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Navigating the complexities of the U.S. tax system becomes particularly intricate for U.S. persons residing abroad. The Form 14653 serves as a critical tool for those who seek to comply with American tax laws while living outside the United States. This form is a Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, designed to facilitate compliance for taxpayers who have failed to report foreign financial assets and pay all due taxes in the past. It enables individuals to submit delinquent or amended tax returns for the most recent three years and disclose unreported income from foreign assets. Importantly, it caters to those whose actions were non-willful—stemming from negligence, a misunderstanding of the law, or an inadvertent mistake. Form 14653 also outlines the requirements for eligibility, such as the non-residency criteria for U.S. citizens or lawful permanent residents and those not meeting the substantial presence test. Joint filers must individually meet these criteria and, if applicable, provide separate narratives for differing circumstances. This form emphasizes the necessity of a full disclosure regarding one's foreign financial assets, including an account's origin, interactions, and advice received from financial professionals. The diligent completion of this form can pave the way toward rectifying past tax oversights under the streamlined filing compliance program, emphasizing the need for thoroughness and accuracy to avoid penalties and ensure a successful submission.

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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)
⇩ PDF Form

File Attributes

Fact Name Description
Form Number and Revision Date Form 14653 (Rev. 10-2017)
Issuing Agency Department of the Treasury - Internal Revenue Service
Primary Purpose Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures
OMB Number 1545-2241
Eligibility Non-willful conduct for failure to report all income, pay all tax, and submit all required information returns, including FBARs; must meet non-residency requirements.
Key Requirements Providing delinquent or amended income tax returns for the most recent 3 years, filing correct and complete FBARs for the last 6 years, agreeing to retain records for specified periods, and demonstrating non-residency depending on citizenship status.

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. This form helps taxpayers certify that their failure to report income, pay tax, and submit required information returns, including FBARs, was due to non-willful conduct. It's essential for those seeking to comply with tax obligations and potentially avoid steeper penalties. The process requires attention to detail and a clear understanding of one’s own tax situation over the covered period. Below are the steps to fill out this form correctly.

  1. Start by entering your Name(s) of taxpayer(s) and TIN(s) (Taxpayer Identification Numbers) at the top of the form.
  2. Provide your Telephone number and Mailing address, including City, State, and ZIP code.
  3. Under the Certification section, list the most recent 3 years for which the U.S. tax return due date has passed and detail the Amount of Tax I Owe for each year in the provided table.
  4. Indicate whether you failed to report income from foreign financial assets during the specified period.
  5. Confirm that you meet all eligibility requirements for the Streamlined Foreign Offshore Procedures and that any required FBARs for the last six years have now been filed electronically.
  6. Agree to retain all relevant records related to your income and foreign financial accounts as specified in the form.
  7. Acknowledge your understanding of non-willful conduct and the potential outcomes of submitting amended tax returns under the Streamlined Foreign Offshore Procedures.
  8. Complete the section relevant to your residency status, indicating your physical presence outside of the U.S. and meeting the non-residency requirements.
  9. Attach a detailed statement explaining the specific reasons for failing to report all income, pay all tax, and submit all required information returns, including FBARs. Be sure to include your personal and financial background and all relevant facts.
  10. Sign and date the form at the bottom. If it’s a joint certification, both taxpayers must sign and date.
  11. If applicable, fill out the section for Estates Only or For Paid Preparer Use Only.
  12. If you wish to allow another person to discuss this form with the IRS, complete the Designee’s information section.

Before sending in the form, double-check that all information is accurate and that all necessary attachments are included. Submitting Form 14653 is a serious step towards resolving tax issues related to foreign income and financial assets. It's important to handle this process with care to ensure the best possible outcome under the Streamlined Foreign Offshore Procedures.

Frequently Asked Questions

What is Form 14653?

