Simplified tax regularisation in the USA: the classic pitfalls
Are you a US taxpayer and reside in or outside the United States? In both cases, you may need to regularise your situation using the simplified procedures provided by the IRS. But do you know how they work?
What is the Streamlined procedure for regularising a tax situation?
In the United States, as in most countries, non-compliance with tax reporting requirements can lead to fines and penalties. The Internal Revenue Service (IRS), the US federal government agency, offers a simplified compliance procedure to regularise a situation. In this way, you reduce the consequences of failing to declare and/or pay taxes.
The precise American term is Streamlined Filing Compliance Procedures. Although everyone must ensure in detail that they are eligible for the Streamlined scheme, any US taxpayer can use it, regardless of nationality or place of residence.
This simplified process is one of the US tax amnesty schemes, along with the Relief Procedure. This second programme is for people who are considering renouncing their US citizenship and want to regularise their tax situation.
In what cases is the Streamlined programme used in the USA?
Here are some examples that justify using the simplified procedure for regularisation of the US tax situation:
- A foreign expatriate in the United States who is unaware of his tax obligations in his country of expatriation
- A US citizen expatriated to another country who discovers penalties for non-compliance with regulations
- Failure to declare foreign financial assets to the US tax authorities
- Non-payment of taxes due on foreign financial assets due to an unintentional failure to file
- A need to amend tax returns or finalise outstanding tax returns
- Payment of overdue taxes and related penalties
How do you go about regularising your tax situation in the United States?
Simplified compliance procedures require you to take things one step at a time:
- Check eligibility for the Streamlined programme (situation of the US taxpayer and type of adjustment to be made)
- Certify the unintentional nature of the offence (it can be explained by negligence, inadvertence or ignorance of the law)
- Have a valid tax identification number (SSN or ITIN if you do not have an SSN)
- File the documents required to initiate the simplified procedure (income tax return, FBAR, reasons for the application and payment of tax, including interest)
Note, however, that in the absence of an ITIN, individuals eligible for this number can also apply for one as part of the simplified procedures for regularisation of situation. Expand CPA can also carry out this ITIN identification formality, thanks in particular to its partnership with an acceptance agent.
Why does the Streamlined procedure seem complicated for foreigners?
Although this Streamlined process is available to any US taxpayer, regardless of nationality, it is nonetheless complex. This is especially true for foreigners who are unfamiliar with US tax regulations. If the language barrier is added to the mix, the process proves to be hardly accessible on its own, without the help of an expert.
Finally, expatriates in the USA sometimes risk penalties for non-compliance with tax provisions. If they have not applied for their ITIN, they are often at a loss when faced with the simplified regularisation of the Streamlined Procedure. It’s a bit of a double whammy. Better to entrust the entire file to an IRS-approved acceptance agent.
Expand CPA, chartered accountants at your service for Streamlined formalities in the USA
Our firm, Expand CPA, has offices in Miami, the United States, Paris and Tel Aviv. This threefold presence gives us an international dimension, ideal for accompanying entrepreneurs in all their activities, anywhere in the world.
Our Florida office has all the knowledge and expertise needed to handle every accounting, legal and tax file in relation to the IRS. Our staff have mastered the Streamlined procedure, as well as the procedure for obtaining an ITIN number when one is lacking.
Our services for regularising US tax situations
Expand CPA offers several services related to the Streamlined procedure. Here is what you can entrust us with from a tax point of view.
Our services relating to Streamlined Filing Compliance Procedures
- Assessment of eligibility for the Streamlined regularisation process: analysis of the criteria for all US taxpayers, whether or not they are resident in the USA
- Completion of outstanding tax returns for up to the last three years
- Preparation of FBAR returns for financial assets held in banking institutions outside the USA, i.e. for up to 6 years
- Application for an ITIN where the taxpayer does not have one
- Preparation and submission of specific information, such as Form 14653 for non-residents (simplified offshore regularisation procedure)
- Reduction of tax penalties, thanks to optimisation of the Streamlined system
Our areas of specialisation in US taxation
In addition to actions directly related to tax amnesty schemes such as Streamlined Procedure, we offer a number of tax assignments.
IRS representation services
We offer you an all-in-one service, with the option of representing you before the IRS. This is the case, for example, in the event of an audit relating to the Streamlined tax regularisation scheme. It’s also conceivable if you also need to obtain an ITIN number, an essential prerequisite for the simplified regularisation process. In fact, we have a partnership with an approved acceptance agent by the Internal Revenue Service.
Analysis of tax compliance options
We help you regularise your tax situation. But, the goal is to then operate in full compliance with US regulations. We provide advice on adopting the best tax practices for the future.
International tax advice
Whether you are an expatriate in the United States or an American living abroad, we will analyse your entire tax situation and its context. As a result of our international positioning, we are able to assist you with all aspects of taxation in order to optimise your situation over the long term.
Why use a chartered accountant specialising in the United States?
The Expand CPA teams come from a variety of backgrounds and cultures. Our in-depth knowledge of the United States gives us practical, pragmatic experience dealing with U.S. tax requirements.
We have a thorough understanding of the workings of the tax authorities and all the subtleties of regularisation procedures. We can advise you on how to reduce tax risks and mitigate any penalties incurred as a result of an irregular situation.
Expand CPA’s multi-location helps you to have a global view, faced with your international tax file. What’s more, we are used to dealing with tax treaties between countries. So we can advise you in your best interests, both professionally and personally.
Other support for companies and entrepreneurs in the United States:
- Creation of an LLC company
- Creation and management of a C-Corp company
- Obtaining an EIN number
- Obtaining an ITIN number
- Opening a bank account in the USA
- Expatriation tax assessment
- Setting up a trust
- filing the Annual Report