— Practical Solutions & Actionable Steps for a Successful Exit from the U.S. Tax System —

Many U.S. citizens and long-term green card holders preparing to expatriate ask the same question:

“If I filed three years of amended returns under the Streamlined Procedures, is that enough for expatriation?”

The simple answer is:

❌ No — it is NOT enough.

Streamlined Procedures and Form 8854 serve completely different purposes, and misunderstanding this difference can result in an incomplete or invalid expatriation.

This article breaks down:

• Why three years of Streamlined compliance is insufficient

• What the IRS requires for five years of full tax compliance

• What “material misstatements” and willfulness mean

• And most importantly — practical solutions and next steps to ensure a clean exit

1. Streamlined Procedures vs. Form 8854 — Two Different Systems

✔ Streamlined Procedures

• Allows filing up to 3 years of amended returns

• Designed to bring taxpayers “into compliance”

• Administrative relief program

• NOT designed for expatriation requirements

✔ Form 8854 (Expatriation Form)

The official IRS instructions require that an expatriate certify:

“…I have complied with all of my U.S. tax obligations for the 5 years preceding my expatriation.”

This includes all of the following for each of the five years:

• Income tax returns

• Employment tax

• Gift tax

• Information returns (FBAR, 8938, 5471, 3520, etc.)

• Payment of all tax, penalties, and interest

This is a statutory requirement — not optional.

Therefore:

3 years ≠ 5 years.

2. What Does “Violation” Mean? Understanding IRS Standards

When signing Form 8854, you sign under penalty of perjury.

You are considered in violation if:

• A material item on your return is false

• You knew the information was incorrect

• You acted willfully, meaning you intentionally violated a known legal duty

A material matter is anything that affects:

• The proper calculation of tax, or

• The IRS’s ability to review or audit your return

This is why accuracy on Form 8854 — and the supporting five-year tax history — is essential.

3. Solutions: What You MUST Do to Prepare for a Valid Expatriation

Below are practical, professional-level steps to ensure your expatriation is compliant.

✅ Step 1: Review & Organize Your Last Five Years of Returns

Confirm that you have complete filings for:

• Form 1040

• Schedules (B, C, D, etc.)

• FBAR (FinCEN 114)

• Form 8938

• Form 5471 / 8865 (foreign corporations)

• Form 3520 / 3520-A (foreign trusts)

• Gift tax returns

• Employment tax, if applicable

Create a checklist and identify missing items.

✅ Step 2: Correct or File Any Missing Returns

If you only filed 3 years via Streamlined Procedures, you must file:

✔ Additional 2 years of amended or original returns

to complete the required 5 years.

For complex issues — foreign companies, crypto, foreign real estate, PFICs — professional guidance is strongly recommended.

✅ Step 3: Pay All Balances, Penalties, and Interest

Form 8854 requires not just filing, but full payment.

Unpaid balances = non-compliance.

✅ Step 4: Prepare the Dual-Status Return for Expatriation Year

The expatriation year requires a unique filing:

• Form 1040 (resident portion) through your expatriation date

• Form 1040-NR (nonresident) for the remainder of the year

This is one of the most commonly misunderstood parts of the process.

✅ Step 5: Accurately Complete Form 8854

8854 is the IRS’s final assessment of your tax compliance, net worth, assets, and obligations.

Errors can result in:

• Covered expatriate status

• Increased tax exposure

• Audit risk

• Disallowance of your expatriation

A professional review is highly advised.

4. Common Pitfalls and Misunderstandings

❌ “Streamlined Procedures are enough for expatriation.”

→ Incorrect — they only cover 3 years.

❌ “FBARs don’t matter.”

→ They are part of the 5-year compliance requirement.

❌ “Paying tax is enough.”

→ Filing errors also cause noncompliance.

❌ “8854 mistakes can be easily corrected.”

→ 8854 has no official amendment process; corrections are complex.

5. Action Checklist — What To Do Right Now

• 🔲 Collect and review all 5 years of returns

• 🔲 Identify missing information returns (FBAR, 8938, 5471, etc.)

• 🔲 File and amend returns as needed

• 🔲 Pay all outstanding taxes and penalties

• 🔲 Prepare your dual-status expatriation-year return

• 🔲 Draft and review Form 8854

• 🔲 Consult a qualified expatriation tax specialist

6. Expatriation Is Your “Tax Graduation” — Make It Clean and Final

Your exit from the U.S. tax system is one of the most important financial milestones of your life.
Ensuring compliance now protects your future and prevents years of unnecessary risk.

If you need assistance, the CHI Border Tax Team is available for consultation.

📞 Professional Consultation (CHI Border Team)

• Meeting link:
  https://meetings.hubspot.com/hikaru-fujimoto/chi-border-meeting

• Address:
  134 N La Salle St, Ste 2130, Chicago, IL

• Phone: 312-647-2247

• Email: kfujimoto@chiborder.com

📄 Disclaimer (English)

This article is for general educational purposes only and does not constitute tax, legal, or financial advice.
The information may not reflect the most current laws or IRS guidance.
No guarantee is made regarding accuracy or completeness, and we are not responsible for actions taken based on this material.
Please consult a qualified tax professional or attorney regarding your specific situation.