The Streamlined Filing Procedures are a great method to get caught up on delinquent taxes if you meet the requirements of the IRS amnesty program. When filing this way, there’s no set timeline for when your late tax returns and FBARs will be reviewed – but the important thing is that you’ve submitted everything to get caught up. Here’s what you should know if you’re asked to resubmit Form 14653.
What is IRS Form 14653?
Form 14653 is officially known as the Certification by US Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures and is a requirement when filing using the Streamlined Filing program. The form is meant to certify that your tax delinquency was a non-willful act, which is a requirement in order to utilize the Streamlined program for getting caught up on taxes without penalties. If you filed using Streamlined, you should have completed this form. However, a few changes were implemented at the beginning of 2016 that are reflected in the updated IRS Form 14653, so if you filed using the old version, the IRS may have required you to submit a new form.
How Do I Complete the “Narrative Statement of Facts” Portion of Form 14653?
In January 2016, the IRS clarified the Streamlined program process a bit, noting that taxpayers using the program needed to include “a narrative of specific facts which led to the failure to timely report all income, pay all tax and submit all required information” – including FBARs. This form requires you to list:
- Specific reasons for past failure, whether they are favorable or not to your situation (including personal and financial background, etc.)
- Explanation of the source of funds in your foreign financial accounts (i.e., if you inherited it, opened it while living in a foreign country, opened for business reasons, etc.)
- Explanation of your contacts with the account (withdrawals, deposits, investment/management decisions, etc.)
- Complete story about foreign financial account
- Contact information about the tax professional with whom you worked, if applicable
- Detailed information showing that you’ve spent more than 330 days outside the US for the last three years if filing as a non-resident (note: this may be problematic for individuals who spent more days in the US)
- If married taxpayers submitting the form jointly have different reasons for the delinquency, they must list their individual reasons separately in the statement of facts
The purpose of these changes was likely to allow the IRS to further scrutinize and ensure that those using Streamlined Filing are the proper candidates for this amnesty program. While the IRS does want you to tell the complete story and list all relevant facts, they aren’t interest in reading a short novel. Usually, a thorough page of facts is good; more than ten pages is overboard. Let them know how you found out about your tax noncompliance, and how quickly you acted. They want facts that will help your case as well as any that might hurt it. But know that if you admit willfulness in your statement of facts, your Streamlined Program application will very likely be denied.
Are the Streamlined Filing Forms and Procedures Right for Me?
If you haven’t yet filed using the Streamlined Filing Procedures, but need to get caught up on delinquent taxes, this might be a great option for you. The Streamlined program was created as a way to help US citizens get caught up without facing penalties, as long as their failure to file was non-willful. In order to file using this program, you must:
- File three years of delinquent tax returns
- File six years of delinquent Foreign Bank Account Reports (FBARs)
FBARs are required of all US citizens who have foreign bank account(s) that held over $10,000 in total at any point during the filing year. If you file using the Streamlined filing forms, you will need to file the past six years of FBARs or explain why an FBAR was not required for any year(s) in the six-year period.
Please note: the IRS terminated the OVDP (Offshore Voluntary Disclosure Program) in 2018, which was another amnesty program that helped willfully noncompliant taxpayers become compliant without facing prosecution. All amnesty programs are offered at the discretion of the IRS, and can be terminated at any point. Though the IRS typically gives notice before amnesty program termination, your best option is to use these programs before they are no longer offered.
Need to Get Caught Up Using the Streamlined Filing Procedures?
Our team of dedicated CPAs and IRS Enrolled Agents has particular expertise in helping US expats get caught up using the Streamlined program. Get started with us today to become compliant on your US tax obligation, and to learn more about IRS Form 14653!
This article was first published on September 14, 2016. It was updated on July 8, 2021.