Form 14653, titled "Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures," is a document issued by the Department of the Treasury - Internal Revenue Service. It serves as a certification for U.S. taxpayers living abroad who are applying for the Streamlined Foreign Offshore Procedures, aiming to address failures to report foreign financial assets and comply with U.S. tax obligations.

Who needs to file Form 14653?

U.S. citizens or lawful permanent residents (green card holders) living outside the United States, who have not complied with their tax and foreign financial asset reporting obligations, should file Form 14653. This form is part of the Streamlined Foreign Offshore Procedures, designed for individuals whose failure to report income, pay taxes, or file required information returns, including FBARs (Report of Foreign Bank and Financial Accounts), is non-willful.

What are the requirements for filing Form 14653?

To qualify for filing Form 14653, an individual must meet specific criteria:

  • Be a U.S. citizen or lawful permanent resident.
  • Reside outside the United States.
  • Have failed to report income from foreign financial assets and pay tax as required by U.S. law, due to non-willful conduct.
  • Be able to provide a full disclosure of all foreign financial assets.
  • Have missed filing FBARs for relevant years and now be willing to submit them electronically.

How is 'non-willful' conduct defined for the purposes of Form 14653?

'Non-willful' conduct is defined as conduct that is due to negligence, inadvertence, mistake, or results from a good faith misunderstanding of the legal requirements. This distinction is crucial for taxpayers utilizing the Streamlined Filing Compliance Procedures, as it excludes those who deliberately avoided their tax reporting responsibilities.

What information is required on Form 14653?

Form 14653 requires comprehensive information, including:

  1. Full name(s) and Taxpayer Identification Number(s) (TINs) of the taxpayer(s).
  2. Mailing address, including city, state, and ZIP code.
  3. A detailed statement explaining the failure to report all income, pay tax, and submit required information returns, including FBARs, with specific reasons.
  4. A listing of the tax years and amounts owed in taxes and interest for each of those years.
  5. Confirmation of meeting the non-residency requirement by proving absence from the U.S. for at least 330 full days in one or more of the years covered.

What are the consequences of not filing Form 14653 if required?

Failure to file Form 14653 when required can result in delayed or denied access to the Streamlined Foreign Offshore Procedures. It may also open up the taxpayer to investigations, audits, and potential penalties for failing to report foreign financial assets and income. Providing false information on the form can lead to significant legal and financial penalties.

Can joint filers use a single Form 14653?

Yes, spouses filing a joint certification can use a single Form 14653. However, if their reasons for failing to meet tax obligations differ, they must provide individual explanations for their respective failures in the required statement of facts.

How long should one retain records after filing Form 14653?

After filing Form 14653, the taxpayer must retain all relevant records related to income and foreign financial assets for three years from the date of the certification. If delinquent FBARs were filed as part of the streamlined process, records related to foreign financial accounts must be kept for six years. These records should be made available to the IRS upon request.

Common mistakes

Filling out Form 14653, the Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, is critical for taxpayers seeking to use the Streamlined Filing Compliance Procedures. However, errors can compromise the effectiveness of the application. One common mistake is not fully reporting the tax and interest owed for each of the most recent 3 years. Each year must be listed separately with the correct amounts to avoid misunderstandings or delays by the IRS.

Another area where individuals often falter is in explaining their failure to report income from foreign financial assets. The form requires a detailed statement, including both favorable and unfavorable facts. Some applicants provide insufficient details or fail to explain the circumstances fully, leading to an incomplete submission. This can be particularly problematic as the IRS seeks a comprehensive understanding of the background and reasons behind the non-compliance.

Many people also overlook the non-residency requirement section of the form, especially in joint certifications. Both spouses must individually meet the non-residency requirements; however, applicants often mistakenly assume that one spouse's qualification automatically covers both. Specifically detailing each spouse's residency status is crucial.

Submitting incomplete information about foreign financial accounts or assets is another frequent error. The IRS expects a full account, including the source of funds and a narrative of interactions with the account. A general or vague description often leads to the application being deemed incomplete.

