IRS Form 14654, also known as the Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures, serves as a critical tool for individuals attempting to comply with U.S. tax laws relating to foreign financial assets. This form allows residents in the United States to rectify prior omissions of income from foreign assets and ensure proper tax and information reporting, under specific conditions detailed within the form. To ensure compliance and minimize potential penalties, it is vital for individuals who have failed to previously report foreign financial assets to accurately complete and submit Form 14654. Click the button below to begin the process of filling out your form.
The Form 14654, issued by the Department of the Treasury and the Internal Revenue Service, is a critical document for U.S. persons residing in the United States who seek to participate in the Streamlined Domestic Offshore Procedures. This certification is designed to facilitate compliance for individuals who have failed to report income from foreign financial assets and have not submitted required information returns, including FBARs (Foreign Bank and Financial Accounts Reports). The form requires taxpayers to amend income tax returns for the most recent three years for which the U.S. tax return due date has passed and to report the tax and interest owed for each year. It also mandates the electronic filing of correct and complete FBARs for the last six years, if applicable, and the disclosure of foreign financial assets subject to a 5% miscellaneous offshore penalty. The document stresses the importance of non-willful conduct, meaning that any failure to report was due to negligence, inadvertence, or a misunderstanding of the law, rather than intentional evasion. Taxpayers must provide a detailed narrative of their failure to comply, including personal and financial background, and relinquish the right to defense against the assessment and collection of penalties under certain conditions. This form, thus, stands as an essential tool for individuals seeking to rectify their tax situations under the streamlined procedures, ensuring they meet all eligibility requirements and fully understand the implications of their submissions.
Form 14654
(September 2017)
Department of the Treasury - Internal Revenue Service
Certification by U.S. Person Residing in the United States
for Streamlined Domestic 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 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. I previously filed original tax returns for these years. 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 1040X
Interest
Total
I failed to report income from one or more foreign financial assets during the above period.
I meet all the eligibility requirements for the Streamlined Domestic Offshore procedures.
If I failed to timely file correct and complete FBARs for any of the last 6 years, I have now electronically filed those FBARs.
During each year in either my 3-year covered tax return period or my 6-year covered FBAR period, my foreign financial assets subject to the 5% miscellaneous offshore penalty were as follows
Name, City, and Country of
Year Account Was
Year-End Balance/
Account Number
Opened or Asset
Asset Value
Financial Institution/Description of Asset
Was Acquired
(state in US Dollars)
If you held no assets subject to the 5% miscellaneous offshore penalty during this year enter “N/A” next to “Total” in the above table. Attach a continuation sheet if necessary. If you attach a continuation sheet, it must be signed with taxpayer name(s) and TIN(s) printed.
Catalog Number 67044W
www.irs.gov
Form 14654 (Rev. 9-2017)
Page of
Note: Use this seventh year only if your 3-year covered tax return period does not completely overlap with your 6-year covered FBAR period (for example, if your 3-year covered tax return period is 2011 through 2013 because the due date for your 2013 tax return is passed, but your covered FBAR period is 2007 through 2012 because the due date for the 2013 FBAR has not passed).
The assets listed in this certification are my only foreign financial assets subject to the 5% miscellaneous offshore penalty.
My penalty computation is as follows
Highest Account Balance/Asset Value (enter the highest total balance/
asset value among the years listed above)
Miscellaneous Offshore Penalty (Highest Account Balance/Asset Value from above multiplied by 5%)
My payment information is as follows
Total Tax and Interest Due
Miscellaneous Offshore Penalty
Total Payment
Note: Your payment should equal the total tax and interest due for all three years, plus the miscellaneous offshore penalty. You may receive a balance due notice or a refund if the tax, interest, or penalty is not calculated correctly.
In consideration of the Internal Revenue Service’s agreement not to assert other penalties with respect to my failure to report foreign financial assets as required on FBARs or Forms 8938 or my failure to report income from foreign financial assets, I consent to the immediate assessment and collection of a Title 26 miscellaneous offshore penalty for the most recent of the three tax years for which I am providing amended income tax returns. I waive all defenses against and restrictions on the assessment and collection of the miscellaneous offshore penalty, including any defense based on the expiration of the period of limitations on assessment or collection. I waive the right to seek a refund or abatement of the miscellaneous offshore penalty.
I agree to retain all records (including, but not limited to, account statements) related to my assets subject to the 5% miscellaneous offshore penalty until six years from the date of this certification. I also agree to retain all records related to my income and assets during the period covered by my amended income tax returns until three 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 Domestic 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.
