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New Warnings in the IRS’ Streamlined Filing Compliance Procedures

The Internal Revenue Service has recently updated the certification forms required to be filed by taxpayers seeking to avail themselves of the Streamlined Filing Compliance Procedures.  The streamlined program was significantly expanded by the IRS in June 2014 in order to provide a meaningful way for non-willful taxpayers to remedy past non-compliance with respect to non-U.S. bank accounts and income associated with those accounts.  Any taxpayer seeking to utilize the streamlined program must submit a form entitled Form 14654–Certification by U.S. Persons Residing in the United States for Streamlined Domestic Offshore Procedures (SDOP) (for U.S. residents) or Form 14653–Certification by U.S. Persons Residing Outside of the United States for Streamlined Foreign Offshore Procedures (SFOP) (for non-U.S. residents).

The streamlined filing compliance procedures are designed for only individual taxpayers, including estates of individual taxpayers. The streamlined procedures are available to both U.S. individual taxpayers residing outside the United States and U.S. individual taxpayers residing in the United States. In order to enter the streamlined offshore procedures, the taxpayer must officially certify that their failure to report all income, pay all tax, and file all required information was due to non-willful conduct.

In either version of the form, the taxpayer is certifying, under penalties of perjury, that:

“My failure to report all income, pay all tax, and submit all required information returns, including FBARs, was due to non-willful conduct.  I understand that non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.”

This is a very important element of the streamlined process.  Any taxpayer who cannot make such a certification is ineligible for the relief afforded by the Streamlined Filing Compliance Procedures.  As part of the certification, the taxpayer is required to provide a factual statement explaining the reasons for non-compliance, including if such non-compliance was attributable to advice received from a professional advisor:

“Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice. If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts. The field below will automatically expand to accommodate your statement of facts.”

Some taxpayers apparently have been submitting the certification form without the narrative statement.  As a result, the IRS has updated the forms to now include, in bright red font, the following warning:

“Note:  You must provide specific facts on this form or on a signed attachment explaining your 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.”

In spite of the standardization of the forms, very careful drafting and persuasive legal advocacy of a taxpayer’s particular circumstances are still recommended for a clear demonstration of non-willfulness. Beware: the statement can be used against the taxpayer.  The narrative portion of the certification form has always been the most important part of the streamlined submission, because that is what the IRS will review in order to determine whether the taxpayer’s failure to file FBARs and report income from offshore accounts was non-willful.  All certifications are reviewed carefully by the IRS.  The updated form with its new conspicuous warning language further confirms the important nature of the narrative.  Taxpayers who choose to submit certification forms without a narrative, or who cannot complete the narrative for whatever reason, are now warned that their streamlined applications will be rejected.

Whether a taxpayer’s conduct is non-willful is a critical question of fact and law, based largely on the taxpayer’s particular facts and circumstances. Taxpayers with foreign accounts would be wise to retain tax legal counsel, to better analyze the taxpayers’ position.  In our experience, good facts applied to the law will result in a result.  Legal research, careful drafting and legal advocacy of a taxpayer’s particular circumstances are still strongly recommended for a favorable result.

Hiding Money or Income Offshore Among the “Dirty Dozen” List of Tax Scams for the 2015 Filing Season

IR-2015-09, Jan. 28, 2015

WASHINGTON — The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the 2015 filing season.

“The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order.”

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 50,000 disclosures and we have collected more than $7 billion from this initiative alone.  The IRS conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

The IRS remains committed to our priority efforts to stop offshore tax evasion wherever it occurs.  Even though the IRS has faced several years of budget reductions, the IRS continues to pursue cases in all parts of the world, regardless of whether the person hiding money overseas chooses a bank with no offices on U.S. soil.

Through the years, offshore accounts have been used to lure taxpayers into scams and schemes.

