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 March 2013

IRS FAQs on the Streamlined Compliance Program



Last year the IRS announced an alternative to its Offshore Voluntary Compliance Program (OVDP) which was being made available to a limited group of non-resident individuals who failed to file Foreign Bank Account Reports (FBARs) on Form TDF 90-22.1. Our tax lawyers blogged about the  Streamlined Program previously, taking a look at some of the pros and cons. Now the IRS has issued six Frequently Asked Questions about the Streamlined Compliance Program.


The most important FAQ is the first one. It makes clear that taxpayers who have a tax liability greater than $1,500 may apply. It cautions that if a taxpayer exceeds the $1,500 threshold he or she may be classified as higher risk, and under FAQ No. 2 may be subject to higher penalties. It appears that the Streamlined Program may be a good bet for those individuals whose liability exceeds the threshold by a relatively small amount, perhaps $1,000 or $2,000, or even as much as $3,500. In the judgment of our tax attorneys going over that amount could be problematic, although as with tax problems in general and FBAR problems in particular, there is no substitute for a review of all of the facts. Simply put, a case by case determination is necessary before making the decision.


FAQ No. 3 provides that an individual who is already in the 2011 Offshore Voluntary Disclosure initiative (OVDI) or the earlier or later OVDP, who qualifies under the
Streamlined Procedure may move over from those programs into the Streamlined Procedure. Like everything else about the IRS' OVDP it is not possible to do so without risk. Specifically, the FAQs require one to opt-out of the OVDP by way of an irrevocable election. Only then will the examiner determine whether the taxpayer meets all of the qualifications of the Streamlined Procedure. So it is possible, especially in cases where the taxpayer is over the $1,500 per year threshold , to opt out, and wind up in a situation with the IRS asserting either a non-willful FBAR penalty, or even a willful FBAR penalty.


This is just another example of the IRS making FBAR compliance more difficult than necessary. There is no good reason why the IRS could simply combine the OVDP and the Streamlined Procedure into one coordinated system. A taxpayer wishing to come clean, and who believes she qualifies, could apply under the Streamlined Procedure, and then if the IRS disagreed that person would automatically be phased into the standard OVDP.


The reverse should also be the case. If a taxpayer is already in OVDP she should be able to get a determination as to whether she qualifies under the Streamlined Procedure without having to opt out, and possibly incur disastrous consequences.


As in all FBAR cases involving substantial dollars a knowledgeable tax lawyer should be consulted before anything is done.


If you have tax problems, don't let them turn into criminal tax problems. Call the former IRS tax attorneys at Brager Tax Law Group, A P.C. at 1-800-Tax Litigator.



Dennis Brager

(310) 208-6200

Brager Tax Law Group Launches FBAR Website Videos in Spanish


Faced with a growing number of Hispanics, who have questions about their foreign bank accounts, the Brager Tax Law Group has launched a series of videos in Spanish, which explain the regulations governing the requisite reports.


If you know anyone who would like to listen to an explanation in Spanish about FBARs, please direct the person to our website.

Dennis Brager Interviewed on KFWB Radio

Dennis Brager was the featured guest on Money Talk 101 on KFWB 580 Radio with Bob McCormick. Dennis talked about tax problems including foreign bank accounts, offers in compromise, the liability of individuals for corporate sales tax and payroll tax, and innocent spouse tax issues. Dennis fielded questions from the listeners on identity theft and the claim of right doctrine.


Dennis will be on Money Talk 101 again on Friday, March 29th at 9:05 AM talking about more tax problems.

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Dennis N. Brager, Esq.
Nationally Recognized California State Bar Certified Tax Specialist
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2013 American Bar Association 30th Annual Institute on Criminal Tax Fraud and 2nd National Institute on Tax Controversy

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February 12, 2013
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December 6-7, 2012
Articles Quoting Dennis Brager

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"Third-Party Federal Tax Liens and Levies and How to Fight Them"

Journal of Tax Practice & Procedure

December 2012/January 2013 
October 4, 2012
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December 3, 2012
 Our Services

The Brager Tax Law Group is a tax litigation and tax controversy law firm, which represents clients with tax problems and tax disputes with the IRS, the California Franchise Tax Board (FTB), the State Board of Equalization (SBE) and the Employment Development Department (EDD). All of the firm's tax lawyers were former trial attorneys with the IRS. 

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Brager Tax Law Group
10880 Wilshire Boulevard
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Los Angeles, California 90024
Tel: (310) 208-6200
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