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The process of remedying past oversights in the realm of tax and foreign account reporting is both daunting and critical for U.S. persons residing abroad. Form 14653, a key document titled "Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures," serves as an important avenue for individuals to come into compliance with the U.S. tax system. This form, issued by the Department of the Treasury and the Internal Revenue Service, is meticulously designed to facilitate the process for taxpayers seeking to report delinquent or amended income tax returns, including all necessary information returns, for the most recent three years where the due date has passed. Moreover, it addresses the implications of failing to correctly report income from foreign financial assets within the stipulated period. Eligibility for the Streamlined Foreign Offshore Procedures demands adherence to specific requirements, notably regarding non-residency and the timeliness of filing correct and complete Foreign Bank and Financial Accounts Reports (FBARs). Additionally, it underscores the importance of retaining substantial records related to overseas income and assets, emphasizing the necessity for thorough documentation and truthfulness. The form casts light on the potential consequences of presenting amended tax returns, including the forfeiture of favorable terms under these streamlined procedures, should the corrections extend beyond certain assessment limitations periods. The residency sections specifically cater to both U.S. citizens and lawful permanent residents, as well as those not falling into these categories, stipulating the conditions under which one's submission qualifies for the streamlined penalty relief. By providing a comprehensive route for correcting previous errors in foreign income reporting and FBAR submissions, Form 14653 reflects the IRS's commitment to facilitating voluntary compliance while warning of the repercussions of willful, fraudulent, or criminal conduct.

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Form 14653

(October 2017)

Department of the Treasury - Internal Revenue Service

Certification by U.S. Person Residing Outside of the United

States for Streamlined Foreign Offshore Procedures

OMB Number

1545-2241

Name(s) of taxpayer(s)

TIN(s) of taxpayer(s)

Telephone number

Mailing address

City

State

ZIP code

Note: If this certification is a joint certification, the statements will be considered made on behalf of both spouses, even though the pronoun "I" is used. If spouses submitting a joint certification have different reasons for their failure to report all income, pay all tax, and submit all required information returns, including FBARs, they must state their individual reasons separately in the required statement of facts.

Certification

I am providing delinquent or amended income tax returns, including all required information returns, for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed. The tax and interest I owe for each year are as follows

Year

(list years in order)

Amount of Tax I Owe Shown On

(Form 1040 or Form 1040X)

Interest

Total

Total

Note: Your payment should equal the total tax and interest due for all three years. You may receive a balance due notice or a refund if the tax or interest is not calculated correctly.

I failed to report income from one or more foreign financial assets during the above period.

I meet all the other eligibility requirements for the Streamlined Foreign Offshore procedures.

If I failed to timely file correct and complete FBARs for any of the last six years, I have now electronically filed those FBARs.

I agree to retain all records related to my income and assets during the period covered by my delinquent or amended returns until three years from the date of this certification. If I was required to file delinquent FBARs in accordance with these procedures, I also agree to retain all records (including, but not limited to, account statements) related to my foreign financial accounts until six years from the date of this certification. Upon request, I agree to provide all such records to the Internal Revenue Service.

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.

I acknowledge the possibility that amended income tax returns I am submitting under the Streamlined Foreign Offshore Procedures may report income for tax years beyond the three-year assessment limitations period under I.R.C. § 6501(a). Other assessment limitations periods in I.R.C. § 6501 may allow the Internal Revenue Service to assess and collect tax. If I seek a refund for any tax or interest paid for the omitted income that I am reporting on my amended income tax returns because I feel that my payments were made beyond the assessment limitations period, I understand that I will forfeit the favorable terms of the Streamlined Procedures.

I recognize that if the Internal Revenue Service receives or discovers evidence of willfulness, fraud, or criminal conduct, it may open an examination or investigation that could lead to civil fraud penalties, FBAR penalties, information return penalties, or even referral to Criminal Investigation.

I meet the non-residency requirements for the Streamlined Foreign Offshore procedures as disclosed below.

Note: Both spouses filing a joint certification must meet the non-residency requirements.

Complete one of the following (two) sections regarding your residency status

If you are a U.S. citizen or lawful permanent resident (i.e., “green card holder”), complete this section:

For the covered tax period, indicate whether you were physically outside the United States for each year. You must have been physically outside the U.S. for at least 330 full days in any one or more 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 you must not have had a U.S. abode. For more information on the meaning of “abode” see IRS Publication 54.

