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Amended Tax Returns and OVDP2020-11-24T10:31:31-05:00

Amended Tax Returns | OVDP, Streamlined and More

Do you have a tax situation with the IRS that needs to be “cleaned up?” Or perhaps you suspect something might be wrong with your prior filings, including math errors.

Having a tax situation of any kind is challenging. But when your tax situation has an international component, such as foreign financial assets, that increases the complexity significantly. And that’s where we come in. Every day, we help clients with amending tax returns, so they get back into compliance with the IRS.

Facts about Amended Tax Returns

FACT: You don’t always need to amend.

The IRS says that you should fix mistakes, but you are not legally required to do so. (This, of course, assumes that when you signed the original return, you believed that it was complete and accurate.) Consider the risks of not fixing the mistake against the benefits of amending the return. If your returns contain errors in reporting your foreign income or assets, then the risks are usually high, and it often makes sense to amend.

FACT: The number of years you need to amend depends on the severity of the error.

Usually, taxpayers only choose to amend their returns for the past 3 years. That’s because the IRS can usually only audit the past 3 years. And because the IRS will only issue refunds for the past 3 years. In certain cases, though, the IRS can look back many more years. For example, the IRS can audit up to 6 years if you under-reported your income by 25% or more. And the statute of limitations (IRS look-back period) remains open indefinitely in cases of fraud or if certain forms are not filed. If you did not include certain foreign asset reports with your tax returns, there is no limit— the IRS can audit the returns at any point in the future!

FACT: If you have unreported foreign income or assets, you may need more than a regular amended return.

The IRS takes it very seriously when taxpayers haven’t filed all the proper informational disclosures to report their foreign assets. If you tried to file a regular amended return to fix this reporting, then the IRS would likely charge you multiple $10,000 penalties for late filing of the forms. There are better ways to fix the prior returns! Ignoring the situation is also unwise. The IRS takes a hard approach when taxpayers have knowingly chosen not to correct significant errors in their returns.

The good news is that the IRS offers a variety of “amnesty” programs. These programs allow you to fix your past filings and asset reporting at very low penalty rates (often 0% or 5%).

IRS Amnesty Programs: OVDP, Streamlined, and More

Since 2009, the IRS has offered a variety of amnesty programs specifically for taxpayers who need to fix their foreign income and asset reporting. These programs allow you to:

  • Fix your foreign income and asset reporting under more favorable circumstances
  • Avoid the numerous $10,000 per-form penalties that you would incur had you corrected certain foreign asset reporting problems by filing regular amended returns
  • Significantly reduce penalties related to your unreported income
  • Fix only a few years’ worth of returns instead of all of the returns with problems
  • End the IRS’s ability to go back and audit you for certain (older) prior-year returns that were missing the same foreign information

We have an extensive history and background in these programs. ALL of our staff regularly prepare corrected tax packages under IRS amnesty programs so that we can do these efficiently. In most cases, we can handle correcting prior filings without engaging an attorney. In cases where it makes sense to work with an attorney, we have efficient processes and a network of attorneys we work with regularly.

Since the IRS amnesty programs launched in 2009, we have assisted clients with every iteration of these programs. We know these programs inside and out, and we know the best options available.

But be forewarned! The IRS can close amnesty programs at any time, with or without prior notice. And programs are only available if you come forward before the IRS audits you.

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IRS Amnesty Programs for Foreign Income and Asset Reporting Currently Available

Program Usually Best for Requirements Benefits
Foreign Streamlined Compliance Procedures Individuals

  • Who didn’t deliberately file their taxes incorrectly
  • Who have unreported foreign income or assets (or other foreign ownership interests)
  • Who lived outside the US for at least 1 of the past 3 years and did not own a home in the US
  • 3 years of tax returns
  • 6 years of FBARs
  • Certification statement
  • Payment of any additional tax owed for the past 3 years, with interest
  • 0% penalty on unreported income and assets
  • Waiver of $10,000 per-form penalties
  • No need to fix other prior returns
Domestic Streamlined Compliance Procedures Individuals

  • Who didn’t deliberately file their taxes incorrectly
  • Who have unreported foreign income or assets (or other foreign ownership interests)
  • Who have been living in the US
  • 3 years of amended tax returns
  • 6 years of FBARs
  • Certification statement
  • Payment of any additional tax owed for the past 3 years, with interest
  • 5% penalty on unreported income and assets
  • Waiver of $10,000 per-form penalties
  • No need to fix other prior returns
Delinquent FBAR Submission Procedures Individuals

  • Who have not filed FBARs to report their foreign accounts
  • Who have NO unreported income associated with the accounts
  • Who have otherwise properly filed their tax returns
  • 6 years of FBARs
  • Certification statement
  • Potential 0% penalty on unreported accounts
  • Potential waiver of $10,000-$100,000 penalties*
  • No need to fix other prior FBARs
Delinquent International Information Return Submission Procedures Individuals

  • Who inadvertently did not include required foreign informational forms or disclosures in their past tax returns
  • Who did not file Forms 5471, 3520, 3520-A, 8865, 8858, and others forms to report ownership in foreign entities and assets
  • Who have otherwise properly filed their tax returns
  • Amended returns with informational filings
  • Statement of Reasonable Cause
  • Certification Statement
  • Payment of any additional tax owed, with interest
  • 0% penalty on unreported ownership interests
  • Waiver of $10,000-$100,000 penalties
  • No need to fix other prior years for the same issue
    *Penalties may or may not be waived under DIIRSP program
Voluntary Disclosure Procedures Individuals