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice (DOJ) to shut down scams and prosecute the criminals behind them.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by hiding income in offshore banks, brokerage accounts or nominee entities and then using debit cards, credit cards or wire transfers to access the funds. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as the banks and bankers suspected of helping clients hide their assets overseas. The IRS works closely with the Department of Justice (DOJ) to prosecute tax evasion cases.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant penalties and fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward voluntarily to disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.  The IRS also announced its SDOP and SFOP last year for non-willful cases.

Another Customer with Unreported Offshore Bank Accounts Pleads Guilty

George Landegger, CEO of pulp and paper company, pleaded guilty last week in New York to a federal charge of failing to file a required report to the IRS about the account. He admitted that he maintained the undeclared account worth $8.4 million at the Swiss Bank in Zurich from the early part of the last decade to 2010.

Landegger, 77, of Ridgefield, Connecticut, agreed as part of his plea bargain to pay a civil penalty of more than $4.2 million and back taxes of more than $71,000. A judge set his sentencing for May 12′ he faces a maximum of five years in prison, although the actual punishment likely will be less.

“As he admitted, George Landegger maintained secret Swiss bank accounts he repeatedly failed to declare to the IRS, and he took steps to conceal his ownership of the accounts,” Manhattan U.S. Attorney Preet Bharara said in a prepared statement. “The benefits of citizenship or residency in the United States come with certain obligations, including, as George Landegger well knew, the legal requirement to report foreign bank accounts. He will now pay for his illegal conduct.”

Parsons & Whittemore employed hundreds of people at a pair of pulp mills in Monroe County but sold them in 2010 to Georgia-Pacific, a subsidiary of Koch Industries.

Court records in the criminal case indicate that in 2005, a representative of Swiss Bank recommended to Landegger that he use a Zurich-based lawyer to create a sham trust to hold the executive’s undeclared accounts at the bank. That trust – named “Onicuppac,” or cappucino spelled backwards – was organized under the laws of Lichtenstein and kept money in the bank, outside of the reach of the IRS.

Court records describe an April 2009 meeting between Landegger, an unnamed Swiss Bank official and a third person in which they discussed news accounts of the United States cracking down on untaxed earnings hidden in foreign bank accounts. At the time, U.S. officials were investigating UBS AG regarding allegations that the Swiss bank was helping U.S. taxpayers maintain undeclared accounts.

Landegger and the Swiss Bank official discussed the possibility of entering the IRS’s offshore voluntary disclosure program but rejected the idea. Instead, he and the bank official decided to empty the accounts of their assets by slowly moving funds out of Switzerland. Court records show that between May 2009 and July 2010, Landegger, with the assistance of the banker and others, began transferring the assets from his account to a new, declared account in Canada. He then transferred the remaining funds to an account maintained by another person in Hong Kong.

During the time Landegger kept undeclared accounts at the Swiss Bank, capital gains and losses were generated in the account from his investments in foreign securities, according to the plea agreement.

IRS Acting Special Agent-in-Charge Thomas E. Bishop said “The Internal Revenue Service has made uncovering hidden offshore accounts and income a top priority and, working with the Department of Justice, we continue to demonstrate our success in doing so.” “The prosecutions of individuals who decide to keep their foreign assets concealed and of those who advise and assist them serve as clear warnings to anyone who doubts the U.S. government’s resolve.”

A timely OVDP submission (or maybe SDOP filing) may have saved Mr. Landegger.  The case is interesting because it reveals the discussions between the bankers and client, which ultimately were criminally used against the client. In recent years, foreign banks have come under great scrutiny by the US government.  We expect more banks to reveal more information in order to avoid civil and criminal complications for the bank. The case provides a valuable lesson: be careful of all verbal and written communications with bankers.

Internal Revenue Service announces new International Data Exchange Service: The Beginning of Information Sharing

The Internal Revenue Service announced this week the opening of the International Data Exchange Service (IDES) for enrollment.  Financial institutions and host country tax authorities will use IDES to securely send their information reports on financial accounts held by U.S. persons to the IRS under the Foreign Account Tax Compliance Act (FATCA) or pursuant to the terms of an intergovernmental agreement (IGA), as applicable.