Catalog Number 67042A

www.irs.gov

Form 14653 (Rev. 10-2017)

Page of

I was physically outside the United States for at least 330 full days (answer Yes or No for each year)

Year

Yes

No

Both spouses filing a joint certification must meet the non-residency requirement. If the number of days physically outside of the U.S. differs for each spouse, disclose that on the chart above or in an attachment to this certification.

If you are not a U.S. citizen or lawful permanent resident, complete this section:

If you are not a U.S. citizen or a lawful permanent resident, please attach to this certification your computation showing that you did not meet the substantial presence test under I.R.C. sec. 7701(b)(3). Your computation must disclose the number of days you were present in the U.S. for the three years included in your Streamlined Foreign Offshore Procedures submission and the previous two years. If you do not attach a complete computation showing that you did not meet the substantial presence test, your submission will be considered incomplete and your submission will not qualify for the Streamlined Foreign Offshore Procedures.

Both spouses filing a joint certification must meet the non-residency requirement. If the number of days inside the U.S. differs for each spouse, disclose that on the chart above or in an attachment to this certification.

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.

Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts. Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/ management decisions. Provide a complete story about your foreign financial account/asset. 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.

Catalog Number 67042A

www.irs.gov

Form 14653 (Rev. 10-2017)

Page of

Under penalties of perjury, I declare that I have examined this certification and all accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.

Signature of Taxpayer

Name of Taxpayer

Date

 

 

 

Signature of Taxpayer (if joint certification)

Name of Taxpayer (if joint certification)

Date

 

 

 

For Estates Only

Signature of Fiduciary

Date

 

 

Title of Fiduciary (e.g., executor or administrator)

Name of Fiduciary

For Paid Preparer Use Only (the signature of taxpayer(s) or fiduciary is required even if this form is signed by a paid preparer)

Signature of Preparer

Name of Preparer

 

 

Date

 

 

 

 

 

Firm’s name

 

 

 

Firm’s EIN

 

 

 

 

 

Firm’s address

City

 

State

ZIP code

 

 

 

 

 

Telephone number

PTIN

 

 

Check if

 

 

 

 

 

 

 

 

Self-Employed

 

 

 

 

Do you want to allow another person to discuss this form with the IRS

Yes (complete information below)

No

 

 

 

 

Designee’s name

 

 

Telephone number

 

 

 

 

 

Privacy Act and Paperwork Reduction Notice

We ask for the information on this certification by U.S. person residing in the United States for streamlined domestic offshore procedures to carry out the Internal Revenue laws of the United States. Our authority to ask for information is sections 6001, 6109, 7801, 7803 and the regulations thereunder. This information will be used to determine and collect the correct amount of tax under the terms of the streamlined filing compliance program. You are not required to apply for participation in the streamlined filing compliance program. If you choose to apply, however, you are required to provide all the information requested on the streamlined certification. You are not required to provide the information requested on a document that is subject to the Paperwork Reduction Act unless the document displays a valid OMB control number. Books or records relating to a document or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. Section 6103, however, allows or requires the Internal Revenue Service to disclose or give this information to others as described in the Internal Revenue Code. For example, we may disclose this information to the Department of Justice to enforce the tax laws, both civil and criminal, and to cities, states, the District of Columbia, and U.S. commonwealths or possessions to carry out their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism. Failure to provide this information may delay or prevent processing your application. Providing false information may subject you to penalties. The time needed to complete and submit the streamlined certification will vary depending on individual circumstances. The estimated average time is: 8 hours

Catalog Number 67042A

www.irs.gov

Form 14653 (Rev. 10-2017)
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Document Attributes

Fact Name Description
Purpose of Form 14653 This form is used for Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures to comply with tax obligations and avoid penalties related to foreign assets and accounts.
Eligibility Criteria Applicants must have failed to report income from foreign financial assets due to non-willful conduct, meet the non-residency requirements, and need to submit delinquent or amended tax returns for the most recent 3 years.
Submission Requirements Taxpayers are required to provide detailed reasons for their failure to report all income, pay all tax, and submit all required information returns, including FBARs. A narrative statement of facts supporting non-willful conduct is necessary.
Governing Law(s) This form is governed under the authority of sections 6001, 6109, 7801, 7803 of the Internal Revenue Code, conforming to U.S. tax laws and regulations for the streamlined filing compliance program.

