Usually very little that you can see. The IRS says returns sent under the streamlined filing compliance procedures (opens the official IRS page in a new tab) are processed like any other return, that it will not acknowledge receipt, and that the process does not end in a closing agreement. The payment is applied, the returns go onto your account, and most filers hear nothing further. The returns are not audited automatically, but they can be selected for examination in the ordinary way.
This post is for US citizens and green card holders in the UK who have posted, or are about to post, a Streamlined Foreign Offshore package and want to know what comes next. It goes further on one stage of our guide for people behind on US taxes in the UK. It covers how the package is handled, how to confirm it arrived, what an examination would mean for the penalty position, the notices that can follow, staying compliant afterwards, and a worked example from Glasgow.
What does the IRS do once your streamlined package arrives?
It processes the returns in the normal way. Nothing about a Streamlined Foreign Offshore package triggers a special review on arrival, a meeting or a decision letter. The red marking at the top of each return routes it through the procedure, the payment is applied to the right years, and the returns then sit on your account like any other filing.
The marking matters more than it looks. The IRS page for US taxpayers residing outside the United States (opens the official IRS page in a new tab) asks for the words Streamlined Foreign Offshore to be written in red at the top of the first page of each late or amended return, and says this is critical to make sure the returns are processed through the special procedures. The package goes on paper to a dedicated IRS address in Austin. The IRS says electronic submissions will not be accepted under the procedure, and that the address may only be used for returns filed under it.
The FBARs travel separately. The IRS instructions require the late FBARs to be filed electronically on the FinCEN BSA E-Filing System, giving other as the reason for late filing and naming the streamlined procedures in the explanation. FinCEN's own page on how to report foreign bank and financial accounts (opens the official FinCEN page in a new tab) explains the electronic system. Nothing about the FBARs goes in the envelope to Austin, and paying the tax does not file them.
- three years of late or amended returns, each marked in red, to the Austin address
- Every required information return, such as Form 8938, attached to the return it belongs to
- The original signed Form 14653, with copies attached to each return and information return
- Payment of all tax shown on the returns with statutory interest
- six years of FBARs, filed electronically with FinCEN and not posted
Will you receive a confirmation or closing letter?
No. The IRS states plainly that receipt of streamlined returns will not be acknowledged and that the process does not end with a closing agreement. Silence after posting is the expected result and does not mean the package was lost or rejected. Confirming that it arrived is something you do from your own records and your IRS account.
The closing agreement point is the one with lasting effect. The older offshore disclosure programmes ended with a signed agreement that settled the years concerned. The streamlined procedures were built as a lighter process and settle nothing in that formal sense. What the filer has instead is the published IRS statement of which penalties will not be imposed on a person who is eligible and follows the instructions, together with the normal rules on how long a filed return stays open.
To check that the money and the returns have been posted, the IRS individual online account and transcript service (opens the official IRS page in a new tab) lets you view transcripts, the balance owed and your payment history, and transcripts can also be ordered by mail. A tracked courier receipt for the package, the bank or card confirmation for the payment, and a full copy of everything sent are the core of the file. Our post on paying a Streamlined balance from a UK bank sets out what to keep from the payment side.
Can a Streamlined Foreign Offshore submission still be audited?
Yes. The IRS says streamlined returns are not subject to audit automatically, but they may be selected for audit under the existing audit selection processes that apply to any US return. They may also be checked for accuracy and completeness against information received from banks, financial advisers and other sources, which for UK residents includes FATCA reporting.
If an examination does happen, the Foreign route sets out what is protected. For an eligible taxpayer who followed the instructions, the IRS says that on later audit there will be no failure-to-file, failure-to-pay or accuracy-related penalties, and no information return or FBAR penalties, for the amounts reported on the streamlined returns. On the Foreign route there is also no miscellaneous offshore penalty, unlike the Domestic route with its charge of 5% on the relevant foreign assets.
The protection has two limits. It falls away if the examination finds that the original non-compliance was fraudulent or that the FBAR violation was wilful. And if the IRS finds an additional tax deficiency on a streamlined return, it may assert the additions to tax and penalties that relate to that new amount. The IRS also says streamlined returns may be subject to additional civil penalties, and even criminal liability, where appropriate. A complete package and a truthful certification are what keep a filer inside the protection.
What notices or refunds can follow a streamlined submission?
Mostly none, but two outcomes are named by the IRS itself. If the tax or the interest was calculated incorrectly, you may receive a balance due notice or a refund. Any other letter should be read for what it actually is, because an ordinary computer notice and the opening of an examination call for very different responses.
The IRS guide to understanding your IRS notice or letter (opens the official IRS page in a new tab) says to read the notice carefully, find its number in the upper right corner, and reply by the date given if a reply is asked for. A balance due notice after a streamlined filing usually means the interest was worked to a different date than the IRS used. Paying promptly limits further interest, and the IRS offers payment plans (opens the official IRS page in a new tab) where the shortfall cannot be met at once.
Penalties assessed before the submission are a separate matter. The IRS says penalty assessments previously made for earlier filings will not be abated by a later streamlined submission, so a notice about an old penalty can still arrive and is not a sign that the package failed. Where a letter refers to an examination, our IRS representation page explains how we respond on a client's behalf.
- A balance due notice where tax or interest was understated
- A refund where tax or interest was overstated
- Notices about penalties assessed before the package was filed
- Ordinary letters about later years that have nothing to do with the procedure
What does staying compliant look like after you submit?
Filing every later year under the regular procedures. The IRS says that for all future filings you must file according to regular filing procedures, and that a taxpayer who has used the streamlined procedures is expected to comply with US law for all future years. For a US citizen in the UK that means a return by 15 June, or by 15 October with an extension.
The first ordinary Form 1040 after the package carries forward what the package established. Foreign tax credit carryovers, the treatment of UK funds and pensions, and any election made in the streamlined years should run on consistently. The FBAR continues each year the aggregate of your foreign accounts passes $10,000, filed with FinCEN on its own timetable of 15 April, extended automatically to 15 October. Form 8938 continues wherever its higher thresholds for people abroad are met.
A lapse after a streamlined filing is hard to explain as non-wilful, because the signed certification shows the filer knew the rules. Our post on whether Streamlined is a one-time option explains why, and how a mistake found later is usually corrected. The individual tax returns service picks up from the last streamlined year so the next return starts from the same figures.
- Later returns go through ordinary channels, never to the streamlined address
- New UK accounts, inheritances and property sales reported as they happen
- Information returns kept up for every fund, trust and company
How might this look for a US citizen in Glasgow?
A US citizen employed as a secondary school teacher in Glasgow posts her package in the spring: three marked returns, a signed certification with a copy on each return, and a dollar payment of a small balance of tax and interest. She files six FBARs through the BSA E-Filing System the same week. For some time nothing arrives from the IRS.
She checks her IRS online account, sees the payment applied and the returns on her account, and keeps the courier receipt with her copies. Later a notice arrives showing a small balance. She reads the notice number, finds that the IRS worked interest to a later date than her calculation, and pays it. The notice is a processing adjustment and says nothing about her eligibility or her certification.
Later, one of the streamlined returns is selected for examination. Because the returns were complete and the narrative true, the Foreign route protection for the reported amounts holds, and the examination turns on the figures. Our IRS streamlined filing service prepares packages with that possibility in mind, and our post on writing the Form 14653 certification explains why the narrative matters on examination. The wider sequence is in our guide to IRS streamlined filing from the UK, and you can contact US UK Tax Returns about your own package.
General information, not advice. The right answer depends on your circumstances and the tax year concerned.
