Form 14708 – Fix an Overstated Streamlined 5% Penalty

Editorial Standards

How we research, review, and update this guide

Every Accountably guide is researched against primary IRS sources, reviewed by a U.S. CPA, and refreshed as guidance evolves. Read our Editorial Guidelines to see how we source, fact-check, and update our content.

Picture a taxpayer who finished a clean Streamlined Domestic submission two or three years ago, paid the 5% miscellaneous offshore penalty on Form 14654, and only later realized an RRSP should never have sat in the penalty base. Form 14708 is the narrow path to get that money back. It is a post-filing reconsideration request that asks the IRS to recompute the penalty after removing eligible Canadian RRSPs or RRIFs under Rev. Proc. 2014-55.

The math is small and the structure is fixed: Line 1 carries the original penalty, Line 2 the revised penalty after exclusion, and Line 3 the refund requested. The September 2016 instructions even show a worked example, original penalty 6,500, revised penalty 1,500 after removing an RRSP, refund request 5,000. File only after the Streamlined submission is complete and paid, attach the original packet and year-by-year balances, and mail it to the Streamlined Unit in Austin so it lands in the right place the first time.

Key Takeaways

• Form 14708 is for taxpayers who need the IRS to reconsider the Streamlined Domestic Offshore penalty because a Canadian retirement plan was included in the penalty base.
• File only after you completed the Streamlined submission, amended returns and Form 14654, and paid tax, interest, and the original 5 percent penalty.
• RRSP or RRIF removal is the most common fix, which can change the highest aggregate year end balance and lower the 5 percent amount.
• The IRS shows a worked example, original penalty 6,500, revised penalty 1,500 after removing an RRSP, refund request 5,000.
• You will attach your original Streamlined packet, proof of payments, year by year balances, and a short eligibility narrative that cites Rev. Proc. 2014 55.

What Is Form 14708 Used For?

Form 14708 lets you present the original penalty, show the corrected highest aggregate year end balance after removing a non penalty item, then request the recalculated 5 percent and any refund. The IRS Internal Revenue Manual spells it out, this form is the reconsideration path when a Canadian retirement plan was included in the Streamlined Domestic penalty base. Think of it as a short, targeted fix that rides on top of your already filed Streamlined package.

You will typically use it after a complete Streamlined submission is on file and paid. That keeps the reconsideration focused on the single question that matters, is the 5 percent penalty right once the base is corrected. The broader Streamlined page lays the ground rules for eligibility and processing, which is why you should always check for any post filing updates before you mail.

Who Should File Form 14708?

You are a good candidate if you have already filed and paid under Streamlined Domestic Offshore and you can point to a precise correction. The usual triggers are, an RRSP or RRIF that qualifies for treaty deferral under Rev. Proc. 2014 55, a keyed error that changed a December 31 balance, or an asset that never belonged in the base under the Streamlined rules. If the highest aggregate year changes once you remove the item, that is fine, the IRS addresses this directly.

• You can identify the asset and show why it does not belong.
• You can present year end statements that support the corrected amounts.
• Your revised highest aggregate year end balance produces a lower 5 percent.
• You can walk the examiner from the original number to the revised number with a one page narrative that cites the authority.

Why this matters for firm delivery

If your firm’s growth stalls, it is rarely about leads, it is about delivery. Review loops, documentation gaps, and resourcing spikes make simple fixes feel hard. Form 14708 is one of those assignments where neat workpapers, clear naming, and a concise story save days of back and forth. That is real time back to your team and better margins on the engagement.

When Should You Ask For Reconsideration?

Act once you confirm the penalty base included an ineligible item or an incorrect year end value. Do not file until your Streamlined submission is complete and paid, including amended returns, Form 14654, tax, interest, and the original 5 percent penalty. That sequence makes your request easy to match to the case and reduces avoidable correspondence.

