Apparently, in applying to the Streamlined Foreign Offshore or Streamlined Domestic Offshore Procedures with the benefit, respectively, of no penalties or a significantly reduced penalty, many taxpayers have been providing certifications with little or no explanation to demonstrate that their tax noncompliance was “non-willful”. This has not gone unnoticed by the IRS which responded last month by revising the Streamlined forms.
The IRS recently re-released the Streamlined certification forms making clear that taxpayers “must provide specific facts on this form or on a signed attachment explaining [the taxpayer’s] failure to report all income, pay all tax, and submit all required information returns, including FBARs. Any submission that does not contain a narrative statement of facts will be considered incomplete and will not qualify for the streamlined penalty relief.”
You can learn more about the Streamlined Procedures at my tax blog post here.
Taxpayers should undertake some serious due diligence and obtain professional advice before signing a certification of non-willfulness and entering the Streamlined Program. The certification must be signed under penalties of perjury, which if found to be false can itself result in prosecution for submitting a false sworn statement. Significantly, the Streamlined procedures provide no protection from criminal prosecution if the IRS determines that the failure to disclose a foreign account was “willful”.
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