  • Who were aware of the reporting requirements and did not fully disclose their foreign income or assets
  • Who are working with attorneys to correct their prior tax issues
  • 8 years of original or amended tax returns and FBARs
  • Other disclosures, documentation, certifications, etc., depending on the case
  • Payment of any additional tax owed for the past 8 years, with interest
  • Reduced penalty rates negotiated on a case-by-case basis with the IRS
  • Waiver of criminal charges related to the lack of reporting
  • No need to fix other prior years for the same issue
2019 Exit Tax Amnesty Program Individuals

  • Who expatriated prior to 2019 but failed to properly file paperwork to terminate tax residency
  • Who fall below income and asset thresholds for the US Exit Tax
  • Who were “accidental Americans” and gave up their citizenship
  • 5 years of tax returns and FBARs
  • Documentation related to current citizenship or immigration status
  • Waiver of penalties
  • Formal termination of US tax residency

How We Help

Whether you already know you need to amend your tax returns or you aren’t sure, we can:

  • Help you determine if you have a problem
  • Help you understand the nature, extent, and implications of any errors in your past tax filings
  • Let you know your options for correcting your past tax filings (amended returns or an amnesty program)
  • Advise you on the pros and cons of the options and whether amnesty programs make sense
  • Walk you through the steps and let you know what to expect along the way
  • Prepare the necessary filings
  • Help keep you in good standing with the IRS going forward

Frequently Asked Questions about Amended Tax Returns and FBARs

What will the process look like if I hire you to correct my prior filings?2020-01-15T12:36:03-05:00

Our process is very straightforward.

  1. Discovery Meeting | You will be able to meet with us (usually via phone or video conference) for a free “Discovery Meeting.” In this meeting, we’ll learn about your situation, hear your questions, and understand where your filings may need to be corrected. We’ll give you some initial information on options available to you. We’ll also give you an initial sense of cost based on your specific needs.
  2. Hiring Us | If you would like to move forward, you will receive an engagement letter that documents our understanding and outlines the services to be provided, along with an estimated service quote.
  3. Gathering Relevant Documents | Once you formally engage us and pay a retainer, we will send you a list of information needed to correct your filings. You will gather and send us this information, including copies of prior tax returns, account statements or policies related to your foreign assets, and completed tax and foreign asset questionnaires.
  4. Analysis | Our team will review the information you provided and let you know if we have any questions or need any further clarification or documents.
  5. Correcting Filings | Our team will prepare your corrected filings, interacting with you throughout to obtain clarifications, explain findings, and let you know about next steps in the process.
  6. Submitting Filings | You will receive the corrected filings, along with explanations and instructions from us on what to file and how, where to send the returns, which items are filed first, and other important details.
  7. Supporting You | If the IRS has any questions on your corrected returns, we are available to help! You can reach out to us at any point.
Many online “expat tax experts” offer Streamlined Filings at discount prices. So, why shouldn’t I use them to prepare my tax filings?2020-01-15T12:34:29-05:00

This is a bad idea. We know the problems in using these providers because we are often contacted to fix the errors in their filings! Many of these filings are prepared by contractors with limited expat tax and international tax knowledge. Although you are using a “professional,” the IRS looks to you, not the CPA as bearing the ultimate responsibility for the accuracy of the filings.

Sadly, we have had clients come to us who have already engaged a CPA to correct their filings and are now having to engage us because the corrections weren’t correct. It just doesn’t pay to cut corners.

My Streamlined Filings were prepared by another tax firm and are now under audit by the IRS. The IRS found errors. Can you help?2020-01-15T12:34:06-05:00

Yes. The IRS is auditing high numbers of Streamlined Filings, in part because it’s finding significant errors in these filings. International tax is complex, and specialized knowledge is required. With our international tax focus, our tax returns stand up under audit.

As a result, we’ve become a go-to provider to assist with these audits. We help the original attorney, CPA, or client fix the issues that weren’t fixed with the first amnesty filing. Every year we prepare and correct thousands of US tax returns that involve an international tax component. We can help you get your tax situation settled.

Why The Wolf Group?

Since 1983, we’ve worked with clients in the United States and abroad on international tax matters. We have a long history of “cleaning up” complex tax returns, reporting foreign assets, and reconstructing financial records.

Check out our extensive team of CPAs, all with vast international tax experience.

Looking for a Nexia International Partner?

We’re an active member of Nexia International, a global network of independent accountancy, tax and business advisors with over 250 firms around the globe.

Meet our tax professionals

Anjana Jain

Anjana Jain

Tax Specialist
Michelle Rizzo

Michelle Rizzo

Senior Manager-International Corporate Tax
Sheila Flett

Sheila Flett

Tax Manager
All Team Members

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What our clients say

“I really appreciate the exceptional professionalism of your service, and the friendly and patient support and guidance provided during a complicated (and frankly emotionally taxing) process.”

“Very good client support. Easy to communicate and upload documents. Thorough and timely delivery of the returns. Used them for last year and this year. I am very happy to work with The Wolf Group.”

“I am very satisfied with the service at The Wolf Group. It’s very comforting to have the trust in professionals who are familiar with the G4 situation, as I have previously received conflicting and confusing guidance from most, if not all my previous tax advisors.”

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