More than 145,000 financial institutions have registered through the IRS FATCA Registration System. The U.S. has more than 110 IGAs, either signed or agreed in substance. Financial institutions and host country tax authorities will use IDES to provide the IRS information reports on financial accounts held by U.S. persons.

“The opening of the International Data Exchange Service is a milestone in the implementation of FATCA,” said IRS Commissioner John Koskinen. “With it, comes the start of a secure system of automated, standardized information exchanges among government tax authorities. This will enhance our ability to detect hidden accounts and help ensure fairness in the tax system.”

Where a jurisdiction has a reciprocal IGA and the jurisdiction has the necessary safeguards and infrastructure in place, the IRS will also use IDES to provide similar information to the host country tax authority on accounts in U.S. financial institutions held by the jurisdiction’s residents.

Using IDES, a web application, the sender encrypts the data and IDES encrypts the transmission pathway to protect data transfers. Encryption at both the file and transmission level safeguards sensitive tax information.

Host country tax authorities in Model 2 IGA jurisdictions and financial institutions are encouraged to begin the enrollment process well in advance of their reporting deadline.

For host country tax authorities in Model 1 IGA jurisdictions, the IRS will directly notify them to let them know when it is time to enroll. Financial institutions will initiate enrollment online on their own; in order to enroll, the financial institution will need to have registered as a participating financial institution through the IRS FATCA Registration System and have a global intermediary identification number (GIIN) that appears on the IRS FATCA FFI list.

The IRS has published a searchable list of financial institutions. The FFI List Search and Download Tool is located on the IRS’s FATCA Website. The tool can be used to search for the name of a specific foreign financial institution and find out if it has registered under FATCA. Users can also download an entire list of financial institutions with the tool. See the FFI List Search and Download Tool and User Guide. Countries complying with FATCA can be found at FATCA – Archive.

The fact that 145,000 banks have registered and are providing government help to the IRS means that no foreign account is secret. US persons must report worldwide income and many must file IRS Form 8938 to report foreign accounts and assets. With such comprehensive databases, noncompliant taxpayers should beware; the IRS has quicker, better and more complete information than ever.

National Taxpayer Advocate Delivers Annual Report to Congress that Criticizes Offshore Voluntary Disclosure Programs

National Taxpayer Advocate Nina E. Olson today released her 2014 annual report to Congress, which expresses concern that taxpayers this year are likely to receive the worst levels of taxpayer service since at least 2001 when the IRS implemented its current performance measures.

Federal law requires the Annual Report to Congress to identify at least 20 of the “most serious problems” encountered by taxpayers and to make administrative and legislative recommendations to mitigate those problems.  Overall, this year’s report identifies 23 problems, makes dozens of recommendations for administrative change, makes 19 recommendations for legislative change, and analyzes the 10 tax issues most frequently litigated in the federal courts.

Among the “most serious problems” addressed is the Offshore Voluntary Disclosure (OVD) Program Inequities.  The report describes the evolution of the OVD program and the disproportionate penalties it says were often imposed, particularly with respect to unrepresented taxpayers.  The IRS changed the streamlined program in 2014 in ways that allow many taxpayers to pay lower penalties.  However, the new rules do not allow taxpayers who already had entered into closing agreements with the IRS at higher penalty rates to amend those agreements.  Therefore, taxpayers who are the most deserving of leniency because they were the first to acknowledge they had failed to comply with foreign account reporting requirements ultimately are paying substantially greater penalties than taxpayers who waited until later to acknowledge their noncompliance.  Among other things, the report recommends that the IRS revisit this decision.