If you are excluding a Canadian plan, align your facts with Rev. Proc. 2014 55, then recompute the highest aggregate year end balance. If the corrected highest year turns out to be different from the year in your original certification, the IRS tells you to mark that change on Form 14708.

Documents To Include With Form 14708

You are building a short, verifiable packet that lets an examiner tie every number to a document in minutes.

• A completed and signed Form 14708 with Line 1 original penalty, Line 2 revised penalty, and Line 3 the requested refund (Line 1 minus Line 2).
• Your original Streamlined packet, Form 14654 and certification, plus amended returns and any IRS notices that assessed the penalty.
• Proof of payments and statements that support exclusion or revaluation, for RRSP or RRIF, include ownership records and the December 31 balances.
• A brief explanatory statement that cites Rev. Proc. 2014 55 and identifies the affected years and the specific Form 14708 lines you are changing.

A simple example you can mirror

Here is the RRSP removal scenario the IRS uses, reframed as a quick reference. The math is the same, only the presentation is cleaner for your packet.

Item	Amount
Original penalty on Form 14654	6,500
Revised base after removing RRSP	30,000
Revised 5 percent penalty	1,500
Refund request on Form 14708, Line 3	5,000

How To Complete Form 14708 Step By Step

• Identity, enter your name, SSN or ITIN, and address exactly as shown on the Streamlined submission. If a representative will act for you, include their contact information and ensure a current Form 2848 is on file.
• Line 1, enter the original Streamlined 5 percent penalty you already paid. Use the amount from your signed Form 14654.
• Line 2, compute the revised 5 percent penalty after removing the non penalty item, often the eligible RRSP or RRIF. Recalculate from the corrected highest aggregate year end balance.
• Line 3, enter the requested refund, Line 1 minus Line 2.
• Narrative, write a short paragraph that explains the reason for reconsideration, the affected tax years, the documents that prove the correction, and the date of your original Form 14654. If the highest aggregate year changed, say which year is now the peak and show the math that gets you there.
• Sign, date, and keep a full copy of everything, including the shipping receipt, and remember that if your original Form 14654 was a joint certification, both spouses must sign Form 14708.

Packaging tips from the review desk

• Use clear file names, for example, “2019 RRSP Statement, Dec 31 balance,” “Form 14654, signed,” “Form 14708 narrative, signed.”
• Place the one page narrative on top, then the form, then proof, then the original Streamlined packet.
• Think like a reviewer with 30 minutes, if they can trace Line 1 to Form 14654 and Line 2 to your statements without guessing, you win the timeline.

Where To Send Form 14708, And How To Mail It

The IRS Streamlined FAQ lists the current mailing address for Form 14708 as the Streamlined Unit in Austin, Texas. Always verify the address against your most recent IRS notice before you send, since routing can change. Then use a trackable method and keep the receipt for at least six years.

Current FAQ address for Form 14708 Internal Revenue Service 3651 South I H 35 Stop 4305 AUSC Attn, Streamlined Unit Austin, TX 78741.

Practical steps that help you avoid rework,

• Put your case or notice number, name, and SSN or ITIN on the form and cover letter.
• Do not email the form unless an IRS contact authorizes it in writing for your case, since Form 14708 has no e-file option and must be submitted on paper to the Austin Streamlined Unit.
• If a representative is handling the case, include a current Form 2848 so the examiner can speak to them.

What To Expect After You File

You should expect an acknowledgment and then a processing period while the IRS ties your packet to the Streamlined file and recalculates the penalty using your corrected highest aggregate values. The IRS treats Streamlined submissions like any other returns, which means they can be verified and selected for examination, so tight documentation matters.

Acknowledgment And Processing Timeline

• The IRS first checks completeness, then matches your packet to the Streamlined case.
• If you excluded a Canadian RRSP or RRIF, the examiner recalculates the 5 percent from the corrected base, exactly as shown in the IRS example, then issues either a refund or a bill.
• Expect a written result that approves, denies, or adjusts the penalty, and note that by signing Form 14708 you agreed the IRS determination is final and may not be appealed. Timelines vary with workload and complexity. The IRM reminds staff that streamlined packages are processed like other returns, so your case moves faster when your documentation is clean.

