COMPARISON CHART – OVDP VS. STREAMLINED FILING COMPLIANCE PROCEDURES

COMPARISON CHART – OVDP VERSUS STREAMLINED

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

http://www.steinbergtaxlaw.com

 

CHARACTERISTIC OVDP STREAMLNED
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 9.5.11.9 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 out.in 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 9.5.11.9

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

 

 

Yes

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

File & unfiled if outside U.S.

 

Yes

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

 

 

 

Valuation

 

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.

Yes

No

 

 

No

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.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s