IRS Streamlined Procedures

Late 1040 While in Australia

So you you got a late 1040 while in Australia?

Late 1040 While in Australia

You are not alone. Happens to many. And often it is not just the 1040, but the FBAR as well. 

The bad news is that this can cost you a lot of money if you don’t act. Think US$10,000 per FBAR you didn’t file.

The good news is that there is an IRS amnesty to get you out of this penalty-free. It’s called the IRS ‘Streamlined Procedures’. You still need to pay the actual tax plus interest, but at least the huge IRS penalties are off the table.

To qualify you show that your failure to file was not willful, meaning you didn’t do it with intention. You explain your personal and financial background and how it happened. We can guide you through this process.

The IRS Streamlined Procedures are only for individual taxpayers. Companies and partnerships are excluded. 

Nobody knows how long this amnesty will last. So use it while you can. Just call us if your US tax is troubling you. We deal with late filing issues all the time.

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

Liability limited by a scheme approved under Professional Standards Legislation.

 

IRS amnesty programs for us citizens in Australia

IRS Amnesty Programs For US Citizens in Australia

IRS amnesty programs for US citizens in Australia because it is so easy to forget. You are having a great time in Australia – maybe you lived here most of your life or maybe you arrived a short while ago – either way it is easy to forget that your US tax obligations didn’t stop when you became an Australian resident.

IRS Amnesty Programs For US Citizens in Australia

And so it is easy to fall behind with your US filing. There are hefty fines when you do, but luckily all is not lost. The IRS has a number of amnesty programs that should get you out of trouble relatively scot-free. Here are five of these. The first three are general amnesties. The last two are form specific amnesties.

1 – IRS Streamlined Procedures

With this one you can come clean and avoid penalties if you file tax returns for the past 3 years and FBARs for the past 6 years. To qualify, you must file Form 14653 showing that your previous non-compliance was non-willful. That is the key word: Non-Willful.

You still pay interest on the outstanding tax but at least you avoid most of the penalties.

2 – Voluntary Disclosure Program

This one will help you if you are nervous about something. You didn’t think it was important and so you didn’t include it in your tax return, but now you are awake at night, worrying that maybe it is bigger than you thought. So this one will make sure that the IRS doesn’t slam you as ‘willful’ – there is the word again – and aren’t hit with criminal penalties.

3 – Relief Procedures for Former Citizens

This one is for accidental Americans. Let’s say you were born in Australia and one of your parents had a US passport at the time and so you ended up with US citizenship ‘by accident’. And now you want to renounce your US citizenship but first want to close all your IRS filing obligations. If this is you, then this relief will get you there.

There is just one catch. This one only applies if your total tax liablity was US$25,000 or less for the past 5 years.

4 – Delinquent FBAR Submission Procedures (“DFSP”)

If you have submitted your tax returns on time but forgot your FBARs, then this one is for you. You file the missing FBARs with a brief statement explaining why you are late.

As long as the IRS has not yet contacted you regarding the missing FBARs and as long as you are not under a civil or criminal investigation by the IRS, this amnesty will allow you to file the FBARs for up to 6 years without any penalties.

5 – Delinquent International Information Return Submission Procedures (“DIIRSP”)

This one is for you if you just forgot to file certain information about your international affairs. For example Form 5471 about your Pty Ltd in Australia (‘interest in foreign corporations’) or Form 3520 about your Australian family trust (‘transactions with foreign trusts’) or Form 8938 when your your Australian shares, units and options (‘foreign financial assets’) exceed certain thresholds.

If you have a ‘reasonable cause’ for not filing these on time and the IRS hasn’t contacted you yet asking where they are and if you are not under civil or criminal investigation by the IRS , then you can use this amnesty to file these forms without any penalties, explaining your reasonable cause.

So if you are late, don’t despair. There is almost always a solution. Just contact us. We take care of your Australian and US taxes together with our sister company in the US.

Imagine no longer having your US tax weighing on your shoulders.

 

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Disclaimer: numba does not provide specific financial or tax advice in this article. All information on this website is of a general nature only. It might no longer be up to date or correct. You should contact us directly or seek other accredited tax advice when considering whether the information is suitable to your circumstances.

Liability limited by a scheme approved under Professional Standards Legislation.

IRS Streamlined Procedures

The IRS streamlined procedures allow you to come clean penalty-free.

IRS Streamlined Procedures

If you forgot to file FBARs and US tax returns for quite a while, the IRS Streamlined Procedures are for you. All you need to show is that your failure to file was not willful, meaning you didn’t do it with intention.

The IRS Streamlined Procedures are the most popular and generous of IRS amnesties. And here is why.

Penalties

If you live in Australia and anywhere else in the world outside the US, this amnesty wipes out all your penalties. And there are quite a few of those.

There are – among others – penalties for failure to file (5%) or pay (0.5%) and most significant the $10,000 penalty for each FBAR you didn’t file. 

And these are just the three most common ones.

Then there is also an additional 20% penalty if your income is substantially understated. A civil penalty of $10,000 per year per entity when you fail to file Form 5471, Form 8865 and/or Form 8858. Not to mention criminal penalties when the IRS finds you to have willfully neglected your filing obligations.

But all this is off the table when you apply for the IRS Streamlined Procedures.

What You Still Pay

This amnesty wipes out all penalties, but you still have to pay the actual taxes you owe plus any interest on these. 

Eligibility

To qualify you need to file tax and information returns for the past three years, FBARs for the past six years plus your Non-Willful Certification (Form 14653).

The IRS Streamlined Procedures are only for individual taxpayers. Companies and partnerships are excluded. 

There are different more stringent rules for taxpayers living in the US, but since you live in Australia, these won’t apply to you. 

Non-Willful Certification

In your non-willful certification in Form 14653 you explain how you unintentially got into this mess and that your conduct was non-willful. So you explain your personal and financial background and explain how it happened.

You also need to explain the source of all foreign funds and assets – inheritance, bank account while living in Australia etc – and what you did with them – investment decisions, withdrawals to cover cost of living etc. List the name and address of your tax agent and anybody else who helped you with your financial affairs.

Nobody knows how long this amnesty will last. So use it while you can. Just call us if your US tax is troubling you. We deal with late filing issues all the time together with our sister agent in the US.