Possible IRS Follow Up

It is common to receive a short request for more information, for example statements that prove the December 31 balances, proof you qualify under Rev. Proc. 2014 55, or a copy of your signed Form 14654. Respond completely and before the requested date. The sooner you close questions, the sooner the case moves.

Outcome And Next Steps

If the penalty drops, the IRS issues a notice and either refunds the overpayment or applies it to other amounts you owe. If the penalty stays the same or increases, you receive a bill with payment instructions. Keep every letter, calculation, and shipping receipt for six years from the date of your Form 14708 reconsideration request, not from the date of your original Form 14654 or the original tax year. The Streamlined pages and IRM guidance underline that submissions are processed like normal returns, which is why recordkeeping is your safety net.

Rules That Can Reduce The Streamlined 5 Percent Penalty

Under Streamlined Domestic Offshore, you compute a single highest aggregate year end balance across the covered years, then apply 5 percent. Corrections usually come from removing an ineligible asset, often an RRSP or RRIF that qualifies for treaty deferral, or from fixing a December 31 balance that was entered incorrectly. Your Form 14708 restates the original base, shows the revised base, and asks for the difference. The IRS FAQ describes this method in plain terms and provides numbers.

Excluding Canadian RRSPs Or RRIFs On Form 14708

If you fit the eligibility described in Rev. Proc. 2014 55, you remove the RRSP or RRIF from the penalty base and recompute the 5 percent using the corrected highest aggregate year end balance. Only RRSPs and RRIFs described in Rev. Proc. 2014 55 qualify, not chequing accounts, TFSAs, or other Canadian financial accounts. The IRS Internal Revenue Bulletin explains the treaty deferral election and the change that eliminated the old Form 8891 reporting requirement, which is why many taxpayers can now correct past treatment without a private letter ruling.

Eligibility Under Rev. Proc. 2014 55

Show that you meet the eligible individual criteria and that your Streamlined submission is complete and non willful. Tie those facts to your Form 14654 narrative and attach statements that prove ownership and year end balances. When you present the story this way, the examiner can confirm eligibility and move straight to the math.

• Confirm non willful conduct and Streamlined eligibility under the specific eligible individual criteria in section 4.01 of Rev. Proc. 2014 55, not by virtue of merely holding the Canadian plan.
• Show the Canadian plan qualifies for treaty deferral under the revenue procedure.
• Reference your Form 14654 and include the statements that prove the December 31 balances.

Removing The RRSP Or RRIF From The Penalty Base

Once eligibility is clear, complete Form 14708 to show the revised base and the recalculated 5 percent. Specify which year is now the highest aggregate year, it can be the same year or a different year than in your original certification, and the IRS asks you to mark that change on the form.

A quick numeric walk through, if excluding an RRSP drops the highest aggregate from 131,500 to 30,000, the new penalty is 1,500. You would show the original penalty on Line 1, the revised penalty on Line 2, and the difference on Line 3, all supported by statements and your prior Streamlined packet. That mirrors the IRS example.

Completing Key Lines On Form 14708

Accuracy on three lines drives the entire recalculation.

• Line 1, the original 5 percent penalty you paid with your Streamlined submission.
• Line 2, the corrected 5 percent penalty after exclusion, calculated from the revised highest aggregate year end balance.
• Line 3, the requested refund, Line 1 minus Line 2.

Keep one rule close, use year end balances only, pick the single highest aggregate year, then apply 5 percent. That is the number you are fixing.