How to Fill Out 14653

Filling out Form 14653 is a crucial step for U.S. persons residing outside the United States who are utilizing the Streamlined Foreign Offshore Procedures to report delinquent or amended tax returns. This process can seem daunting, but breaking it down into steps can make it straightforward. Carefully compiling accurate information and having it ready before starting can save time and ensure the process goes smoothly. The goal is for each taxpayer to certify their non-willful failure to report foreign financial assets and comply fully with U.S. tax laws. Here's a step-by-step guide to help you accurately complete this important form.

  1. Start with your basic information: Fill in your full name (or names, if filing jointly), Taxpayer Identification Number(s) (TIN), telephone number, and complete mailing address including city, state, and ZIP code.
  2. Joint certifications: If filing jointly, remember that statements are considered made on behalf of both spouses using “I” throughout the form, but separate reasons for failure to comply must be detailed if they differ between spouses.
  3. Provide your tax and interest information: List each of the most recent 3 years for which the U.S. tax due date has passed (or extended due date if applicable) and detail the amount of tax owed and any interest for each listed year on the forms provided (Form 1040 or 1040X).
  4. Explain your failure to report: Clearly state your reasons for not reporting income from foreign financial assets during the period in question, emphasizing non-willful conduct. Include any failure to file FBARs if applicable. Provide all reasons, including negligence or a misunderstanding of the law’s requirements.
  5. Non-residency certification: If you are a U.S. citizen or green card holder, you must indicate whether you were physically outside the United States for at least 330 full days in any of the relevant years without a U.S. abode. For non-U.S. citizens or permanent residents, attach a computation showing you did not meet the substantial presence test.
  6. Detailed narrative: On a separate signed attachment if necessary, provide a full narrative explaining your failure to report all income, pay all tax, and submit required information returns, including FBARs. Detailed personal and financial background should be included along with the source of funds in foreign accounts or assets.
  7. Professional advice: If you consulted a professional advisor, include their name, address, telephone number, and a summary of the advice given.
  8. Sign the certification: After reviewing all information for accuracy, sign and date the form. If filing jointly, both spouses must sign.
  9. Paid Preparer Use Only: If a paid preparer was used, ensure they complete the relevant section with their signature, name, date, firm’s name, address, EIN, and contact information. The taxpayer(s) must still sign the form even if prepared by someone else.

Once you've completed all the steps and reviewed your form for accuracy, you're ready to submit it to the IRS. Make sure to keep copies of the form and all supporting documents for your records. This meticulous approach ensures you meet the requirements for the Streamlined Foreign Offshore Procedures and are on your way to resolving your tax situation.

More About 14653

  1. What is Form 14653?

    Form 14653, also known as the Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, is a document provided by the Internal Revenue Service (IRS). It's designed for U.S. taxpayers living abroad who need to certify that their failure to report foreign financial assets and pay all due taxes was due to non-willful conduct. This form is a part of the streamlined filing compliance procedures that allow taxpayers to correct past omissions with reduced penalties.

  2. Who needs to file Form 14653?

    This form is specifically for U.S. citizens or lawful permanent residents (green card holders) who reside outside of the United States and have failed to report income from foreign financial assets, pay the required tax on that income, and file all necessary information returns, including FBARs (Report of Foreign Bank and Financial Accounts). It is also required if the individuals meet the non-residency requirements under the streamlined procedures.

  3. What are the eligibility requirements for using Form 14653?

    Eligibility for using Form 14653 includes living outside the United States for at least 330 full days in any one of the last three years, having failed to file U.S. taxes due to non-willful conduct, and being out of compliance for not reporting income from foreign financial assets. Taxpayers must also have a valid Tax Identification Number (TIN) and be willing to submit all overdue tax returns and information returns for the past three years, and pay the necessary taxes and interest.

  4. What constitutes as "non-willful" conduct according to Form 14653?

    Non-willful conduct, as outlined in Form 14653, refers to any violation of the tax laws that stems from negligence, inadvertence, mistake, or a good faith misunderstanding of the requirements of the law. Essentially, it implies that the taxpayer did not intentionally ignore or evade their tax reporting obligations.

  5. How does joint filing work with Form 14653?

    Married couples who choose to submit a joint certification must ensure that each spouse meets the non-residency requirements individually. If they have different reasons for their failure to meet tax obligations, these reasons must be stated separately in their submission. This joint certification implies that the statements within the form are made on behalf of both spouses, even if it uses pronouns like "I".

