IRS asks a NW taxpayer to enter SDOP and pay 5% as a penalty. In return
what is the taxpayer getting for entering the program versus if the same
taxpayer had done a QD?
In other words, what is the penalty buying the taxpayer?
A QD will bring a taxpayer in compliance. However, the programs
offered by the IRS gives some certainty. Even though streamlined
submissions are still subject to audit, I doubt that many will be
audited.
The QD is more uncertain. The IRS says that it is
looking for QDs that report of foreign bank income and change the Schedule B
foreign bank question to yes and for filings of delinquent or amended
FBARs. So, the chances of audit may be greater.
But for most
taxpayers who are nonwillful, their FBAR penalties are likely not going
to be great if audited, so a QD might be the way to go, particularly if
they are willing to accept a possible higher risk of audit.
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