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)
No
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
Filling out Form 14654 requires accuracy and a clear understanding of its components. This form serves as a certification by U.S. persons living in the United States who are seeking relief under the Streamlined Domestic Offshore Procedures. It is crucial for taxpayers who have previously failed to accurately report income from foreign financial assets or have not filed required foreign bank and financial account reports, among other related oversights. The proper completion and submission of this form, along with amended tax returns and any other specified documents, are key steps towards compliance with U.S. tax laws and potentially avoiding harsher penalties. Below are step-by-step instructions to assist you in filling out Form 14654 accurately.
Once all parts of Form 14654 are accurately completed, review the form to ensure all information is correct and true to the best of your knowledge. It is recommended to keep a copy of the filed form and all documentation for your records. Properly and promptly submitting this form is a significant step towards resolving past non-compliance with offshore asset reporting requirements.
What is Form 14654?
Form 14654, also known as the Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures, is a document used by the Internal Revenue Service (IRS) for individuals correcting prior omissions of foreign income and financial assets on their U.S. tax returns. It's part of the IRS's Streamlined Filing Compliance Procedures, designed for taxpayers who might not have been fully aware of their filing requirements. This form helps them certify that their failure to report income, tax, and required information returns, including Foreign Bank and Financial Accounts Report (FBAR), was non-willful.
Who needs to file Form 14654?
This form is intended for U.S. persons, including individuals, estates, and domestic entities that have previously filed U.S. tax returns but unintentionally failed to report foreign income and assets or failed to file FBARs. To use this form, taxpayers must meet the eligibility criteria for the Streamlined Domestic Offshore Procedures, which include having a U.S. residency and the IRS considering their actions as non-willful.
What should be included with Form 14654?
When submitting Form 14654, taxpayers must also include amended tax returns for the last three years and delinquent FBARs for the last six years, if applicable. Additionally, taxpayers need to calculate and report the tax and interest owed for each year, as well as a miscellaneous offshore penalty equal to 5% of the highest aggregate balance/value of their foreign financial assets during the years in question. A detailed narrative explaining the reasons behind their failure to comply with tax laws and the nature of their foreign financial assets is also required.
What is the miscellaneous offshore penalty?
The miscellaneous offshore penalty is part of the Streamlined Domestic Offshore Procedures. It equals 5% of the highest year-end balance or value of the taxpayer's foreign financial assets that are subject to the penalty over the period covered by the voluntary disclosure. This penalty is in lieu of all other penalties that could apply, including FBAR and information return penalties.
How does one determine if their conduct was non-willful?
Non-willful conduct is defined as conduct that is due to negligence, inadvertence, mistake, or a good faith misunderstanding of the requirements of the law. When filling out Form 14654, taxpayers must explain their specific reasons for failing to report all income, pay all tax, and submit all required information returns, including FBARs. This explanation should support the claim of non-willful conduct. Make sure to include all relevant facts, both favorable and unfavorable.
Can Form 14654 be e-filed?
As of the last update, Form 14654 cannot be e-filed. It must be printed, signed, and mailed along with all required documents, including amended tax returns and any necessary information returns, to the IRS. Ensure all documents are complete and accurate to avoid delays in processing.
What happens after Form 14654 is submitted?
After submission, the IRS will review the certification, amended returns, and other documents to verify eligibility for the Streamlined Domestic Offshore Procedures. If everything is in order, the taxpayer's amended returns will be processed, and the appropriate taxes and penalties will be assessed. The IRS may contact taxpayers for additional information if necessary. It is crucial to retain all records related to the disclosure for at least six years after the certification date. Taxpayers may receive a notice or refund if payments for taxes, interest, or penalties are not calculated correctly during the submission.
One common mistake individuals make when completing Form 14654 is not providing detailed explanations for each year of non-compliance. It is crucial that taxpayers include specific reasons for their failure to report all income, pay all tax, and submit all required information returns, including FBARs. A narrative that outlines the taxpayer's personal and financial background and any relevant circumstances is necessary. Failure to include these details can lead to the rejection of the streamlined procedure request.
Another error often seen is incorrectly reporting the year-end balance or asset value of foreign financial accounts or assets. Each year listed on the form must accurately reflect the highest account balance or asset value in U.S. dollars. This information is vital for calculating the 5% miscellaneous offshore penalty. Misreporting or estimating these values can result in incorrect penalty calculations and potential penalties for underpayment.