  6. What information is required to complete Form 14653?

    To complete Form 14653, taxpayers need to provide their name(s), Taxpayer Identification Number(s), telephone number, mailing address, and details about their residency status during the covered tax period. Additionally, a detailed statement of facts explaining the reasons for their failure to report all income, pay all tax, and file all required information returns, including FBARs, is required. The form also asks for information about the source of funds in foreign financial accounts/assets and any professional advice received.

  7. What happens if you don't complete Form 14653 fully?

    If Form 14653 is not fully completed, or if it lacks the required narrative statement of facts regarding your failure to comply with tax obligations, the IRS will consider the submission incomplete. This may disqualify you from receiving penalty relief under the Streamlined Foreign Offshore Procedures and could delay the processing of your application or result in standard penalties being applied.

  8. Can Form 14653 affect your eligibility for a refund on taxes paid for omitted income?

    Yes, if you are applying for a refund for any tax or interest paid on omitted income that you are now reporting through amended tax returns under the Streamlined Foreign Offshore Procedures, and you feel the payments were made beyond the statute of limitations for assessments, submitting Form 14653 means you accept that you might forfeit favorable terms provided by the Streamlined Procedures. This includes potentially waiving your right to such refunds.

  9. What are the potential consequences of submitting Form 14653?

    Submitting Form 14653 and meeting the streamlined procedures’ criteria can lead to a significant reduction in penalties for failing to report foreign financial assets. However, if the IRS later finds evidence of willful conduct, fraud, or criminal activity, it could initiate an investigation that might result in further penalties, including civil fraud penalties, FBAR penalties, penalties on informational returns, or even criminal prosecution. Therefore, it's crucial that all information provided on the form is accurate and truthful.

Common mistakes

When preparing the Form 14653, which is crucial for U.S. persons residing outside the United States applying for the Streamlined Foreign Offshore Procedures, individuals often encounter numerous pitfalls. It's essential to navigate these carefully to ensure compliance and avoid possible penalties. The following list outlines ten common mistakes made during this process:

  1. Not fully understanding the eligibility requirements for the Streamlined Foreign Offshore Procedures, leading to incomplete or incorrect submissions.
  2. Failing to accurately report the total tax and interest owed for each of the most recent three years, which can result in either underpayment or overpayment.
  3. Omitting income from foreign financial assets, which is a critical component of the form that can lead to severe consequences if ignored.
  4. Incorrectly completing the residency section, especially failing to accurately report the number of days physically outside the U.S. or, for non-citizens, not properly demonstrating that they did not meet the substantial presence test.
  5. Submitting the form without a detailed statement of facts explaining the reasons for failure to report all income, pay all tax, and submit all required information returns, including FBARs.
  6. Omitting specific reasons for the failure to comply with tax obligations, such as personal or financial background that led to non-willful conduct.
  7. Not providing a complete narrative about foreign financial accounts/assets, which should include the source of funds, contact with the account, and any advice received from professional advisors.
  8. If filing a joint certification, failing to provide individual reasons when spouses have different grounds for their past non-compliance.
  9. Forgetting to sign the declaration under penalties of perjury, which certifies that the information provided is true, correct, and complete to the best of the individual's knowledge.
  10. Incorrectly or incompletely filling out the paid preparer section (if applicable), which is necessary even when the form is signed by a paid preparer.

It's critical for taxpayers to approach the Form 14653 with precision and to seek guidance if any uncertainties arise during the completion process. Fully understanding each section and requirement can prevent costly errors and ensure a smoother path to compliance with the U.S. Internal Revenue Service's regulations.

Documents used along the form

When dealing with the Form 14653, a critical document for U.S. persons residing outside of the United States who are entering the Streamlined Foreign Offshore Procedures, you'll often need to pair it with several additional documents to ensure a complete and compliant submission. These documents provide necessary background, financial details, and clarifications required by the IRS to process and understand your tax situation fully.

  • Form 1040 or Form 1040X: These forms are essential for reporting individual income tax. Form 1040 is used for the initial filing, while Form 1040X is necessary for making any amendments to previously filed returns. These forms accompany Form 14653 to provide a detailed account of the taxpayer's income, tax calculations, and any corrections to previously reported figures.
  • FBAR (FinCEN Form 114): The Report of Foreign Bank and Financial Accounts (FBAR) must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) for U.S. persons with financial interests in or signature authority over foreign financial accounts if the aggregate value of the accounts exceeds $10,000 at any time during the calendar year. This form is crucial for individuals disclosing foreign financial assets as part of the Streamlined Foreign Offshore Procedures.
  • Form 8938, Statement of Specified Foreign Financial Assets: Required under the Foreign Account Tax Compliance Act (FATCA), this form is used to report specified foreign financial assets if the total value exceeds the applicable reporting threshold. Form 8938 provides detailed information about foreign financial accounts and assets, which is necessary for taxpayers submitting Form 14653 who hold substantial assets abroad.
  • Signed Statement of Facts: Though not a formal IRS form, a narrative statement detailing the reasons behind the failure to report all income, pay all tax, and submit all required information returns, including FBARs, is essential. This personalized statement should accompany Form 14653, providing context, explanations, and any other relevant information to support the taxpayer's case for non-willful conduct.

