Should I Make an IRS Streamlined Offshore Filing Procedures Submission (Foreign or Domestic)

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Pros & Cons of Making a Streamlined Procedure SubmissionStreamlined Filing Lawyers (Domestic & Foreign): Our International Tax team of Streamlined Filing Lawyers represent clients worldwide in over 70-countries. The are many pros (and some cons) to making a Streamlined Procedure submission.

Pros & Cons of Making a Streamlined Procedure SubmissionThe Streamlined Procedure, is a procedure used to report foreign accounts, investments, accounts, and income to the IRS. This includes:

Foreign Accounts
Foreign Assets
Foreign Investments
Foreign Income
Foreign Life Insurance
Foreign Mutual Funds
Foreign Corporations
Foreign Partnerships

Streamlined Procedure

Here are some of the main benefits for submitting to the streamlined program:
Pros of Making a Streamlined Procedure Submission

Less paperwork than OVDP/VDP

Unlike traditional OVDP, the submission process for the streamlined offshore procedures is handled in one fell swoop. You only have to submit three years of amended returns instead of eight years of amended returns as required by OVDP. Moreover, you only have to submit six years of FBARs instead of eight years of FBARs

Streamlined has a Reduced Penalty

The penalty for the streamlined program is much different. First, if you qualify as a foreign resident -- penalties are waived. But, presuming that you do not meet the strict definition of foreign resident for the streamlined program, the penalty is still relatively light in comparison to traditional OVDP. The penalty is only 5% of the highest year-end balance for the six-year compliance period (not all six years, just one year). Moreover, certain assets that are penalized under traditional OVDP are not penalized under the Streamlined Program.

The Risk of Audit is Not Exceedingly High

While the IRS has the opportunity to still audit you under the streamlined program, the IRS is understaffed and therefore the chances of being audited under the program are not necessarily any higher than they would be for you if your were to be audited outside of the program. In other words, by entering the program -- you reduce your penalties significantly, without necessarily increasing your chance of audit.

No Representation of Willfulness

A common question we receive is whether a submission to offshore disclosure will impact work visa or legal permanent residency status. Generally it will not impact immigration status, since you are not making any affirmative representation that you were willful.

Cons of Making a Streamlined Procedure Submission

There is no audit protectionIf the IRS wants to, they can still audit you. While submitting to the Streamlined Program does not actually increases your chance of audit, just do not get "protection" against an IRS audit on International Tax issues as you do with OVDP.

There is No Criminal Protection

The IRS can still pursue a criminal investigation against you

.There is No Firm (Black-Letter Law) Definition of "Willfulness"

Willfulness comes in various shapes and sizes. It can mean intent, knowledge, willful blindness, reckless disregard, etc. In other words, just because you believe you are not willful does not mean the IRS will agree or accept your facts.