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The Isaac Brock Society

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What are the benefits of the coming into U.S. tax compliance through the Streamlined program?

Posted on by Posted in Issues regarding US persons abroad 34 Comments

Updated November 3, 2014 – Readers are strongly encouraged to read the comments as well. One must remember that Streamlined and OVDP are programs which have been invented by the IRS. They are not found in the Internal Revenue Code. Consequently this post should be read in the context of the following comment to this post:

Commentary on the ‘clarifying rules’:

http://tax-expatriation.com/2014/10/14/irs-releases-clarifying-rules-for-u-s-citizens-living-outside-the-u-s-re-streamlined-filing-guidance/

“……..FAQs are all the rage these days with the IRS, as the government does not take the time or spend the resources to follow the Administrative Procedures Act or similar requirements which are required in order to issue binding rules and regulations. See a previous post regarding these requirements, specifically regarding those who renounce U.S. citizenship or abandon LPR status and have not complied with IRS Notice 2009-85. See,Does IRS Notice 2009-85 regarding expatriation have the “force of law”? Posted on April 14, 2014

Hence, these SFCP are not legally binding on the IRS and they can pick cases as they choose for audit, review and penalty assessment in any manner they think is consistent with the law. Sometimes they do it in a manner that is not consistent with the law.”………….

Americans abroad are getting special attention from the IRS

 

 

During the last week the IRS has been paying special attention to Americans abroad. First we have the new bulletin which relieves Canadians of the need to file the Form 8891 in order to “legitimize” their RRSPs and RRIFs. This was the subject of considerable discussion at the Isaac Brock Society. As noted in a insightful post by Roy Berg, many Canadians will NOT be eligible for the “8891 Relief”. The “effective date” of the RRSP announcement is December 31, 2014. Some Canadians had been using the “Streamlined Compliance” program to fix the “problem of having used an RRSP for retirement planning in Canada” (talk about “tax evasion”). Brave Canadians had “come clean” about their RRSPs in OVDI or either Streamlined Compliance 1 (September 1, 2012 – July 1, 2014) or Streamlined Compliance 2 (July 1, 2014 and continuing). Streamlined 2 appeared to be a “good faith” attempt by the IRS to relieve Americans abroad from penalties on information returns that they didn’t know they had to file. This appeared to be a “step forward” by the IRS. It even appeared to be an attempt to reverse some of the “ill will” generated by “IRS Penalty Abuse” in OVDI and OVDP. As Robert Wood notes, the relationship between the IRS and Canadians is NOT good. It looks like the relationship is about to go from bad to worse. For new readers, it’s important to note that the “clarifications” announced by the IRS in October of 2012, must be understood in the context of the evolution of the so called “IRS Amnesty” programs that began in 2009. As a reminder to all, here is the progression and evolution of these programs:

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