Virginia Streamlined Filing Lawyer
Taxpayers Who Have Inadvertently Failed to Disclose Their Offshore Assets Can Minimize Their Liability with a Streamlined Filing
Under various federal laws, U.S. taxpayers have an obligation to disclose their offshore assets to the federal government. If you live in Virginia and you have offshore assets that exceed the relevant statutory thresholds, you are required to make filings with the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN) on an annual basis. While failure to file can lead to civil or criminal penalties, taxpayers can often mitigate their liability by making a streamlined filing.
Overview of the IRS’ Streamlined Filing Compliance Procedures
To help delinquent taxpayers come into compliance with their offshore disclosure obligations, the IRS has established a set of Streamlined Filing Compliance Procedures. For eligible taxpayers, making a streamlined filing limits their exposure to penalties, and it ensures that the IRS will not discover their noncompliance through an audit or investigation.
But, while making a streamlined filing can be beneficial, it can also be risky. If taxpayers are not careful, they can end up tipping off the IRS about their noncompliance without securing the protection that the Streamlined Filing Compliance Procedures afford. As a result, before voluntarily sharing any information with the IRS, it is critical that taxpayers seek advice from an experienced Virginia streamlined filing lawyer.
When Can (and Should) Taxpayers Make a Streamlined Filing?
Streamlined filing is an option for U.S. taxpayers with unreported offshore assets who can “certify[] 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.” This applies to both failure to file IRS Form 8938 (as required by the Foreign Account Tax Compliance Act (FATCA)) and failure to file a Report of Foreign Bank and Financial Accounts (FBAR) (as required by the Bank Secrecy Act (BSA)).
Taxpayers are not eligible to make a streamlined filing if:
- They are unable to certify that their non-disclosure was non-willful;
- They are currently facing an IRS audit or investigation; or,
- They have previously filed for relief under the IRS’s former Offshore Voluntary Disclosure Practice (OVDP).
One of the most important aspects of streamlined filing is that it is an option that is only available to taxpayers who have not “willfully” violated FATCA or the BSA. To be considered non-willful, an offshore disclosure violation must result from “negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.”
If a Virginia taxpayer is ineligible to make a streamlined filing based on the IRS’ “non-willfulness” requirement, the taxpayer may be able to submit a voluntary disclosure to IRS Criminal Investigation (IRS CI). However, voluntarily disclosing a willful violation of federal law is a very different matter, and it is imperative that taxpayers make informed decisions about which route to pursue (if either).
What are the Benefits of Making a Streamlined Filing?
If you are a U.S. taxpayer residing in Virginia and you are behind on your FATCA or FBAR filings, why should you consider a streamlined filing? By successfully submitting streamlined filings, taxpayers can:
- Limit the penalties they owe as a result of their previous offshore disclosure violations;
- Obtain acknowledgment from the IRS that their previous offshore disclosure violations were non-willful; and,
- Mitigating the risk of facing full penalties for their offshore disclosure violations as the result of an IRS audit or investigation.
As a result, submitting a streamlined filing can be extremely beneficial for taxpayers who qualify. But, before submitting a streamlined filing, taxpayers need to make sure that they qualify, as attempting to make a streamlined filing when you are ineligible to do so can lead to adverse consequences.
What are the Risks of Making a Streamlined Filing?
Submitting a streamlined filing carries two main risks. First, streamlined filers are not guaranteed protection from an IRS audit. Even if submitting a streamlined filing helps you avoid full failure-to-file penalties related to your offshore disclosure obligations, the IRS could still decide that your filing history warrants additional scrutiny.
Second, the IRS does not have to accept your certification of non-willfulness. After reviewing your streamlined filing, your filing history and the circumstances surrounding your failure to file, the IRS may decide that you do not qualify for the protections of the Streamlined Filing Compliance Procedures. If this is the case, the IRS can use the information you voluntarily provided to launch an audit or investigation and pursue civil or criminal penalties.
Experienced Tax Counsel for Submitting a Streamlined Filing to the IRS
Given the risks involved in submitting a streamlined filing to the IRS, Virginia taxpayers who are considering a streamlined filing should seek guidance from experienced tax counsel. At Thorn Law Group, our team, led by Managing Partner Kevin E. Thorn, has decades of combined experience helping taxpayers address their offshore disclosure violations. When you schedule a confidential consultation at Thorn Law Group, we will:
- Evaluate your eligibility to submit a streamlined filing to the IRS
- Assess the likelihood that the IRS will deem your offshore disclosure violations “willful”
- Help you consider alternatives (including voluntary disclosure) if necessary
- Prepare your streamlined filing (or other appropriate filings) for you
- Deal with the IRS on your behalf until your prior offshore disclosure violations have been fully resolved
We can assist you with maintaining offshore disclosure compliance going forward as well. Once you submit a streamlined filing, the IRS is far less likely to accept that any future violations are non-willful. Our lawyers can explain everything you need to know about offshore disclosure compliance, and we can help you take all necessary steps to mitigate your risk of facing IRS scrutiny in the future.
Schedule an Appointment with Virginia Streamlined Filing Lawyer Kevin E. Thorn
Do you need to know more about submitting a streamlined filing to the IRS? If so, we invite you to schedule a confidential initial consultation at Thorn Law Group. To request an appointment with Virginia streamlined filing lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752, email ket@thornlawgroup.com or send us a confidential message online today.