Individuals frequently neglect to electronically file FBARs for each of the last 6 years when they were required. Form 14654 requires that taxpayers certify they have now electronically filed these FBARs. Overlooking or forgetting to file these essential documents can disqualify applicants from the Streamlined Domestic Offshore Procedures, leaving them liable for more severe penalties.
Additionally, many filers forget to sign the continuation sheets, if attached. When more space is needed to detail foreign financial assets, continuation sheets are used. However, for these sheets to be considered valid and part of the form, they must be signed with the taxpayer's name(s) and TIN(s) printed. Unsigned sheets can render the submission incomplete.
Failure to fully understand and acknowledge the waiver section can also be a crucial mistake. By submitting Form 14654, taxpayers waive their right to seek a refund or abatement of the miscellaneous offshore penalty and consent to the immediate assessment and collection of this penalty. Not fully understanding the implications of this waiver can lead to unexpected financial consequences and eliminate certain legal defenses that might have been available.
When completing Form 14654, also known as the Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures, you're taking an important step toward resolving issues related to foreign assets. Alongside Form 14654, there are several other documents that are often required to fully comply with the streamlined filing process and ensure that your financial disclosure is complete and accurate. Understanding these documents can help streamline the process and ensure compliance with IRS regulations.
Each of these forms plays a critical role in ensuring full compliance with U.S. tax laws regarding foreign assets and income. Properly completing and submitting these documents can help avoid penalties and ensure peace of mind. It's important to consult with a tax professional or advisor to determine which forms are necessary for your specific situation and to ensure that all information is accurate and complete.
The 14654 form is closely related to Form 1040X, "Amended U.S. Individual Income Tax Return." Both forms involve the rectification of previously submitted tax returns, but while Form 1040X is used for amending inaccuracies or omissions in domestic income on an income tax return for a specific year, Form 14654 is specifically tailored towards the correction of unreported foreign financial assets and income, alongside the submission of rectified tax information under the Streamlined Domestic Offshore Procedures. This focus on offshore financial activity is the main differentiator between the two.
Form 8938, "Statement of Specified Foreign Financial Assets," shares similarities with Form 14654 in that both require detailed reporting of assets held in foreign countries. However, Form 8938 is necessary as part of an individual’s annual tax return if they hold specified foreign financial assets above a certain threshold. Conversely, Form 14654 is used as part of a corrective process to certify compliance with tax obligations related to previously unreported foreign assets, serving a remedial purpose rather than an annual reporting requirement.
Another related document is the FinCEN Form 114, commonly known as the FBAR (Foreign Bank and Financial Accounts Report). Like Form 14654, the FBAR requires disclosure of certain foreign financial accounts. The critical difference lies in their administration; the FBAR is filed with the Financial Crimes Enforcement Network (FinCEN), not the IRS, and focuses solely on foreign bank accounts, whereas Form 14654 deals with a broader spectrum of foreign financial assets and is part of an IRS procedure.
The 3520 form, "Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts," also shares common ground with Form 14654 as they both involve reporting foreign financial activities to the IRS. While Form 3520 focuses on transactions with foreign trusts and large gifts from foreign entities, Form 14654 is primarily concerned with the certification of compliance regarding unreported foreign income, assets, and bank accounts under streamlined filing compliance procedures.
Form 8960, "Net Investment Income Tax—Individuals, Estates, and Trusts," and Form 14654 intersect in the arena of foreign investments. Form 8960 is utilized to calculate the 3.8% net investment income tax that might apply to individuals, estates, and trusts on their unearned income, which can include income from foreign entities. Form 14654, while not specifically for calculating taxes, covers the broader certification of compliance including the correction of previously unreported or underreported foreign investment income.
The 8621 form, "Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund," is akin to Form 14654 in its focus on foreign investments. However, Form 8621 specifically addresses investments in passive foreign investment companies (PFICs) and requires reporting by shareholders on annual gains, distributions, and other transactions related to PFIC shares. Form 14654’s scope includes compliance certification for a wider range of foreign financial assets, making it a broader corrective tool compared to the more specialized reporting of Form 8621.
Lastly, Form 5471, "Information Return of U.S. Persons With Respect to Certain Foreign Corporations," relates to Form 14654 through its involvement in foreign financial reporting. Required from U.S. citizens or residents who are officers, directors, or shareholders in certain foreign corporations, Form 5471 demands comprehensive reporting on the activities and holdings of the foreign corporation. Whereas Form 5471 deals with direct involvement in foreign corporations, Form 14654 encompasses a broader certification of rectifying previous failures to report foreign income and assets, including but not limited to corporate interests.
