Streamlined Program vs. Qualified Amended Return

Despite the seemingly taxpayer-friendly incentives, the SDOP has drawbacks.
First, participants are not guaranteed immunity from criminal prosecution. In addition, the 5% penalty is imposed on a broader base of foreign assets – not just those subject to FBAR reporting.
Finally, if it is later determined that the taxpayer was willful, the client will undoubtedly face additional criminal charges for submitting a false certification. Therefore, the taxpayer may end up paying a greater price than the price of participating in other compliance-driven initiatives.
Similarly, a Voluntary Disclosure coupled with QAR-compliant amended returns does not guarantee immunity from criminal prosecution. Although a taxpayer filing a QAR is not liable for the accuracy related penalties, he may be liable for FBAR and other filing-related penalties unless he can show that there is reasonable cause for the failure to file. However, most non-willful taxpayers will be able to make this demonstration. If the taxpayer demonstrates that the failure to file FBARs was not negligent, the monetary penalty for failure to file will not exceed $500. On the other hand, if the taxpayer is determined to be non-willful, or willful, the monetary penalties are significantly greater. Under those circumstances, the cost to the taxpayer may actually be greater through the QAR procedure.
Finally, a taxpayer cannot participate in the QAR procedure if one of the enumerated preclusion events occurred. Non-willful taxpayers should check their eligibility for the Streamlined Program or a voluntary disclosure by ordering transcripts of account from the IRS and submitting a pre-clearance letter to the IRS.
Conclusion
Allowing taxpayers to self-correct their noncompliance furthers the IRS’s stated mission of encouraging voluntary compliance and self-policing. One size does indeed not fit all taxpayers.