The IRS Amnesty Programs for US citizens who have been delinquent with their past US tax filing obligations have gone through numerous changes since their inception about 6 years ago. Now, the latest program potentially forgives all penalties for most delinquent US citizens in Canada.
Even if you have not filed FBARs or other reporting Forms, and even if you owe US tax, there may be no penalties if you are eligible to enter the IRS “Streamlined Foreign Offshore Program” (“SFOP”).
You are eligible to enter the SFOP, if:
1) Your noncompliance was not willful,
2) The IRS has not advised you it is examining you, and
3) In one of the last 3 years, you were outside the US at least 330 days and you did not have an “abode” in the US. (“Abode” is a very technical US tax word. Having a dwelling in the US does not necessarily mean you have an “abode” in the US).
If you meet the above qualifications, you can file 3 years of US tax returns and 6 years of FBARS and there will be no automatic IRS audit and no automatic penalties for FBARS, other delinquent reporting forms, late payment of tax, or late filing of the tax returns. Streamlined filings may still be subject to penalties if they are selected under the “normal” audit process. If you have previously been assessed penalties, they will still be payable. However, if you previously made a “quiet disclosure” you can still enter the SFOP.