If you are an American living in Hong Kong, Macau, or elsewhere abroad and have missed your U.S. tax reporting deadlines, the us tax streamlined procedure may be the lifeline you need. Introduced by the IRS in 2012, this process aims to help you correct past non-willful oversights, such as failing to file tax returns or FBARs. It can minimize—or even eliminate—penalties, provided you meet certain criteria and certify that your non-compliance was truly unintentional.

Understand the US tax streamlined procedure

Key features and background

The IRS created the streamlined filing compliance procedures to encourage taxpayers with unreported foreign financial accounts or missed returns to come forward voluntarily without facing severe penalties. Designed specifically for non-willful situations, this initiative can be especially helpful if you recently discovered your obligation to file. Key points include:

  • Coverage of the most recent three years of tax returns and up to six years of FBARs
  • Waiver of penalties for qualifying taxpayers, as long as past mistakes were non-willful
  • Availability for both U.S. residents and U.S. citizens or lawful permanent residents living overseas

You can read more about this solution under streamlined filing compliance procedures.

Determine your eligibility

Non-willful conduct explained

Non-willful conduct generally means you did not intentionally evade tax obligations. It could be attributed to negligence, oversight, or a genuine misunderstanding of the law. As long as you can provide a credible explanation for why you failed to file, you may be able to certify that your actions were non-willful. Review the streamlined procedure eligibility criteria if you are unsure whether you qualify.

Residency guidelines

Two versions of the process exist:

  • Streamlined Foreign Offshore Procedures if you live outside the United States and meet specific physical presence requirements (often, at least 330 days outside the U.S. in one of the last three years).
  • Streamlined Domestic Offshore Procedures if you reside in the United States and have unreported foreign accounts.

Should you qualify as a non-U.S. resident, your primary focus will be the Streamlined Foreign Offshore Procedures. If you reside stateside, you will follow the domestic version. Both are intended to bring you into compliance, but each has unique rules regarding penalties. In either case, be sure you are not under criminal investigation or civil examination by the IRS before you move forward.

Complete the streamlined steps

Required documentation

For streamlined submission, you must gather:

  • The three most recent years of delinquent or amended federal tax returns (Form 1040)
  • Six years of FBARs via FinCEN Form 114 if you have any foreign bank accounts exceeding the reporting thresholds
  • Non-willful conduct certification, typically Form 14653 for non-U.S. residents

You will also need a valid Taxpayer Identification Number (SSN or ITIN). If you do not have one, an ITIN application can be submitted alongside your returns. Visit IRS streamlined filing process for more detail on required forms and how to organize your documents.

Filing process overview

  1. Complete and mark your federal tax returns “Streamlined Foreign Offshore” or “Streamlined Domestic Offshore” as applicable.
  2. File six years of FBARs electronically through FinCEN’s BSA E-Filing System if you have unreported foreign accounts.
  3. Attach Form 14653 (for non-U.S.-based filers) or Form 14654 (for U.S.-based filers) certifying your non-willful conduct.
  4. Pay any taxes and accrued interest due for the years in question.
  5. Submit your complete package to the designated IRS address.

If you missed filing deadlines entirely, you might also review the IRS late filing penalty waiver to see if it applies to your situation, although streamlined procedures typically simplify penalty relief by default.

FAQs

  1. Do I need to include more than three years of returns if I missed more filings?
    No, typically you only need the last three years’ returns and six years of FBARs for the streamlined procedure. If you owe tax for earlier years, consider speaking with a tax professional.
  2. Can I still use the streamlined procedures if I have filed some delinquent returns in the past?
    Yes, you may still qualify. However, any previously assessed penalties generally remain in effect. Consult expat IRS compliance solutions to explore your options.
  3. What if the IRS decides my non-compliance was willful?
    If the IRS determines willful intent, you could face serious penalties and possibly criminal prosecution. You might need to consider the Voluntary Disclosure Program instead.
  4. Are state taxes covered under the streamlined procedures?
    No, the streamlined filings are a federal initiative. You must address any state tax obligations separately, depending on where you maintain residency stateside.
  5. Do I qualify if I have been physically present in China but still maintain a home in the United States?
    You must demonstrate that your primary abode is outside the U.S., or you may need to use the domestic version of the program. The specific requirement often revolves around spending at least 330 days outside the U.S. in one of the three tax years in question.

Key takeaways

  • The us tax streamlined procedure offers a way to resolve missed filings and unreported foreign assets without harsh penalties.
  • You must certify your non-compliance was non-willful, emphasizing negligence or a good faith misunderstanding of tax law.
  • Both domestic and foreign offshore procedures exist, so choose the correct one based on your residency status.
  • Proper documentation and timely submission are critical for a successful filing.
  • If eligible, you can significantly reduce penalties and restart your tax compliance on a clean slate.

At American Pacific Tax, we understand the stress and complexity of dealing with late or missed U.S. filings. Our experienced team can guide you through each step of the streamlined procedure—from gathering the right paperwork to ensuring you remain compliant afterward. If you are uncertain about your circumstances or want a professional review, consider reaching out for tailored advice. Getting right with the IRS is achievable, and you do not have to navigate it alone.