Streamlined and the Other Routes Back: What Each Path Requires

Start with the question that decides everything

Every route below turns on the same threshold question: was the failure to file non-willful? The IRS defines non-willful conduct as conduct due to negligence, inadvertence, or mistake, or conduct that is the result of a good faith misunderstanding of the requirements of the law. Under the Streamlined procedures you certify that in writing, under penalty of perjury.

That is why no honest adviser can tell you at a first conversation that you qualify. It is a characterisation of what you knew and when, and it has to be reviewed against your history before anyone signs anything. Where there is a real question about it — or where the answer might be no — the right first call is to a tax attorney, not a CPA, because the protection attaching to that conversation is different.

The routes, side by side

Foreign or Domestic: it is a residency test, not a choice

The difference between the two Streamlined versions is worth understanding precisely, because it is the difference between no penalty and a 5% one. For U.S. citizens and lawful permanent residents, the non-residency requirement asks whether, in any one or more of the most recent three years, the individual did not have a U.S. abode and was physically outside the United States for at least 330 full days. Meeting it points to the Foreign procedures; failing it points to the Domestic ones.

Note that this is a different 330-day test from the one used for the foreign earned income exclusion, applied over a different period and for a different purpose. They are easy to conflate and should not be.

The route that is not a route

The most common instinct — file the missing forms quietly, attach nothing, hope it passes unnoticed — is not one of the published procedures. It forfeits the protection each of them offers, and a pattern of late filings arriving with no explanation is not obviously better than the alternative. Where a procedure applies, using it is the point.

Equally, the Offshore Voluntary Disclosure Program that older articles describe closed on September 28, 2018. Advice written before that date may point at a programme that no longer accepts submissions. Check the date on anything you read about this, including this page.

What has to be gathered

• Every year at issue, and what was and was not filed for each
• Maximum value of each foreign account for each year in the covered periods
• Foreign tax returns and proof of foreign tax paid, to support any credit
• Statements for foreign pensions, investments and any entity interests
• A truthful narrative of what you understood and when — this becomes the certification, and it is the part that cannot be reverse-engineered
• Any correspondence received from the IRS about any of the years

What nobody can promise you

Not eligibility, not the absence of penalties, not that a submission will be accepted, and not that a particular procedure is the right one before the facts have been reviewed. Anyone offering those before reading your history is selling certainty they do not have. What can be done is a careful review of what happened, an honest assessment of which routes are open, and a clear account of the risks of each.

When this is not a CPA matter at all

Where there is any prospect that the conduct was deliberate; where returns were filed that were knowingly incomplete; where the IRS has already opened an examination or made contact about the years; or where the amounts and circumstances suggest criminal exposure — the first conversation should be with a tax attorney. This is not a formality. It affects what protection attaches to what you say, and it is not something to work out after the fact.