Streamlined Filing vs. Voluntary Disclosure: Understanding the Differences

Articles/News, Offshore Account Update

Posted on March 31, 2021 |

For U.S. taxpayers who fail to disclose their offshore accounts to the IRS, streamlined filing and voluntary disclosure provide two potential options for coming into compliance. However, both of these options are very different, and taxpayers must choose wisely when deciding how to address past filing deficiencies. Here, New Jersey FATCA attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains the key differences between these two options for remedying delinquent foreign financial asset disclosures:

The OVDP Is No More

Before we discuss the differences between streamlined filing and voluntary disclosure, it is important to clear up some confusion. Until September 28, 2018, the primary option for disclosing violations of the Foreign Account Tax Compliance Act (FATCA) was to utilize the IRS’ Offshore Voluntary Disclosure Program (OVDP). Now that the OVDP has expired, the term “voluntary disclosure” has a very different meaning than it did previously. As discussed in greater detail below, while the OVDP provided an option for remedying most types of offshore disclosure violations, the current voluntary disclosure practice is specific to willful federal tax law violations.

Streamlined Filing: An Option for U.S. Taxpayers Who Unintentionally Fail to Disclose Offshore Accounts

If your failure to disclose your offshore accounts was unintentional, you may be eligible to use the IRS’ Streamlined Filing Compliance Procedures. There are two main eligibility criteria for submitting a streamlined filing:

  • Your must be able to certify that your previous nondisclosure was non-willful; and,
  • You must not currently be the subject of an IRS audit or investigation.

Making a streamlined filing does not protect you against liability for any taxes, interest and penalties that you already owe, but it does protect you against the risk of facing IRS scrutiny with regard to your offshore disclosures. As a result, this is a good option for most taxpayers, and working with a New Jersey FATCA attorney will help ensure that you qualify for the protections afforded by streamlined filing compliance.  

Voluntary Disclosure: An Option for U.S. Taxpayers Who Need to Remedy Willful FATCA Violations

If you cannot certify as to non-willfulness, then you may need to utilize the IRS Criminal Investigation (IRS-CI) Voluntary Disclosure Practice. As noted above, this is very different from the now-expired OVDP.

Submitting a voluntary disclosure can protect you from federal prosecution, but this protection is not guaranteed. As a result, prior to making a voluntary disclosure to IRS-CI, it is imperative that you discuss your situation with an experienced New Jersey FATCA attorney. Not only will your attorney be able to determine your eligibility for making a voluntary disclosure, but your attorney will be able to advise and represent you in dealing with IRS-CI as well.

Discuss Your Situation with New Jersey FATCA Attorney Kevin E. Thorn, Managing Partner of Thorn Law Group

Do you have questions about submitting a streamlined filing or voluntary disclosure to remedy a FATCA violation? If so, we encourage you to contact us promptly. To speak with New Jersey FATCA attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, in confidence, call 201-355-8202, email or request an appointment online today.

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