The Streamlined Process - What is it and How Does it Work?
The streamline program is a voluntary disclosure procedure for Americans who have not filed their US tax returns, or reported foreign assets from previous tax years.
First offered by the IRS in autumn 2012, the streamlined filing procedure has recently been expanded and modified to accommodate a broader group of U.S. taxpayers. Major changes to the streamlined procedure include:
- Extension of eligibility to U.S. taxpayers residing in the United States
- Elimination of the $1,500 tax threshold
- Elimination of the risk assessment process associated with the streamlined filing compliance procedure announced in 2012
Criteria for eligibility
The streamline procedure is available for both American tax payers residing within the United States (Streamlined Domestic Offshore Procedures), and for US expats (Streamlined Foreign Offshore Procedures).
To qualify you will need to prove that you did not file your taxes due to ‘non-willful circumstances’. According to the IRS
“non-willful conduct results from negligence, inadvertence, or mistake that is the result of a good faith misunderstanding of the requirements of the law”.
It does not include those willingly trying to commit tax evasion to avoid paying required taxes.
The Streamlined process
If eligible for the streamlined procedure, an individual must follow specific instructions to ensure their forms will be processed correctly as outlined below:
- If you’ve never previously filed a US tax return you will need to complete your return using Form 1040 (US Individual Tax Return) with the other necessary completed forms (including forms 3520, 5471 & 8938) for each of the most recent three years of missed US tax returns.
- If you have previously filed a US tax return you will need to submit a Form 1040X (Amended US Individual Tax Return) with the necessary corresponding returns for each of the most recent three years of missed US tax returns.
- For both above situations at the top of the first page of each amended return you should include “Streamlined Foreign Offshore” written in red to ensure your forms are processed correctly under the special streamlined conditions. Failure to write this will result in your taxes not receiving the special processing and you will be required to pay the late fee penalties.
- You will also need to complete and sign a statement on the certification by U.S. person residing in the US form to confirm you are eligible for the Streamlining process and that your previous negligence to file your taxes correctly was from non-willful conduct and all outstanding FBARs have now been filed.
- It is important this form is completed, if it isn’t your returns will be processed normally and not under the special streamlining process. If this form is not completed and returned, your returns will be process normally, not under the special streamlining process.
- Submit payment for any tax and interest due on any of the returns. It is important you pay any outstanding monies in full otherwise a balance notice will be sent to you. You must include your taxpayer identification number on your check.
Things to note….
In order to participate in the streamlined procedure taxpayers require a valid Taxpayer Identification Number (TIN). For U.S. citizens, resident aliens, and certain other individuals their TIN is a valid Social Security Number (SSN).
If you do not have a Social security Number or TIN, submit an application for an TIN along with your required forms.
For individuals who are not eligible for an SSN or TIN their tax returns will not be processed under the streamlined procedures.
Submitting streamlined returns
All paperwork together with any payment must be sent in paper form to the following address:
Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined Foreign Offshore
Austin, TX 78741
Tax returns submitted under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures will be processed like any other return submitted to the IRS. Consequently, receipt of tax returns will not be acknowledged by the IRS and the streamlined filing process will not culminate in the signing of a closing agreement with the IRS.
Future tax returns
Following participation in the Streamlined Process, it is important to file your taxes fore all subsequent years using regular filing procedures in order to avoid any further penalties for neglecting to pay your taxes.
How we can help
At Bambridge Tax Services we have an expert team of IRS enrolled agents who are on hand to guide you through each step of completing your taxes and make the whole process as smooth as possible.
We offer fixed rate fees and free initial consultations so contact us today to find out how we can help you.