The summary of the report is below:

OFFSHORE VOLUNTARY DISCLOSURE (OVD): The OVD Programs Initially Undermined the Law and Still Violate Taxpayer Rights


Before it updated the “streamlined” program in 2014, the IRS generally required those who failed to report offshore income and file a related information return (e.g., a Report of Foreign Bank and Financial Accounts (FBAR)) to enter into an offshore voluntary disclosure (OVD) settlement program and pay an

“offshore penalty” designed for bad actors. “Benign actors” with inadvertent violations generally had to “opt out” and be audited to obtain a lesser penalty.  Uncertainty about what penalty might apply in the audit, the IRS’s one-sided interpretation of the program terms, processing delays, and the cost of representation in an audit prompted some to pay a disproportionate offshore penalty. Inside the 2011 OVD programs, taxpayers with small accounts paid over eight times the unreported tax—over ten times the 75 percent penalty for civil tax fraud—and those who were unrepresented generally paid even more.


Because violations by taxpayers who have small accounts or are unrepresented are more likely to have been inadvertent, the OVD programs undermined the statutory scheme, which applies a higher penalty to “willful” than non-willful violations or those due to “reasonable cause.” The IRS’s one-sided interpretations of its OVD FAQs, which were not explained, appealable, or published, eroded confidence that the IRS would be reasonable in a post-opt-out examination. The IRS now allows benign actors to pay a smaller penalty under the 2014 streamlined program. However, unlike the last time it made taxpayer favorable changes to an OVD program, the IRS will not allow those with signed closing agreements to benefit from the most recent changes, thereby punishing taxpayers who came in early. Thus, the IRS’ OVD programs eroded taxpayer rights, such as the rights to pay no more than the correct amount of tax, challenge the IRS’s position and be heard, appeal an IRS decision in an independent forum, to be informed, and to a fair and just tax system.


The IRS should improve the transparency of OVD program guidance (e.g., FAQ interpretations); allow taxpayers to discuss OVD and streamlined program guidance interpretations with the IRS employee interpreting the guidance and to appeal the interpretations; and allow taxpayers to amend closing agreements to benefit from recent program changes.

The full report of this problem is quite negative.

Unfortunately the IRS is not mandated to accept the above recommendations. However, in the past, such recommendations were taken “into consideration” for future changes.  So stay tuned.

New IRS Subpoenae and IRS Data Mining Expected

Last week a federal judge approved the IRS issuing “John Doe” summonses requiring FedEx, DHL, UPS, and numerous other intermediaries to produce information about U.S. taxpayers who used Sovereign Management & Legal Ltd. for offshore accounts and assets. They include Western Union Financial Services Inc., the Federal Reserve Bank of New York, Clearing House Payments Company LLC, and HSBC USA.

The IRS uses John Doe summonses to obtain information when it searches for tax fraud by individuals whose identities are unknown. This is a expansive order, allowing the IRS to get records from all of these companies. The target is any U.S. taxpayers who, from 2005 through 2013, used Sovereign’s services to control foreign accounts or entities.

The IRS uses John Doe summonses when it doesn’t know the identities of the suspected culprits.  Information collected will include U.S. shipment addressees, senders, recipients of payments, and other US persons potentially involved in offshore banking and tax evasion.

The IRS recently spent about $1 billion in its recent data-mining modernization. As a result, the agency’s is rolling out an effort to deploy sophisticated data-matching and pattern-recognition technology, and match up taxpayer returns with third-party information, according to U.S. Treasury Inspector General for Tax Administration J. Russell George.

According to a Sept. 21, 2011, report by the Treasury Inspector General for Tax Administration (TIGTA), IRS’s data-mining software is called the E-Trak Offshore Voluntary Disclosure system. Since 2009, more than 33,000 taxpayers have contributed detailed information to E-Trak by participating in IRS’s Offshore Voluntary Disclosure Program (OVDP).  The IRS’s use of E-Trak in the last few years has greatly improved its ability to find taxpayers, bankers, and other professionals who are involved in the world of offshore bank accounts.

Given the IRS’ latest data mining efforts, our law firm expects unabated aggressive enforcement of the US tax laws, including increased criminal prosecutions and civil audit examinations. We have been advising our clients to expect the unexpected (and the worst) in their tax treatment and disclosure of offshore assets.  The OVDP, SDOP and SFOP compliance programs should be considered with experienced legal counsel.

