The Form 14653, issued by the Department of the Treasury Internal Revenue Service, serves as a certification by U.S. persons residing outside of the United States for Streamlined Foreign Offshore Procedures. This form is a critical tool for taxpayers who need to certify that their failure to report income, pay tax, and submit required information returns and FBARs (Report of Foreign Bank and Financial Accounts) was due to non-willful conduct. It outlines the process for submitting delinquent or amended tax returns along with all necessary information returns for the past three years and, if applicable, delinquent FBARs for the last six years, to comply with U.S. tax law while residing abroad.
The Form 14653, issued in October 2017 by the Department of the Treasury's Internal Revenue Service, serves as a pivotal measure for U.S. persons residing outside the United States intending to comply with tax obligations through the Streamlined Foreign Offshore Procedures. This form allows individuals to certify that their failure to report income, submit required information returns, and pay the associated taxes was due to non-willful conduct. It requires the filer to detail their delinquent or amended tax returns for the previous three years, specifying the amounts of taxes and interest owed. Additionally, the form addresses the potential circumstances under which individuals failed to report income from foreign financial assets and affirms their eligibility for the streamlined process, provided they have now submitted any necessary Foreign Bank and Financial Accounts Reports (FBARs). Form 14653 also delves into the need for retaining extensive financial records and acknowledges the consequences of submitting under the Streamlined Procedures, including the forfeiture of favorable terms if seeking refunds on payments made outside of the assessment limitations period. Moreover, it outlines the residency requirements essential for eligibility, distinguishing between U.S. citizens, lawful permanent residents, and those not meeting these criteria, emphasizing the importance of proving non-residency through detailed declarations and computations. By signing the form, taxpayers attest under penalty of perjury to the completeness and accuracy of their submission, acknowledging the risks of potential investigation by the IRS should evidence of willfulness, fraud, or criminal conduct emerge. This form exemplifies the IRS's efforts to facilitate compliance while enforcing the tax laws, representing a crucial tool for U.S. persons abroad to regularize their tax status with minimized penalties.
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
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)
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.
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)
For Estates Only
Signature of Fiduciary
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
Firm’s name
Firm’s EIN
Firm’s address
PTIN
Check if
Self-Employed
Do you want to allow another person to discuss this form with the IRS
Yes (complete information below)
Designee’s name
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
Once the decision to complete Form 14653 has been made, individuals residing outside of the United States undertake a crucial task towards compliance with U.S. tax regulations under specified streamlined foreign offshore procedures. This form facilitates the submission of delinquent or amended income tax returns, including all necessary information returns for the past three years for which the U.S. tax return due date has passed. It is vital for taxpayers to meticulously follow each step to ensure accuracy and completeness of their submission. This diligent approach aids in avoiding potential penalties and acknowledges the taxpayer's efforts toward rectifying past non-compliance.
It's imperative to review all information for accuracy and completeness before submission to the Internal Revenue Service. This attention to detail ensures that the submission process progresses smoothly and decreases the likelihood of issues that could delay compliance and resolution.
Frequently Asked Questions about Form 14653:
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 used by the Internal Revenue Service (IRS) to facilitate compliance with tax obligations for U.S. persons residing abroad. It is specifically designed for individuals who have not willfully failed to report foreign financial assets and are seeking to use the IRS's Streamlined Foreign Offshore Procedures to report these assets and comply with U.S. tax laws.
Who needs to fill out Form 14653?
This form is intended for U.S. citizens or lawful permanent residents (green card holders) living outside of the United States who have not complied with U.S. tax and foreign financial asset reporting requirements in a non-willful manner. Non-willful conduct could include negligence, inadvertence, or a misunderstanding of the legal requirements. If individuals or spouses meet the non-residency requirement and have unreported income from foreign financial assets, they should use this form to comply with tax laws under the Streamlined Foreign Offshore Procedures.
What are the key components of Form 14653?
The form requires the taxpayer to certify that they are eligible for the Streamlined Foreign Offshore Procedures by meeting several criteria. These include providing amended or delinquent tax returns for the last three years where the due date has passed, reporting all income from foreign financial assets for those years, and acknowledging the payment of all due taxes and interest. Additionally, taxpayers must certify their non-willful failure to comply with reporting and payment obligations, meet the non-residency requirement, and agree to retain and provide documentation as requested by the IRS.
What documentation is necessary to support the submission of Form 14653?
