When a taxpayer qualifies, the Streamlined Filing Compliance Procedures can be an effective way to address prior year’s tax and disclosure issues. When properly used the taxpayer has piece of mind that any past deficiencies have been addresses and can now more forward and on a fully on a fully compliant basis going forward.
It is very important to make sure that the taxpayer actually qualifies to use the Streamlined Filing Compliance Procedures. The most well-known requirement is that the prior deficiencies were the result of “non-willful” activity. Non-willful activity generally means a deficiency that is the result of negligence, good faith misunderstanding of the law or an inadvertent non filing of a form. However, there are other criteria to be considered as well. For example, for a taxpayer living in the U.S., they must have actually filed their “regular” domestic tax returns. If they have not, they don’t qualify for the streamlined filing compliance procedure. With this in mind it is important to understand the basic thresholds that trigger a U.S. tax return filing obligation.