Streamlined Procedures
What Are the Streamlined Filing Compliance Procedures?
Many immigrants come to the United States with bank accounts, investments, retirement plans, or other financial assets in their home country. Because the U.S. tax system taxes U.S. residents on their worldwide income, these foreign assets and income often have reporting requirements that may not exist in their home country. As a result, many taxpayers unintentionally fail to file the required forms or report all of their foreign income.
Why Clients Choose CHI Border
Submitting a Streamlined Filing Compliance Procedures package is often one of the most important tax filings a taxpayer will ever make. It requires careful preparation, thoughtful documentation, and confidence that experienced professionals will remain available if questions arise after submission. At CHI Border, our services are designed with these long term concerns in mindOne Year of IRS Notice Response Support
Our Streamlined Filing Compliance services includes one year of IRS notice response support following the submission of your streamlined package.
Many taxpayers worry about what will happen if the IRS contacts them after they have filed. This concern is particularly common among individuals who are returning to their home country or otherwise leaving the United States. We believe our clients should have peace of mind even after their submission has been completed.
As your authorized representative (when the appropriate IRS authorization forms are in place), CHI Borden can:
- Receive IRS correspondence on your behalf.
- Access your IRS account information to review the status of your filings.
- Analyze most IRS notices and respond when appropriate.
- Minimize the need for you to communicate directly with the IRS, even if you are living overseas
Our goal is to make the post-filing process as seamless as possible, allowing you to move forward with confidence.
Attorney-Client Privilege During the Non-Willfulness Statement Process
A well-prepared non-willfulness statement is one of the most important components of a Streamlined Filing Compliance submission. Because taxpayers often need to discuss sensitive facts and circumstances, CHI border works closely with an independent law firm so that clients have the opportunity to communicate with legal counsel under the protections of the attorney-client privilege, where applicable.
This arrangement allows clients to:
- Discuss their facts openly and candidly with an attorney.
- Receive legal guidance while preparing the non-willfulness statement.
- Benefit from confidential attorney-client communications that are generally protected under applicable law.
The attorney-client privilege is an important legal protection that encourages honest and complete communication between a client and their attorney. While the scope and application of the privilege depend on the specific facts and applicable law, it can provide valuable protectition when preparing a Streamlined Filing Compliance submission.
A Service Designed for Cross-Border Taxpayers
Our focus extends beyond preparing tax forms. We strive to provide comprehensive support throughout the Streamlined Filing Compliance process from evaluating eligibility and preparing amended tax returns and FBARs to assisting with IRS correspondence after submission and coordinating with legal counsel when appropriate.
Our objective is simple: to help you resolve past international tax compliance issues with confidence, professionalism, and ongoing support.
Why Did the IRS Create This Program?
The IRS established the Streamlined Filing Compliance Procedures to help taxpayers who made honest mistakes come into compliance with U.S. tax laws.The program is intended for taxpayers whose reporting failures were non-willful, meaning they did not intentionally avoid their U.S. tax obligations but simply misunderstood or were unaware of the reporting requirements.
Who May Be Eligible?
The Streamlined Procedures may be available to taxpayers who failed to report foreign income, foreign financial accounts, or certain international information returns because of a non-willful error. Eligibility depends on each taxpayers individual facts and circumstances, so a professional review is recommended before relying on the program.
What Does the Submission Include?
A Streamlined submission generally includes:
- U.S. tax returns for the most recent three years (amended or original, depending on the circumstances)
- Foreign Bank Account Reports (FBARs) for the most recent six year, if required
- Any missing international information returns, such as Forms 8938, 5471, 3520, or 8621 when applicable
- Payment of any additional tax and interest due
- A signed certification explaining why the reporting failures were non-willful
Why Is the Non-Willful Certification Important?
One of the most important parts of a Streamlined submission is the taxpayers written certification describing why the reporting mistakes occurred. This statement allows the IRS to understand the circumstances surrounding the noncompliance and explains why the taxpayer believes the failures were not intentional.
Two Types of Streamlined Procedures
There are two versions of the Streamlined Procedures:
-
Streamlined Foreign Offshore Procedures (SFOP) for eligible taxpayers living
outside the United States. -
Streamlined Domestic Offshore Procedures (SDOP) for eligible taxpayers
living in the United States.The filing requirements are similar, but the eligibility rules and penalty provisions differ between the two programs.
