IRS Tweaks Form 14653 for the Streamlined Amnesty Program
IRS Further Tweaks Non-Willful Certification (Form 14653) for the Streamlined Amnesty Program
Starting in January of this year (2016), a newly revised version of the Form 14653 (Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures) is to be used by delinquent taxpayers living abroad who decide to participate in the Streamlined tax amnesty program.
Under the Streamlined program, delinquent taxpayers abroad who have failed to file previously with the IRS can come clean and avoid severe penalties by filing the prior 3 years of tax returns and 6 years of FBARs. They must also submit the Form 14653, certifying that their delinquency was a result of non-willful conduct.
In January of last year, the Form 14653 was revised somewhat by clarifying that taxpayers must include a narrative of specific facts which lead to the failure to timely report all income, pay all tax, and submit all required information, including FBARs. This year’s revisions further reinforce the IRS’s requirement that taxpayers be very specific in detailing the events surrounding their past delinquency.
In the 2016 version of the form, the IRS has added that the taxpayer’s explanation of non-willfulness must include the following:
- Specific reasons for your past failure, whether favorable or unfavorable to you, including your personal background, financial background, and anything else you believe is relevant to your failure.
- An explanation as to the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it.
- An explanation of your contacts with the account/asset including withdrawals, deposits, and investment/ management decisions.
- A complete story about your foreign financial account/asset.
- If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice (this requirement was previously included).
- If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts (this requirement was also previously included).
These very detailed information requests may signify that the IRS is beginning to more closely scrutinize taxpayers who wish to participate in the IRS Streamlined program. This trend corresponds to recent comments by IRS Commissioner John Koskinen, who intimated that the IRS is becoming more skeptical of taxpayers pleading ignorance, and it, therefore, may terminate the Streamlined program once it determines there’s no way a taxpayer who wanted to participate couldn’t have heard previously about the process.
If you are an expat considering the Streamlined program, then it is important that you understand the requirements and relief available to you, and that you act quickly to participate in the program before it is further modified or before it eventually runs its course.
Our expat professionals have helped many clients successfully participate in the Streamlined program as well as other IRS tax amnesty programs. Our team of experts has the knowledge and experience to help you utilize the Streamlined program in the best manner possible and to mitigate, or even eliminate, any payment of back taxes to the IRS. We are available to help discuss your situation and guide you through every step of the disclosure process.
By Ephraim Moss, Esq. & Joshua Ashman, CPA