Reliance on professional advice is another critical area on the form. When applicants indicate that they relied on a financial advisor, they must provide detailed information about the advice received, including the advisor's name, address, and phone number. Failing to document this advice accurately can lead to issues with the application's acceptance.

Furthermore, submitting a certification without a thorough narrative statement of facts is a mistake that can lead to an incomplete application. The narrative is essential to understand the totality of the circumstances that led to the failure in compliance.

Incorrectly addressing the form when there are different reasons for non-compliance between spouses submitting a joint certification is also problematic. The form requires that these reasons be detailed separately for each spouse, but often, submissions mistakenly combine these explanations or fail to individually articulate each spouse's circumstances.

An additional error is not correctly completing the section related to residency status for U.S. citizens or lawful permanent residents and for those who are not. The form calls for specific days outside or inside the U.S. to be accounted for, yet applicants sometimes leave these sections blank or insufficiently detailed, leading to an incomplete submission.

Last, overlooking the importance of signing and dating the certification under penalties of perjury is a common but critical mistake. This is the applicant's acknowledgment of the truthfulness and completeness of the information provided, and forgetting to sign can nullify the submission.

Documents used along the form

When a taxpayer uses Form 14653 for the Streamlined Foreign Offshore Procedures, it’s often a key part of a broader documentation package aimed at complying with U.S. tax obligations while living abroad. Understanding the accompanying forms and documents can ensure a comprehensive approach to fulfilling these obligations.

  • Form 1040 or Form 1040X: These are the U.S. Individual Income Tax Return and Amended U.S. Individual Income Tax Return, respectively. For taxpayers seeking to correct or update prior years' tax filings under the Streamlined Foreign Offshore Procedures, submitting these forms allows for the accurate declaration of income and tax liabilities for the years in question.
  • FBAR (FinCEN Form 114): The Report of Foreign Bank and Financial Accounts (FBAR) must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) if a taxpayer’s foreign financial accounts exceed $10,000 in aggregate at any point during the calendar year. This form is crucial for taxpayers who have foreign accounts, as it’s a common reporting requirement alongside Form 14653.
  • Form 8938 (Statement of Specified Foreign Financial Assets): This form is used to report specified foreign financial assets if the total value exceeds the applicable reporting threshold. Form 8938 must be filed with the annual income tax return, making it an important document for individuals navigating the Streamlined Foreign Offshore Procedures.
  • Signed Statement of Facts: Though not a standardized IRS form, a narrative statement providing specific reasons for failure to report income, pay tax, and submit required information returns, including FBARs, is often required. This statement should detail the taxpayer's personal and financial background, the source of funds in foreign accounts, and any reliance on professional advice. It complements Form 14653 by offering a detailed account of the non-willful conduct behind the compliance failure.

Collectively, these documents enable taxpayers to comprehensively address past non-compliance while taking advantage of the Streamlined Foreign Offshore Procedures’ terms for mitigating penalties. Properly understood and utilized, this suite of forms and statements provides a pathway back to compliance for U.S. persons residing overseas.

Similar forms

Form 8300, "Report of Cash Payments Over $10,000 Received in a Trade or Business," shares similarities with Form 14653 in its focus on disclosing financial information to the Internal Revenue Service (IRS) for compliance purposes. Both forms require detailed financial reporting and are designed to combat financial crimes by increasing transparency in significant transactions or offshore financial activities. Both forms also necessitate a thorough understanding of the tax filer's financial activities and involve providing extensive details about transactions to ensure compliance with U.S. tax laws.

FBAR (FinCEN Form 114, "Report of Foreign Bank and Financial Accounts") closely aligns with Form 14653 in its requirements for U.S. persons to report foreign financial accounts. The core similarity lies in their shared goal of promoting tax compliance and disclosing overseas financial activities to U.S. authorities. Both forms are instrumental in the U.S. government's efforts to uncover and reduce offshore tax evasion, requiring citizens to disclose assets held in foreign countries.

