Offshore Voluntary Disclosure Prgram (OVDP); Frequently Asked Questions, Streamlined Filing For Non-Resident, Non-Filer Taxpayers
Question 1. One of the risk factors listed in the Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer Taxpayers Questionnaire is a tax liability below $1,500 for each of the three years submitted under the Streamlined Procedures. If my tax liability exceeds $1,500 for any of the three years, am I ineligible?
Answer 1. No. The $1,500 per year tax limit will not disqualify you from admission to the Streamlined Procedures, but exceeding that limit may result in your submission being treated as higher risk. The instructions for the Streamlined Procedures state that low risk will be predicated on simple returns with little or no U.S. tax due. Submissions with tax due of $1,500 or less will be considered low risk absent any risk factors. Submissions with tax due in excess of $1,500 or the presence of other risk factors may be treated as higher risk.
Q2. If I submit a return with tax in excess of $1,500 and I am determined to be higher risk, what are the consequences?
A2. Submissions determined to be higher risk due to tax amounts over $1,500 or the presence of other risk factors may be subject to applicable penalties. Submissions determined to be higher risk may also be subject to an examination. If you have a submission presenting higher risk, you may consider filing under the Offshore Voluntary Disclosure Program.
Q3. If I have already been accepted into the 2011 Offshore Voluntary Disclosure Initiative but I qualify for the Streamlined Procedures, can I request the Streamlined Procedures?
A3. Yes. If you qualify for the Streamlined Procedures but have been accepted into one of the offshore voluntary disclosure programs prior to September 1, 2012, you may opt out of the offshore voluntary disclosure program and request the Streamlined Procedures. To opt out, you need to inform the examiner of your decision in writing. This is an irrevocable election and you will receive a notification letter stating this fact. The examiner assigned to your case will then be able to make a risk determination of your submission and close your case according to the Streamlined Procedures. If all submission items for the voluntary disclosure program have already been submitted to the IRS, you will not be required to make a second submission for the Streamlined Procedures.
Q4. If I elect to opt out of one of the offshore voluntary disclosure programs for the Streamlined Procedures, how will my submission be considered?
A4. Under the offshore voluntary disclosure programs, you were required to submit tax and information returns for a period of years. If you qualify for the Streamlined Procedures, the IRS will review all of the returns that you previously submitted through one of the programs. If your submission is determined to be low risk, you will not be subject to any applicable penalties. However, if your submission is determined to be higher risk, you may be subject to applicable penalties and your returns may be subject to examination.
Q5. If I qualify for the Streamlined Procedures, but I previously participated in one of the offshore voluntary disclosure programs and entered into a closing agreement, can I now have my case reconsidered under the Streamlined Procedures?
A5. Taxpayers who participated in one of the offshore voluntary disclosure programs whose cases have been resolved and closed with a Form 906 closing agreement and who believe the facts of their case qualify them for the Streamlined Procedures should provide a statement to this effect, including all pertinent contact information (name, address, SSN, home/cell phone numbers), the name of the Revenue Agent assigned to their case, and a copy of their closing agreement. This information should be sent to:
Internal Revenue Service
3651 S. I H 35 Stop 4301 AUSC
Austin, TX 78741
Attn: Streamlined Redetermination
Upon receipt of this information, the case will be assigned to an examiner to review and make a determination whether the case should be reconsidered, based on all the facts and circumstances.
Q6. To submit complete and accurate tax returns under the Streamlined Procedures, what income tax return form should I use?
A6. Taxpayers should use Form 1040, U.S. Individual Income Tax Return, except that taxpayers who are submitting amended returns for the sole purpose of submitting late-filed Forms 8891 should use Form 1040X, Amended U.S. Individual Income Tax Return. Use of any other forms (for example, Form 1040NR, U.S. Nonresident Alien Income Tax Return, when the taxpayer is not a nonresident alien) may result in significant delays or exclusion from the Streamlined Procedures.
For assistance with any tax matters, including the IRS representation and disclosing your unreported foreign bank accounts, you may contact Zaher Fallahi, Tax Attorney, CPA, at (310) 719-1040 (Los Angeles) or (714) 546-4272 (Orange County), or e-mail to [email protected]