© 2016 by Robert S. Steinberg, Esquire. All rights reserved


Up Front Qualification? Yes -Names clearance (30 days) & Provisional acceptance after OVDP letter (45 days) – CI reviews for specific info received about taxpayer & reviews OVDP letter for completeness. No – Not told up-front

if qualifying






Eligibility requirements

Individuals, estates, or entities – E.G, corps, partnerships, trusts (FAQ 13)

Offshore but can include Domestic




Generally, Unreported income

Not presently under examination – civil or criminal

• Civil exam start – receipt of audit letter (i.e., 2202, 2202B, 2205A

• Exam end – signed 4549 & IRS acceptance letter 987 (agreed) received

• No open NOD

Individuals or estates – not entities

(U.S. Citizen, Green Card, SPT.

For offshore but can include domestic

Generally, Unreported income (see FAQ 7 for persons living in US)



Not presently under examination – same meaning as for OVDP

Source of income test



Non-willful certification



No residency test






Must cooperate



Make good faith arrangements to pay


Meet requirements of IRM which encompasses the above.




Legal source




N/A – but if op-out must support reasonable cause or non-willful or mitigation


Residency test – 2 groups

·         Outside US – No US abode (where live) & 330 days any look back yr.

·         Living inside US.- Fail to meet living outside test

No cooperation required but see IRM Vol. Disclosure rules


Must pay with filing –   Probably could request installments – Call OVDP Hotline.

Streamlined filing might meet IRM Vol Disclosure test if complies with IRM

Legal source



Legal source


Must submit under penalties of perjury – see below

Non-willful = Negligence •

• Inadvertence • Mistake

• Conduct resulting from good faith misunderstanding of requirements of law.

Joint of separate returns? Spouses may submit jointly or separately or only one may submit Joint original return – must file joint amended return.

Spouse won’t sign – submit joint return with one signature if return shows net increase in tax due.


 Returns eligible



Due diligence required?

Filed or unfiled




Only filed 1040s or 1041s if living in U.S.

File & unfiled if outside U.S.



Years included Eight for which due date of 1040 passed

FBAR inclusion linked to 1040 years included. (due 90 days following provisional acceptance)

3 for which due date of 1040 passed; 6 for which due date of FBAR passed.

Exclude compliant years from submission.

Criminal amnesty? Yes No, but perhaps Vol Disclosure
Income tax penalty 20% accuracy related, FTF (if delinquent returns filed), FTP Outside US

None for amended or delinquent returns.

• Living inside US

None – for amended returns.

• If audited

None for reported assets or income as long as original return not fraudulent & FBAR not willful.

Any additional deficiency subject to all penalties.

• Previously assessed penalties – not abated.


Misc. Offshore Penalty 27.5% to 50% if any account with enabler bank at any time during OVDP period. Living out of U.S. – none

Living in U.S. – 5% (if non-willful)

(audit – as for income. Tax)

Asset Base for Offshore Penalty






All assets connected to non-compliance – FAQ 35

But, not assets for which income was reported – FAQ 45

Any reasonable method

Foreign Financial Assets not correctly reported on FBAR or 8938 or income on such assets not reported even if asset on FBAR or 8938.

Year-end balances.

Amount penalty applied to Highest aggregate value for year in OVDP 8-year period Highest year-end aggregate balance in Streamlined six-year period
Certainty of result – civil?



Certainty of result – criminal?

Yes as to foreign issues – unless opt-out. No as to domestic issues.






SOLs Applied?



872 Required to be signed?

No – unless opt-out as to foreign issues.

Yes – domestic issues if audit

• Yes & FBAR extension

Yes – In theory IRS can audit back more than 3 years – but

would frustrate stated goal.

• No 872 or FBAR extension

Time to complete 1 ½ year to 2 years Usually 1-3 months to filing
Automatic audit? No (open only as to domestic issues) No (but all issues fair game)

Penalties – see above

Public disclosure? No No
Suggested for





Tax criminal, or

Civilly willful

Non-willful or reasonable cause but wanting to cut risks of non-willful FBAR penalty & income tax penalties if quiet filing.
Special PFIC rules available? Yes, FAQ 10 No
Document production scope Large – FAQ 25 Non-willful certification
Cost Extremely expensive Expensive
Phases Five: (1)names clearance (2) OVDP Letter.(3) Package submission (4) Agent review (5) Closing agreement One: File returns with Non-Willful Certification (Form 14653 or 14654)
Concluded by Signing Form 906, Closing Agreement on Final Determination Covering Specific Matters No document signed – No acknowledgement – Must wait out SOLs.
Payment due With package submission but not being strictly enforced With Streamlined Filing
Foreign entity reporting relief? Yes – For nominee entities – if Statement of Abandoned Entities filed.(FAQ 29) No- all required foreign reporting forms must be filed.
Relief for Canadian Registered Retirement Income Fund – failure to elect Treaty deferral? Yes – under Rev. Proc. 2014-55 (FAQs 54.2-54.4) Yes – under Rev. Proc. 2014-55 (FAQs 8 – 12 for persons living in US & FAQs 2 – 5 for persons living outside the US)
Last 3 years compliant – but FBARS not filed for years 4-6 going back N/A – if not criminal or civilly willful If no reasonable cause – file Streamlined using FAQ 7 for per persons living in US).
This entry was posted in OFFSHORE VOLUNTARY DISCLOSURE PROGRAM, STREAMLINED FILING COMPLIANCE PROCEDURES and tagged , , , . Bookmark the permalink.

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