Patel Law Offices has consulted with hundreds of clients regarding their offshore asset compliance issues. Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign accounts.

News from the 2014 Criminal Fraud and Tax Controversy Conference

We just returned last week from attending the Criminal Fraud and Tax Controversy Conference in Las Vegas, sponsored by the American Bar Association Section of Taxation where many government officials were in attendance. Below are some interesting observations:

On the new IRS Streamlined program (including the SDOP and SFOP programs), David Horton LB&I director for international compliance (who is in charge of the IRS Streamlined program), said that there are differences between the OVDP and Streamlined, particularly noting to Streamlined “requires a certification of non-willfulness, and a false certification could lead to possible criminal liability.”

Horton also indicated that he has a team in Austin, Texas for the IRS Streamlined program that is reviewing EVERY certification of non-willfulness. This seems contradictory to the IRS’ statement that not every Streamlined submission will be audited (perhaps the returns will not be audited but the certifications of non-willfulness will be carefully scrutinized.

On the certification statement of reasons for noncompliance, Horton said that a “conclusory statement” will not suffice and that there is not a “checklist on willfulness.”  There was intentionally no statement on what a proper certification statement should include.

“He [Horton] warned of ‘a lot more John Doe summonses’ in the next 12 to 24 months, in other parts of the world and ‘beyond banks.’ The focus will be on intermediaries, he said, referring to those who promoted or facilitated transactions for stashing money abroad.”
Horton indicated that the IRS was aware of but did not have a current solution for the difficulty and delay of U.S. citizens abroad most of their lives not have as SSN and unable to get one in a decent time period, thus delaying their OVDP or Streamlined.

Horton also indicated that revised new FAQs for the Streamline program should be expected shortly.

In our experience, good facts applied to the law will result in a result.  Legal research, careful drafting and legal advocacy of a taxpayer’s particular circumstances are still strongly recommended for a favorable result.

IRS Releases Training Documents on Offshore Voluntary Disclosure Program

last month the IRS released more than 6,500 pages from the Internal Revenue Service on the agency’s Offshore Voluntary Disclosure Program and how it trains its agents. The documents included material used in training IRS personnel in the Offshore Voluntary Disclosure Program, determining program penalties and instructing IRS employees about the program.

The purpose of the OVDP is for individuals who have failed to file an FBAR (Foreign Bank and Financial Accounts Report) form with the IRS, or didn’t report income from offshore activities to disclose their errors and to avoid criminal tax prosecution. The OVDP’s current penalty is 27.5 percent. However there are other alternatives available to certain taxpayers that may provide additional relief, including the SDOP and SFOP programs.

Some of the materials advise agents on interpretation of willfulness and other key legal terms in the SDOP and SFOP programs, which both require non-willfulness as an eligibility requirement.

Below is an illustrative summary of one document.  We are carefully reviewing the documents to further understand the IRS’ analysis in reviewing our OVDP, SDOP and SFOP cases.

Document 11: page 52: “Willfulness is not present where a taxpayer has acted by mistake, accidentally, or in good faith. Making an honest mistake is not fraud while deliberately choosing to not comply with the law can be. Mistakes, inadvertence, reliance on others, honest differences of opinion, and mere negligence or carelessness do NOT constitute willful intent. Willfulness is determined by showing the following:

Document 11: Page 53-54: Taxpayer Involvement: Knowledge-  Intent-  Purpose.