When filling out Form 14654, the Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures, understanding both what you should and shouldn't do is critical for ensuring the process is completed accurately and efficiently. Here's a comprehensive guide:
Things You Should Do
Thoroughly review the entire form before starting to ensure you understand all the requirements. This form is key for those needing to report foreign financial assets and the related income accurately, avoiding penalties by using the streamlined procedures.
Provide specific, detailed reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. This involves not only stating the facts but also including your personal and financial background that contributed to the oversight.
Accurately calculate the tax, interest, and miscellaneous offshore penalty amounts for each relevant year. Ensure you carefully follow the instructions for computing these figures, as they significantly impact your total payment due.
Ensure all required attachments, including continuation sheets and additional statements of facts if your situation is complex, are properly signed and include your printed name(s) and TIN(s). This is crucial for the validation and acceptance of your submission.
Things You Shouldn't Do
Do not omit any income or asset values. It is essential to report all foreign financial assets and their respective incomes accurately. Underreporting or omitting information can lead to further penalties and undermine the integrity of your submission.
Avoid providing vague or general reasons for your failure to report. The IRS requires specific factual narratives that explain your situation. Generalizations or omitting details can result in your submission being considered incomplete.
Do not forget to include your penalty calculation for not reporting foreign financial assets. The miscellaneous offshore penalty is a crucial part of your submission, and failure to accurately calculate or include it can delay processing.
Refrain from signing the form without ensuring all information is true, complete, and correct to the best of your knowledge. Submitting incorrect information, even unintentionally, can lead to penalties and complications with your streamlined procedure.
Filling out Form 14654 accurately and comprehensively is key to taking advantage of the Streamlined Domestic Offshore Procedures. Adhering to these dos and don'ts will help streamline the process and avoid common pitfalls.
There are several misconceptions about Form 14654, "Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures." Understanding these misconceptions is crucial for accurately completing the form and complying with the IRS requirements.
Misconception 1: The form is only for taxpayers with intentional tax evasion. In reality, Form 14654 is designed for taxpayers who have failed to report foreign financial assets and pay taxes due to non-willful conduct, such as negligence or a misunderstanding of the law.
Misconception 2: Only income from foreign accounts needs to be reported. However, taxpayers must report all income, including that from foreign financial assets, as well as pay all due taxes and submit all required information returns, including FBARs (Foreign Bank and Financial Accounts).
Misconception 3: Submission guarantees no penalties will be applied. While the streamlined procedures aim to provide relief from certain penalties, taxpayers may still be subject to a miscellaneous offshore penalty. This form requires the taxpayer to consent to the immediate assessment and collection of this penalty for non-compliance.
Misconception 4: Joint filers must have the same reasons for their past non-compliance. If filing jointly, each spouse must state their individual reasons separately if they are different, ensuring that both spouses' situations are accurately reflected.
Misconception 5: All foreign assets are subject to the 5% penalty. This penalty applies only to those assets that contributed to non-compliance. If you held no assets subject to this penalty during a year, you must enter “N/A” in the respective section of the form.
Misconception 6: Taxpayers can choose which years to report. Taxpayers must provide amended returns for each of the most recent 3 years for which the U.S. tax return due date (or properly extended due date) has passed, and they filed an original return.
Misconception 7: Form 14654 is only for declaring foreign financial accounts. While foreign accounts are a focus, the form also encompasses other foreign financial assets and requires a comprehensive declaration of all related information.
Misconception 8: If the IRS discovers evidence of willful conduct, the streamlined procedure protections still apply. If evidence of willfulness, fraud, or criminal conduct is discovered, the IRS may initiate further examination, leading to potential civil fraud or FBAR penalties beyond the streamlined procedures.
Misconception 9: Detailed narrative of non-compliance reasons is optional. A detailed narrative stating specific reasons for failure to report income, pay tax, and submit required information returns, including personal and financial background, is mandatory for the submission to be considered complete.
Understanding these misconceptions is essential for correct form submission and compliance with the streamlined domestic offshore procedures.
When filling out and using Form 14654, which is crucial for taxpayers applying for the Streamlined Domestic Offshore Procedures, there are several key points to remember:
It's imperative to approach the completion of Form 14654 with diligence and honesty. Accurate representation of your financial history and compliance with the specified requirements can significantly affect the outcome of your application under the Streamlined Domestic Offshore Procedures.
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