Form 8938, "Statement of Specified Foreign Financial Assets," also parallels Form 14653. It requires taxpayers to report foreign financial assets if they exceed the threshold limits. This form complements the FBAR, but it is filed with an individual’s tax return, directly to the IRS, similar to how individuals must submit Form 14653 under the Streamlined Foreign Offshore Procedures. Both forms are components of the FATCA (Foreign Account Tax Compliance Act), aimed at enforcing tax compliance for foreign financial assets and accounts.

Form 5471, "Information Return of U.S. Persons With Respect To Certain Foreign Corporations," bears resemblance to Form 14653 through its requirements for U.S. taxpayers to report their dealings with foreign entities. The objective behind both forms is to prevent tax evasion and ensure U.S. persons report their foreign income and assets accurately. They are essential tools for the IRS in monitoring the international activities of U.S. taxpayers and ensuring compliance with global income reporting.

Form 3520, "Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts," shares its purpose with Form 14653 in encouraging transparency in international financial transactions involving U.S. taxpayers. Both forms are crucial for disclosing overseas financial activities and preventing the misuse of the financial system for tax evasion. They require detailed information about transactions or financial interests outside the United States, highlighting the IRS’s commitment to international tax compliance.

Dos and Don'ts

When preparing Form 14653, the Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, individuals have a critical opportunity to correct prior omissions and report foreign financial assets in compliance with U.S. tax law. The form is an essential part of the Streamlined Filing Compliance Procedures, allowing taxpayers to rectify past mistakes. To ensure the process is navigated successfully, here are several dos and don'ts to consider:

Do:
  • Provide comprehensive answers: Ensure that every section of the form is completed with accurate and detailed information. This includes the full disclosure of your name, TIN, historical tax details, reasons for previous non-compliance, and a complete narrative of all foreign financial assets.
  • Meet all eligibility requirements: Verify your eligibility for the Streamlined Foreign Offshore Procedures by thoroughly reviewing the guidelines and ensuring you meet the non-residency requirements and other criteria set forth by the IRS.
  • Electronically file FBARs if applicable: If you have not timely filed FBARs for the required period, make sure to electronically file these as part of your submission. Retain all records related to your income and foreign financial accounts as specified by the form’s instructions.
  • Sign and date the form under penalties of perjury: The certification must be signed and dated, attesting to the truthfulness and completeness of the information provided. This declaration holds significant legal weight, affirming that you have examined the certification, schedules, and statements thoroughly.
Don't:
  • Omit reasons for previous non-compliance: Failure to provide a detailed explanation of why you did not report income, pay taxes, or submit required information returns, including FBARs, will result in your submission being considered incomplete and disqualify you from the streamlined penalty relief.
  • Ignore instructions regarding joint certifications: If filing jointly with a spouse, remember that both individuals must meet the non-residency criteria and provide separate statements of facts if there are different reasons for each spouse's failure to comply.
  • Forget to check eligibility criteria: Do not skip the step of confirming your eligibility for the Streamlined Foreign Offshore Procedures. This includes ensuring that your failure to report was non-willful and understanding the implications of seeking a refund for taxes paid.
  • Provide incomplete account information: Ensure you give a full account of your relationship with and activities related to your foreign financial assets. This includes explaining the origin of funds, contact with the account, and advice received from financial advisors.

Misconceptions

Form 14653, known officially as the Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, is crucial for taxpayers seeking to comply with U.S. tax laws regarding foreign assets. Yet, misconceptions about its usage and requirements can lead to errors in compliance efforts. Let's address and clarify eight common misconceptions surrounding this form.