Together, these documents paint a comprehensive picture of the taxpayer's financial situation, ensuring that the IRS has all the necessary information to process the streamlined filing compliance submission. It's vital for taxpayers to thoroughly prepare and review these forms and documents to ensure accuracy and completeness, thereby avoiding potential penalties and ensuring compliance with U.S. tax laws.

Similar forms

  • Form 1040 (U.S. Individual Income Tax Return) is similar to Form 14653 in that it is also used by individuals to report their annual income to the Internal Revenue Service (IRS). Both forms are crucial for ensuring compliance with U.S. tax laws, although Form 1040 is for domestic income reporting, whereas Form 14653 is specifically for disclosing foreign income and assets by those participating in the Streamlined Foreign Offshore Procedures.

  • Form 1040X (Amended U.S. Individual Income Tax Return) closely relates to Form 14653 because it is used for amending previously filed income tax returns. Individuals using Form 14653 might also need to file Form 1040X if they are correcting their income, filing status, deductions, or credits for past years as part of the streamlined procedure to become compliant with U.S. tax laws on foreign income and assets.

  • FBAR (FinCEN Form 114, Report of Foreign Bank and Financial Accounts) has a direct connection to Form 14653. The latter requires certification that the individual has filed or is contemporaneously filing FBARs for foreign accounts. Both forms are essential tools for U.S. persons to report foreign financial accounts and assets to the U.S. government, aiming to prevent tax evasion and promote financial transparency.

  • Form 8938 (Statement of Foreign Financial Assets) shares similarities with Form 14653 in its purpose to disclose assets held in foreign accounts. While Form 8938 is filed with an annual tax return to report foreign financial assets exceeding certain thresholds, Form 14653 includes certification regarding compliance with the broader scope of foreign asset reporting requirements, including but not limited to those reported on Form 8938.

  • Form 8854 (Initial and Annual Expatriation Statement) is akin to Form 14653 as they both involve reporting obligations related to foreign aspects of U.S. tax law. Form 8854 is used by individuals who have renounced their U.S. citizenship or ended their long-term residency, whereas Form 14653 is used by U.S. persons residing outside the United States to certify compliance with tax obligations related to foreign assets under the streamlined procedures.

  • Form 872 (Consent to Extend the Time to Assess Tax) and Form 14653 can be connected through the aspect of tax assessment periods. Form 14653 acknowledges the potential for taxes to be assessed beyond the typical statute of limitations in certain situations due to the reporting of previously unreported foreign income. Similarly, Form 872 is utilized to extend the statute of limitations on assessing taxes, typically in situations where more time is needed to review a taxpayer's return.

Dos and Don'ts

When filling out Form 14653, the Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, it is crucial to pay attention to detail and ensure accuracy. Here is a list of things you should and shouldn't do:

  • Do provide all required information accurately. This includes your name, TIN, address, and the details of your foreign financial assets.
  • Do ensure that you meet the non-residency requirements before submitting the form. Verify your days spent outside the U.S. and make sure they align with the stated requirements.
  • Do include a detailed explanation of your failure to report income, pay tax, and submit information returns, including FBARs. Your explanation should cover both favorable and unfavorable facts about your situation.
  • Do list all years and amounts owed clearly in the tax and interest section. Accuracy here is paramount to ensure proper processing of your form.
  • Do sign and date the form, as it is a declaration under penalties of perjury. If filing jointly, ensure both spouses sign and date.
  • Don't forget to attach any required documentation, such as evidence of your physical presence outside the United States or computations showing you did not meet the substantial presence test, if applicable.
  • Don't leave out any relevant details about your foreign financial accounts or assets. Full disclosure is necessary, including the source of funds and any interactions with the accounts.
  • Don't ignore the requirement to retain all records related to your income and foreign financial accounts for the specified duration. These may be requested by the IRS for verification.
  • Don't underestimate the importance of providing a complete and truthful narrative. Omitting details or providing false information can lead to penalties or rejection of your submission under the Streamlined Procedures.