When submitting Form 14653, taxpayers must attach a signed statement explaining the specific reasons for their failure to properly report income, financial assets, and pay tax as required. This should include a comprehensive explanation of the taxpayer's personal and financial background, the source of funds in foreign accounts, and any other relevant information. Documentation to support this includes account statements, tax returns for the relevant years, and records of communication with tax advisors if applicable. If there were any reliance on professional advice, the details of the advisor should also be included.
What happens after submitting Form 14653?
After the IRS receives Form 14653 and the accompanying documentation, it will review the submission to ensure compliance with the Streamlined Foreign Offshore Procedures. The IRS may request additional information or documentation during their review. If the submission is accepted, it will lead to compliance with U.S. tax laws and avoid potentially larger penalties associated with non-compliance. However, if the IRS discovers evidence of willful conduct, fraud, or criminal activity, it may initiate an examination or investigation, which could result in significant penalties or other legal consequences.
One common mistake individuals make when completing Form 14653 is overlooking the meticulous detail required in the narrative statement of facts. This section demands an exhaustive recounting of one's failure to report income, including both favorable and unfavorable facts. It's not just about stating the oversight; it's about providing an entire story - personal and financial backgrounds, and the reasons behind the failure. Without supplying a comprehensive narrative, submissions risk being deemed incomplete and are disqualified from the streamlined penalty relief.
Another frequent error involves the residency status section. Both spouses filing a joint certification must meet the non-residency requirements. Mistakes occur when filers do not accurately disclose their physical presence or absence from the United States, leading to potential issues with eligibility. It's imperative that each spouse's days spent in the U.S. are correctly accounted for, and any discrepancies between the spouses are explicitly noted, to ensure the application meets the streamlined procedure criteria.
In addition to personal backgrounds, an often-overlooked requirement is the detailed explanation of the source of funds in foreign financial accounts or assets. Filers sometimes provide superficial or incomplete explanations. The IRS, however, expects a thorough disclosure – whether the account was inherited, opened while living abroad, or established for business reasons. This detail is crucial for providing the IRS with the necessary context to evaluate the filer's tax situation accurately.
Many filers also falter when it comes to discussing their interactions with their foreign accounts or assets. This includes not just the opening of the account but also regular deposits, withdrawals, and any investment decisions made. A detailed account of these activities helps the IRS understand the nature of the filer's oversight, yet this is often where submissions lack sufficient depth.
Reliance on professional advice is another area ripe for mistakes. If a taxpayer's failure to report was based on professional advice, the form requires the name, address, and telephone number of the advisor, along with a summary of the advice given. However, taxpayers often omit either the advisor's details or the summary of advice, both of which are crucial for the IRS to evaluate the taxpayer's claim of non-willful conduct.
For those submitting a joint certification with differing reasons for their failure to report, a common mistake is not providing separate statements of facts for each spouse. Each spouse may have unique reasons for their reporting failures, and these differences must be documented meticulously to avoid confusion or the appearance of withholding information.
An underappreciated aspect of Form 14653 is the agreement to retain all records related to the taxpayer's income and foreign financial assets for the required period. Filers sometimes overlook this commitment, but it is vital. These records must be kept for three years from the date of certification or six years for delinquent FBARs, as they may be requested by the IRS to substantiate the certification claims.
The calculation of taxes owed, along with interest, for each year listed on the form is another challenging area. Accurate calculations are essential, yet filers often make errors that lead to either underpayment or overpayment. This not only risks an adverse notice from the IRS but also could affect the taxpayer's eligibility under the streamlined procedures.
Last but not least, a significant misstep can occur if filers do not properly acknowledge the potential for amended returns to cover tax years beyond the three-year assessment limitation period. Misunderstanding or ignoring this aspect can lead to the forfeiture of the beneficial terms offered by the Streamlined Foreign Offshore Procedures, particularly if the filer seeks a refund for taxes paid on income reported through amended returns.
When navigating the complexities of dealing with international tax obligations, the submission of Form 14653 plays a pivotal role for U.S. persons residing outside the United States who seek to comply with the Streamlined Foreign Offshore Procedures. Beside this crucial form, several other documents and forms are frequently required to ensure full compliance and to provide the necessary detail about an individual's tax situation. Understanding these documents can significantly facilitate the process, ensuring that all pertinent information is accounted for.
