IRS Clearance on Quiet Disclosure so Estate can distribute Assets

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    Marc Enzi
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    Group,
    I have a client who came to me with a problem (a mess) I am trying to sort out.
    Is there a way to get definitive closure on potential FBAR penalties related to quiet disclosures?

    Taxpayer died in 2015 and had delinquent 1040 tax returns 2008-2015 that were filed by the executor in January 2019.
    One of the heirs knew of an account in Switzerland and tried to have the funds distributed directly to themselves and the heir filed FBARs (on behalf of the decedent) reporting $700,000 before alerting the Executor as to the existence of a foreign account.
    Switzerland Bank mailed a cashier’s check to the Executor for $654,000 and the Executor is concerned about penalties for the late FBARs & 8938 filings. After being alerted to the foreign account and funds, the Executor filed Amended 1040X (QUIET DISCLOSURE) to include Schedule B and Form 8938, there was no additional tax.
    Executor is sitting on the money asking me if it is okay to distribute to the heirs.

    The question I have is “Is there a way to get closure and know that the IRS is not going to go after the decedent for delinquent FBARs and Form 8938?” Executor does not want to distribute until they know the IRS is satisfied and not coming after the Estate for anything.

    A streamlined Form 14654 application comes to mind, but failure to file for 8 years makes it tough to argue non willful. I don’t even know if a streamlined Form 14654 is available now that a Quiet Disclosure has already been submitted. There is still a tax balance of $76,500 due is it okay to just pay it off? Or wait and include the payment with a Streamlined package plus a 5% miscellaneous penalty?

    Kind regards,

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