Streamline filing is potentially a "get out of jail" card. Streamline filing is available for non-willful failure to file the proper forms, such as the FBAR, Form 8938 (Statement of Specified Foreign Financial Assets), as well as required forms for failure to report income from these accounts, and failure to pay the associated income taxes.
In my previous blog on Foreign Tax Reporting Compliance, I discussed three methods, Soft Reporting, Voluntary Disclosure and Streamline Filing. Of these three methods, Streamline Filing should be considered as it could provide a less expensive way to report unreported foreign income. In other words, a potentially "get out of jail" card.
Streamline Filing is available for non-willful failure to file the proper forms, such as the FBAR, Form 8938 (Statement of Specified Foreign Financial Assets), as well as required forms for failure to report income from these accounts, and failure to pay the associated income taxes.
Financial accounts include but are not limited to, banks, brokerage, life insurance, pensions and various other accounts held outside the United States.
Streamline Filing Procedures:
1) File your previous six FBARs
2) File the previous three years of personal tax returns amended for income not reported
3) Use the highest of the FBAR years to compute the fair market value at the end of each year
4) There is a 5% penalty to pay on the highest balance of those six years
5) Pay the income tax due on the amended returns plus the accrued interest up to date of payment
If accepted as filed, penalties are not assessed on the tax due.
Streamline Filing is extremely complex and professional assistance is highly encouraged and recommended. Please contact us if you have any questions.