These documents, while not exhaustive, represent the foundational paperwork that often accompanies Form 14653 in the submission process. Each serves a unique purpose in comprehensively detailing an individual’s fiscal responsibilities and ensuring adherence to U.S. tax laws. Proper preparation and submission of these forms can significantly mitigate potential legal complications and facilitate a smoother interaction with tax authorities. For individuals navigating the intricacies of the Streamlined Foreign Offshore Procedures, attention to detail and an understanding of each required document can lead to a more favorable resolution. Remember, when in doubt, consulting with a tax professional can provide clarity and direction in fulfilling these obligations.
Form 1040 and Form 1040X: Form 14653 requires information about tax and interest owed as shown on Form 1040 or Form 1040X. They are similar in that they deal with reporting individual income, tax owed, and allow for amendments to previously filed returns. While Forms 1040 and 1040X focus on domestic income reporting, Form 14653 extends this requirement to include income from foreign financial assets. All these forms are essential tools for individuals to comply with their tax obligations, correct past mistakes, and disclose foreign income, ensuring accurate tax reporting and payment to the Internal Revenue Service (IRS).
FBAR (Foreign Bank and Financial Accounts Report): The need to file delinquent FBARs as declared on Form 14653 mirrors the requirements of the FBAR itself, where individuals must report foreign financial accounts and assets. Form 14653 specifically addresses individuals who have failed to file timely and correct FBARs, offering them a procedure to rectify this oversight. Both documents are pivotal for the IRS to track and tax foreign-held assets of U.S. taxpayers, aiming to prevent tax evasion through undisclosed offshore accounts.
Form 8854 (Initial and Annual Expatriation Statement): Similar to Form 14653’s requirement for taxpayers to certify their tax compliance in relation to foreign assets, Form 8854 is used by individuals who have renounced their U.S. citizenship or long-term residency to certify compliance with their tax obligations for the five years prior to expatriation. Both forms serve to ensure that individuals with international financial ties or significant changes in residency meet their U.S. tax reporting obligations.
Form 8938 (Statement of Specified Foreign Financial Assets): Both Form 14653 and Form 8938 require the disclosure of foreign financial assets. While Form 14653 is part of a streamlined procedure for taxpayers living outside the United States to become compliant without facing harsh penalties, Form 8938 is an ongoing requirement attached to the annual tax return for taxpayers with significant foreign assets to report these holdings directly on their tax returns. The intersection of these forms highlights the IRS's emphasis on transparency and accountability in foreign asset reporting.
Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts): Form 14653’s requirement for full disclosure of foreign assets and income sources echoes the intent of Form 3520, where taxpayers must report transactions with foreign trusts and receipt of large foreign gifts. Both forms aim to increase the transparency of international financial transactions and ensure that taxpayers pay any taxes due on foreign assets or gifts, thereby reducing the potential for tax evasion.
Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations): Similar to Form 14653's aim to disclose and rectify oversight in foreign income and asset reporting, Form 5471 requires detailed reporting by U.S. persons who are officers, directors, or shareholders in certain foreign corporations. Both forms are part of the IRS's broader efforts to combat tax evasion and to ensure U.S. taxpayers are fully reporting their income and assets worldwide, particularly those held through foreign entities.
When filling out the Form 14653 for the Streamlined Foreign Offshore Procedures, it's crucial to navigate the process with precision and care. The form is designed for U.S. taxpayers living abroad to rectify issues related to unreported foreign assets and income. To ensure a smooth submission process, here are six dos and don'ts to consider:
Adhering to these dos and don'ts can significantly impact the success of your Streamlined Foreign Offshore Procedures submission. Taking the time to carefully prepare your Form 14653 can help ensure you meet the IRS requirements and potentially avoid penalties associated with unreported foreign income and assets.
There are several misconceptions surrounding Form 14653, which is essential for U.S. persons residing outside the United States and seeking to comply with the Streamlined Foreign Offshore Procedures. Understanding these misconceptions will help ensure accurate completion and submission of the form. Below are five common misconceptions and their clarifications:
Understanding these misconceptions is vital for accurately completing and submitting Form 14653 and successfully navigating the Streamlined Foreign Offshore Procedures. It underscores the importance of thoroughness and honesty in declaring foreign financial assets and complying with U.S. tax laws.
The Form 14653 is essential for U.S. persons living outside the United States who are utilizing the Streamlined Foreign Offshore Procedures to report their foreign financial assets and comply with U.S. tax laws. Below are key takeaways to assist those filling out this form:
Approaching the Form 14653 with careful attention to detail and full disclosure will assist in successfully navigating the Streamlined Foreign Offshore Procedures, potentially avoiding further complications with the IRS.
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