Many people may wonder what constitutes the IRS streamlined filing compliance procedures. The IRS streamlined filing compliance procedures are a system of procedures which allows US taxpayers the ability to acknowledge their failure to report all of their foreign assets, as well as to certify that this failure to report all foreign financial assets, and the associated taxes due, was not due to a willful attempt to deceive the IRS. These procedures are designed to provide eligible taxpayers:
- An easy, streamlined procedure for the filing of delinquent or amended tax returns.
- Terms for filing and resolving their amended or delinquent returns, including relevant penalties.
- Terms for resolving any tax or penalty obligations.
Eligibility for Streamlined Filing Compliance Procedures
Eligibility for IRS streamlined filing compliance procedures are available to all US taxpaying individuals, whether residing in the United States or abroad. If an individual is residing outside of the United States, they must use the Streamlined Foreign Offshore Procedure track (SFOP), while those individuals residing within the United States must opt for the Streamlined Domestic Offshore Procedures track (SDOP).
In order to qualify for either IRS streamlined filing compliance procedure, an individual must be able to prove:
- That their non-compliance with IRS foreign asset reporting was non-willful in nature, or in other words, an honest mistake. To qualify, an individual must draft a “statement of facts” regarding their non-compliance and the reasons why it was non-willful in nature.
- The individual hoping to qualify for streamlined filing compliance procedures must have no record with the IRS. This means that the IRS cannot have initiated any civil or criminal examinations or proceedings against the person for any taxable year.
- Any late payments or penalties for any previous tax filings must be made prior to qualification for SFOP or SDOP filings.
- Finally, anyone hoping to qualify for either track of streamlined filing compliance must be a United States citizen, a green card holder and in possession of a Social Security number.
Differences Between SDOP and SFOD Tracks
As outlined above, there are two distinct tracks an individual may take for streamlined compliance filing with the IRS. SDOP differs from SFOP in that it is for those individuals who reside within the United States, whereas SFOP is for those individuals who reside outside of the US. In addition, the major difference between these two tracks is that SFOP penalizes zero percent of foreign asset values, whereas SDOP penalizes five percent of the value of foreign assets. This means that with an SFOP track, those living outside of the US may be able to eliminate any potential penalties they may face.
Contact an Experienced Michigan Tax Attorney Today
Understanding the complexities of IRS asset compliance reporting can be difficult; therefore, it is essential that you contact an experienced tax attorney immediately. If you are facing penalties from the IRS, you need a tax law firm who is willing to fight for you.
At Ayar Law, we represent people and businesses with state and federal tax problems that require creative solutions. We focus entirely on tax problem resolutions and giving our clients a fresh start. We strive to get you the best solution for your individual situation. So, if you’re having tax troubles, call Ayar Law today at (248) 262-3400 for free, no-obligation legal advice.