  • Only for Expats: A common belief is that Form 14653 is exclusively for U.S. citizens living abroad. In reality, it also applies to lawful permanent residents (green card holders) who meet the non-residency requirements for the streamlined foreign offshore procedures.
  • Joint Filing Is Automatic: While the form allows for joint certification, it is a misconception that statements made on it automatically represent both spouses. In cases where spouses have different reasons for their failure to comply with tax obligations, each must provide separate statements outlining their individual situations.
  • No Penalties Apply: Some people mistakenly believe that by using this streamlined process, they are completely absolved of penalties. While the process can lead to reduced penalties, particularly regarding failure-to-file and failure-to-pay penalties, it does not guarantee immunity from all potential penalties, especially in cases of willful conduct or fraud.
  • Eligibility Is Guaranteed: Another misconception is that submission of Form 14653 guarantees acceptance into the Streamlined Foreign Offshore Procedures. Eligibility depends on meeting specific requirements, including the non-residency criteria and the non-willful conduct criterion related to failure to file.
  • All Tax Years Are Covered: It's incorrectly assumed that this form covers all past tax years. However, it only pertains to the most recent three years for which the U.S. tax return due date has passed, and only if the taxpayer failed to report income from foreign financial assets during that period.
  • No Need for Complete Documentation: Submitting Form 14653 without a complete narrative statement of facts, including specific reasons for failing to report income or file taxes, will result in an incomplete submission. Every submission must include detailed explanations and relevant facts to qualify for the streamlined penalty relief.
  • Automatic Forgiveness of Tax and Interest: There's a misconception that by submitting this form and entering the streamlined process, the IRS automatically forgives any taxes and interest owed. Taxpayers must still calculate and report the amount of tax and interest owed for each applicable year, which can result in a balance due notice or a refund if inaccuracies are found.
  • Freedom from Future Audits or Penalties: Lastly, some believe that once they've used this form to comply, they're no longer subject to IRS scrutiny. The reality is, submitting the form and related documentation does not exempt one from future audits or investigations, especially if evidence of willfulness, fraud, or criminal conduct is discovered later.

Understanding the real implications of Form 14653 and the Streamlined Foreign Offshore Procedures is crucial for U.S. taxpayers residing abroad to navigate their tax responsibilities accurately and efficiently.

Key takeaways

Filling out and using Form 14653 is critical for U.S. persons residing outside the United States who wish to comply with the Streamlined Foreign Offshore Procedures. Here are five key takeaways for correctly handling this form:

  • Eligibility Requirements: It's important to understand that this form is designed for non-willful conduct cases, where the failure to report income, pay taxes, and submit information returns (including FBARs) was due to negligence, inadvertence, mistake, or a good faith misunderstanding of the law. Factors such as the number of days you've spent outside the U.S. play a critical role in establishing eligibility.
  • Detailed Certification: When completing Form 14653, taxpayers must provide a thorough narrative explaining their failure to report all income and submit required information, including specific reasons and the complete story behind their foreign financial accounts/assets. This narrative is crucial as submissions without it are considered incomplete and do not qualify for the Streamlined Procedures.
  • Joint Filings: If married, both spouses must meet the non-residency requirements individually to qualify. In cases where spouses have different reasons for their reporting failures, each reason must be documented separately. This ensures that the IRS understands the unique circumstances of each spouse.
  • Documentation and Record Retention: Taxpayers are required to retain all records related to their income and assets for the period covered by their delinquent or amended returns for three years, and all records related to their foreign financial accounts for six years. These documents must be made available to the IRS upon request, emphasizing the importance of good record-keeping.
  • Risks of Misrepresentation: Deliberately omitting information or providing false information on Form 14653 can lead to severe consequences, including investigation or prosecution for willful conduct, fraud, or criminal activities. It's essential to be truthful and comprehensive in your disclosure to the IRS to benefit from the Streamlined Foreign Offshore Procedures.

In summary, carefully completing Form 14653, with a clear understanding of eligibility requirements, by providing a detailed narrative of your specific situation, ensures compliance with the IRS while taking advantage of the Streamlined Foreign Offshore Procedures. Always remember the importance of accurate documentation and the significant repercussions of misrepresentation.

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