Non-Willful Noncompliance Can Become Willful

The Streamlined Filing Compliance Procedures are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The program was announced by the IRS on August 22, 2012.

Non-willful conduct is defined as conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of good faith misunderstanding of the requirements of the law. Taxpayers are required to provide the IRS with a written certification ‘to provide specific reasons for their failure to report all income, pay all tax, and submit all required information returns, including FBARs‘, as well as information about their personal background, financial background, and anything else that is relevant.

Even though there is no indication the IRS will close the Streamlined Procedures in the short-term, there is no guarantee that the program will be open indefinitely. In this context, the Acting Assistant Attorney General of the U.S. Department of Justice has stated that: “After three very well-publicized voluntary disclosure programs, nearly 200 criminal prosecutions, ongoing criminal investigations and the increasing assessment and enforcement of substantial civil penalties for failure to report foreign financial accounts, a taxpayer’s claim of ignorance or lack of willfulness in failing to comply with disclosure and reporting obligations are, quite simply, neither credible nor well-received. Those who continue to fail to come forward and disclose their conduct run the very serious risk of ending up as the next criminal defendant or at the receiving end of a substantial assessment of civil penalties.” Link to source.

CONTACT

We strongly recommend that taxpayers become compliant as soon as possible. Please contact us with any questions you may have about the Streamlined Procedures. Our tax professionals have helped many U.S. taxpayers  become compliant.