  • Did the client have control over the offshore accounts/transactions?
  • How did the client access the funds?
  • How complex was the client’s financial transactions? (Multiple Trusts, Multiple Countries, Convoluted Arrangements)- § What role(s), or title(s), did the taxpayer hold under the scheme arrangement? e.g. Manager, Director, Trustee, Beneficiary-  § Did the taxpayer play an active role in the scheme?
  • Who set up the scheme?
  • What communications did the taxpayer initiate or become involved in- (emails, letters etc.) concerning the scheme?
  • What types of reports, if any, did the taxpayer receive from the promoter regarding the funds and/or the program?- § Look for badges of fraud (unreported income, concealment, destruction of records, use of code words, etc.)-  Taxpayer Knowledge of Scheme
  • Did the taxpayer change accountants during the period of involvement in the scheme?- § Has the taxpayer participated in previous abusive schemes?
  • Did the taxpayer disregard competent advice from the Service or other sources?- § How many years was the taxpayer involved in the scheme?-  § Prior convictions for similar offenses?
  • Prior civil examinations, adjustments, fines, penalties, criminal investigations and correspondence relative to illegal- schemes?
  • Information/documentation in the possession of the taxpayer that address illegality of the scheme? The Examiner also needs to determine if the taxpayer was aware that the Offshore Arrangement was abusive and designed to circumvent the tax laws. Questions such as the ones listed should be considered during the interview. Did you notice the taxpayer get a new preparer? Why? Maybe the old preparer was uncomfortable with the situation? Maybe in the year the scheme started, the promoter referred the taxpayer to a new preparer familiar with the scheme? Talk to the old preparer, find out why the relationship ended? What details did the taxpayer have about the scheme? Does he have promoter material? What was he told about how the scheme works? Does he have an opinion letter? Did he ever question its reliability? Maybe get a second opinion from the IRS or another unrelated professional? Is the taxpayer a known abuser? Was he identified as participating in an earlier arrangement in e-trak of some other database? Can you tell from IDRS if the taxpayer has been examined in the past? If so what were the results? Were penalties assessed?
  • Has he been convicted of things other than tax crimes?

IRS Announces New Clarifying FAQs for Streamlined Offshore Compliance Program

The IRS updated its streamlined offshore compliance program to provide procedures taxpayers residing both inside and outside the United States should use to participate in the program. The streamlined offshore compliance program is for taxpayers whose failure to comply with requirements to report offshore assets is nonwillful. It is designed to allow U.S. taxpayers with offshore assets to become tax compliant with reduced or no penalties.

Under the streamlined offshore procedures for both U.S. residents and nonresidents, taxpayers must (1) file delinquent or amended tax returns, together with all required information returns for each of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, and (2) for each of the most recent six years for which the FBAR due date has passed, file any delinquent FBARs.

Under the streamlined offshore procedure for U.S. residents, the taxpayer must also pay a miscellaneous offshore penalty of 5% of the highest aggregate balance or value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period.

In FAQ #1, the IRS clarified that the 5% penalty will not apply to assets in which the taxpayer has no financial interest but only signature authority.  The IRS also clarified that the 5% penalty will not apply to assets in which the taxpayer has no or partial interest.  The IRS will apply the principles announced in OVDP FAQs 31 through 33, 35.1, and 38 through 41. This interestingly may be the first time where the IRS Streamlined Filing Compliance Procedures is specifically applying OVDP regime principles.  If appropriate, this could lead to the possibility of analogizing of principles and nuances from the OVDP regime (with 55+ detailed FAQs) to taxpayers under the Streamlined Filing Compliance Procedures (where fewer rules exist).

In FAQ #2, the IRS clarified that the 5% penalty applies only to assets reportable on either FBAR or Form 8938, not rental real estate.

In FAQ #4, the IRS made clear that the 5% penalty applies to a foreign business with assets including financial accounts.  In FAQ #6, the IRS clarified that mechanical calculation of the 5% penalty.  In FAQ #7, the IRS explained that a taxpayer can make a streamlined submission and pay a 5% penalty where compliant tax returns and FBARs were filed for the most recent three years but no FBARs for the three years prior to that.

In light of the new IRS clarifying announcements regarding the Streamlined Filing Compliance Procedures, the Streamlined program offers excellent opportunities to eligible taxpayer to clean up past compliance violations and move forward.