Meticulous adherence to these guidelines can help ensure your Form 14653 is filled out correctly and processed smoothly by the IRS.

Misconceptions

Understanding the nuances and correcting common misconceptions about Form 14653, the Certification by U.S. Persons Residing Outside of the United States for Streamlined Foreign Offshore Procedures, is crucial for U.S. taxpayers living abroad. Here are four common misconceptions about this form:

  • Misconception #1: Only taxable income needs to be reported. Many believe that if their foreign income falls below the U.S. tax threshold, they don't need to file Form 14653. However, this form requires the disclosure of all foreign financial assets and income, regardless of whether they are taxable in the U.S. It's not just the amount of tax but the full disclosure of income that matters.
  • Misconception #2: The form is only for correcting intentional mistakes. Form 14653 is specifically designed for individuals who have failed to file due to non-willful conduct, which includes negligence, inadvertence, or mistake, or a good faith misunderstanding of the law. It is not limited to correcting intentional errors; rather, it offers a way to come into compliance for those who mistakenly failed to report their foreign income and assets.
  • Misconception #3: Once the form is filed, any risk of audit or penalties is eliminated. While filing this form under the Streamlined Foreign Offshore Procedures reduces the likelihood of penalties related to the failure to file, it does not grant immunity from future audits. The Internal Revenue Service (IRS) may still audit returns for other reasons, and discrepancies found in the submission could lead to further examination.
  • Misconception #4: Joint filers must meet the same non-residency requirements. While the form stipulates that both spouses filing a joint certification must meet the non-residency requirements, it allows for separate documentation if the number of days spent outside the U.S differs for each spouse. This flexibility acknowledges that spouses may have spent different amounts of time abroad and that each situation is unique.

Correct understanding and application of the guidelines laid out in Form 14653 are essential for U.S. citizens and green card holders living abroad to ensure compliance with U.S. tax laws. Misunderstandings can lead to unnecessary stress, penalties, or the jeopardization of one's financial integrity. It is always advisable to seek professional advice when dealing with complex overseas tax obligations.

Key takeaways

When it comes to navigating the complexities of the IRS Form 14653, understanding the key takeaways can make the process smoother and ensure compliance with the requirements for the Streamlined Foreign Offshore Procedures. Here are some important points to keep in mind:

  • Eligibility and Certification: The form is specifically designed for individuals residing outside the United States who need to certify that their failure to report foreign financial assets and pay taxes was due to non-willful conduct. This means that the errors were not intentional but rather a result of negligence, inadvertence, mistake, or a misunderstanding of legal requirements.
  • Joint Filers: Couples opting to submit a joint certification must be aware that the certification and the statements within it apply to both individuals. However, if there are differing reasons for each spouse's failure to meet their reporting obligations, these must be explained separately within the form, ensuring full transparency and compliance.
  • Non-Residency Requirements: For a successful submission under the Streamlined Foreign Offshore Procedures, both individual and joint filers must meet specific non-residency requirements outlined in the form, which includes being physically outside the U.S. for at least 330 full days in any one of the last three years.
  • Required Attachments: Completeness of submission is crucial. This includes a detailed narrative of the facts explaining the failure to report all income, pay all tax, and submit all required information returns (including FBARs), and in cases for non-U.S. citizens or lawful permanent residents, a computation showing that one did not meet the substantial presence test.
  • Record Retention: Filers agree to retain all pertinent records related to their income and assets for the period covered by the delinquent or amended returns for three years, and all records related to foreign financial accounts for six years from the date of certification. This is essential for potentially verifying the information provided if requested by the IRS.
  • Penalty Relief and Limitations: Submitting Form 14653 is a step towards rectifying past mistakes under more favorable terms offered by Streamlined Procedures, but it's important to acknowledge the potential for civil or criminal investigations if evidence of willful non-compliance is discovered. Additionally, amendments that report income beyond the three-year assessment limitation period may affect eligibility for penalty relief.

Understanding and accurately completing Form 14653 is critical for taxpayers looking to comply with U.S. tax law while taking advantage of the Streamlined Foreign Offshore Procedures. It requires a careful examination of one's tax situation, a detailed narrative of the reasons behind past non-compliance, and a commitment to maintaining thorough records relating to foreign income and assets.

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