intended to help taxpayers avoid penalties and reduce the risk of IRS enforcement actions.

To be eligible for the program, taxpayers must meet certain criteria, including:

  • Being non-willful in failing to report foreign assets and income
  • Filing the required federal income tax returns for the past three years
  • Filing the required FBARs (Report of Foreign Bank and Financial Accounts) for the past six years
  • Paying any taxes due plus interest on the unreported income

Preparing for IRS Streamlined Filing Compliance Procedures

To prepare for the IRS Streamlined Filing Compliance Procedures, you should take the following steps:

Step 1: Determine Your Eligibility

The first step is to determine if you are eligible for the streamlined filing procedures. You must meet all of the criteria listed above to be eligible for the program.

Step 2: Collect All Relevant Documentation

Next, you should collect all the documentation related to your foreign assets and income. This may include bank statements, investment statements, and other financial documents.

Step 3: Review Your Tax Filings

Review your tax filings for the past three years to ensure that they are accurate and complete. If you discover any errors or omissions, you should correct them before submitting your streamlined filing.

Step 4: Complete the Required Forms

The streamlined filing procedures require several forms to be completed and submitted. These include:

  • Form 14654, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures
  • Form 14653, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures
  • Form 1040, U.S. Individual Income Tax Return
  • Form 1040X, Amended U.S. Individual Income Tax Return (if necessary)

Step 5: File Your Streamlined Filing

After completing the necessary forms and gathering all the relevant documentation, you are ready to file your streamlined filing. You can submit your filing electronically through the IRS’s e-filing system.

Conclusion

The IRS Streamlined Filing Compliance Procedures can be an effective way for U.S. taxpayers to come into compliance with their tax obligations and avoid penalties. To prepare for the streamlined filing procedures, you should determine your eligibility, collect all relevant documentation, review your tax filings, complete the required forms, and file your streamlined filing. By following these steps, you can increase your chances of a successful streamlined filing and minimize your tax liability.