Unreported foreign accounts, and you live in the United States? The domestic streamlined procedures fix it for a 5 percent penalty, if the failure was not willful.
Three years of amended returns, six years of FBARs, a sworn certification of non-willfulness, and a one-time penalty of 5 percent of the highest year-end balance. In exchange, the IRS gives up the FBAR and information return penalties that could otherwise exceed the accounts themselves. The judgment that makes you eligible is legal, and it is made here under privilege.
Eligibility, in plain terms
You qualify for the domestic procedures if you are a U.S. resident (you do not meet the non-residency test for the foreign version), you have filed returns for the last three years, the failure to report foreign income and accounts was non-willful, and you are not under IRS examination or investigation.
Non-willful means negligence, mistake, or a good-faith misunderstanding of the law. It does not mean deliberate concealment, ignoring a preparer’s warning, or answering no to the foreign account question on Schedule B while holding foreign accounts. Where the facts fall on that line is the case, and it is decided before anything is filed. If the facts look willful, the Voluntary Disclosure Practice is the right program and this one is the wrong one.
Results depend on the facts of each matter and are not a prediction of the outcome in your case.
The streamlined procedures explained in four minutes.
How the engagement works
Willfulness review
An attorney reviews how the accounts came to exist, what you knew, what you told your preparer, and what the returns say. Under attorney-client privilege.
Reconstruction
Our accounting team assembles six years of account records and three years of foreign income under the attorney’s engagement, so the work stays protected.
Certification and filing
Form 14654 is drafted as the legal document it is: a narrative that explains the failure and why it was not willful. Amended returns, FBARs, and the 5 percent penalty are submitted together.
The firm has guided clients through more than 100 streamlined disclosures. If the IRS follows up with questions or an examination, the same attorney answers. Read the full guide to the domestic procedures.
Questions people ask first
On the highest aggregate year-end balance of the unreported foreign accounts across the six FBAR years, including accounts since closed. It replaces the FBAR penalties and the information return penalties for those years, which for a 300,000 dollar account could otherwise run past 90,000 dollars for non-willful failures alone.
The domestic procedures require that returns were filed; they amend them. Taxpayers who never filed and live in the United States need a different route, which the attorney identifies in the consultation. Those who live abroad can file original returns under the foreign procedures.
Form 14654 lists every account and balance and includes a signed narrative explaining the failure and why it was non-willful. It is sworn under penalty of perjury. A thin, inconsistent, or accusatory narrative is the most common reason a submission is rejected and treated as an ordinary late filing, so it is written by counsel from the facts established in the review.
You can, and the IRS has said it does not treat quiet disclosures as satisfying its programs and may examine them. In willful cases the filings become evidence. The streamlined procedures exist to give the penalty protection a quiet disclosure gives up.
Under current FinCEN guidance an account holding only cryptocurrency is not reportable on the FBAR, but one that also holds fiat currency is, and FinCEN has said it intends to change the rule. Foreign exchange accounts are reviewed as part of the same engagement.
Schedule a confidential consultation
Bring the account statements and the returns you have. The attorney tells you which program fits, what it costs, and what to do first, whether or not you hire the firm.