Why Should You Address the Issue Promptly?
Correcting past reporting mistakes before the IRS contacts you can provide greater certainty and help resolve years of outstanding compliance issues. The Streamlined Procedures are generally intended for taxpayers who voluntarily come forward before an IRS examination begins.
CHI Border's Streamlined Procedures Work Process
Engagement and Initial Payment
The process begins with engagement agreements from CHI Border Inc. and Fujimoto Law Corp., P.C. The agreements are provided electronically for convenient e-signature. For married couples submitting joint income tax returns, both spouses must sign the applicable engagement agreements. The initial payment is due when the agreements are signed.
Information and Document Gathering
CHI Border provides a structured foreign financial account template to help the client organize information regarding foreign bank accounts, securities, investments, retirement accounts, and other relevant financial assets.
The client will also provide the requested tax and financial records, which may include:
- Previously filed U.S. federal income tax returns
- Forms W-2, 1099, and other supporting tax documents
- Foreign income statements and tax returns
- Foreign account statements
- Investment purchase, sale, and distribution records
- Other documents relevant to foreign income and reporting obligations
The exact documents required will depend on the client’s circumstances.
Non-Willfulness Interview
Fujimoto Law Corp., P.C. conducts a confidential interview with the client to understand how the reporting issues occurred and to evaluate whether the client’s conduct was non-willful.
Because this legal work is performed through Fujimoto Law Corp., P.C., communications made for the purpose of obtaining legal advice may be protected by the attorney-client privilege, subject to applicable law.
Based on the interview and supporting information, Fujimoto Law Corp., P.C. prepares a draft non-willfulness statement. The client reviews the statement carefully and provides corrections, comments, or additional facts before approving the final version.
Preparation of Tax Returns and Certifications
CHI Border prepares the required original or amended U.S. income tax returns, together with the applicable international information returns.
Depending on the client’s eligibility and residency, CHI Border also prepares:
- Form 14654 for the Streamlined Domestic Offshore Procedures; or
- Form 14653 for the Streamlined Foreign Offshore Procedures.
The final non-willfulness statement is incorporated into the applicable certification form.
Any additional tax, interest, and applicable miscellaneous offshore penalty are also calculated.
Client Review and Finalization
CHI Border provides the client with a draft PDF copy of the complete Streamlined submission package.
The client reviews the package and confirms that the personal information, financial information, account details, explanations, and tax filings are accurate and complete.
After the client approves the submission package, CHI Border issues the final invoice. Once payment is confirmed, the finalized documents are delivered to the client through a secure and appropriate delivery method.
Signing and Submission
The client signs and dates the tax returns, certification form, and other required documents in accordance with the provided instructions.
When a payment must accompany the submission, the client prepares a check payable to the United States Treasury, unless another approved payment method is used.
The completed Streamlined package is then mailed to the applicable IRS address using a trackable delivery service. Delinquent or amended FBARs are generally submitted separately and electronically through the FinCEN BSA E-Filing System.
The client should retain copies of the complete submission package, payment documentation, and proof of delivery.
Power of Attorney and IRS Representation
CHI Border prepares the applicable IRS power of attorney form and sends it to the client for electronic signature.
After receiving the completed form, CHI Border submits the power of attorney to the IRS for processing. This authorization allows the designated representative to communicate with the IRS regarding the covered tax matters and respond to IRS correspondence when appropriate.
The client should promptly send CHI Border copies of any IRS notices or letters received so that response deadlines can be reviewed and addressed.
Post-Submission Monitoring
The IRS generally does not issue a formal approval or acceptance letter confirming that a Streamlined submission has been accepted. The IRS may process the amended returns, assess additional tax and interest, request further information, or select the returns for examination.
The general federal income tax assessment period is often three years from the date a valid return is filed, but important exceptions may extend the period. For example, special rules may apply when international information returns were incomplete or missing, when there was a substantial omission of income, or in other circumstances.
Accordingly, the passage of three years should not be described as formal IRS approval. Clients should retain the complete submission records and continue monitoring IRS correspondence with assistance from CHI Border when necessary.