Fixing Asset Scope And Valuation Errors Beyond RRSPs

Form 14708 is purpose-built for Canadian retirement plans described in Rev. Proc. 2014-55, specifically RRSPs and RRIFs. If the December 31 balance for an eligible plan was entered incorrectly on the original Form 14654, identify the year that changes, attach statements that prove the corrected December 31 amounts, and present the revised 5 percent with a short, factual explanation tied to the eligible plan. Other Canadian accounts (chequing, TFSA, brokerage) do not qualify and cannot be removed through Form 14708.

Common Form 14708 Mistakes To Avoid

Misstating The Recalculation

Use the correct highest aggregate year end balance, then apply the 5 percent. Do not rewrite your original certification year, simply indicate if the new highest year is different and show the math. The IRS example anticipates this and asks you to mark the change on the form.

Ignoring RRSP Or RRIF Exclusions

If an RRSP or RRIF qualifies under Rev. Proc. 2014 55, remove it from the base and recompute. Leaving it in guarantees a slower review and the wrong number. Cite eligibility in your narrative and attach plan statements.

Incomplete Narrative

A thin narrative forces extra letters. State the exact item you are correcting, the year or years that change, the documents that prove the correction, and the Form 14708 lines that reflect the fix. Tie the numbers to your Form 14654 so the examiner can verify each figure quickly.

Common Mistakes We See Every Season

The same handful of errors show up on the Form 14708 review desk every year. Each one is small in isolation and adds weeks to the case once the packet hits the Austin Streamlined Unit.

Reusable Checklists

Drop these into your firm SOP for Form 14708 work. Each list maps to one phase of the reconsideration packet so a reviewer can sign off in minutes.

Keep 14708 Season From Stalling

Form 14708 work rarely arrives on a predictable calendar. It surfaces when an examiner flags an RRSP inside a Streamlined Domestic file, when a new client brings in a paid 5% miscellaneous offshore penalty from a prior firm, or when a treaty deferral question turns up during a routine return review – any of which can land mid-busy-season and pull a senior reviewer off higher-margin returns. Because the form is still on its September 2016 revision (per the Form 14708 instructions) and routes only to the Austin Streamlined Unit at Stop 4305 AUSC, packets that miss the address or the documentation cadence add weeks per case.

The fix is not heroics, it is structure. Treat every Form 14708 case like a small audit defense: tight workpapers, a one-page narrative on top, and a recomputation an examiner can verify in a single pass. The form has only three numeric lines, but the supporting record has to carry the full story or the file bounces.

• Pre-build a Rev. Proc. 2014-55 §4.01 eligible individual memo template once, then reuse it across cases.
• Lock the Line 1, Line 2, and Line 3 recomputation in a single workbook with a highest-aggregate-year toggle so the math updates when balances are revised.
• Standardize the December 31 statement naming convention (year, plan type, institution) so packet assembly is a sort, not a hunt.
• Add a joint-signature checkpoint when the underlying Form 14654 was a joint certification, since missing the second signature is the single most common return reason.
• Track the six-year retention window from the date of the Form 14708 reconsideration request in the document management system, not from the original Form 14654 date.

Accountably teams handle this packet work end to end inside our taxation delivery service, from eligibility review through Austin mailing logs, so senior preparers and reviewers stay focused on returns where their margin lives. Structure first, capacity follows.

FAQs

How do I calculate the Streamlined 5 percent penalty?

Aggregate the year end values for each covered year, pick the single highest aggregate year, then multiply by 5 percent. Keep statements that support each December 31 value. The IRS Streamlined FAQ explains this method and even gives a worked example.

Where do I mail Form 14708?

Mail it to the Streamlined Unit in Austin, Texas at the address shown in the IRS Streamlined FAQ. Verify the address on your current IRS notice before shipping, then use a trackable method and keep the receipt for six years.

Can the highest year change when I remove an RRSP?

Yes. If removing the RRSP moves the peak to a different year, state the new year on Form 14708. The IRS example mentions this possibility and asks you to indicate the change on the form.

Do I need to amend Form 14654 too?

If the only change is the penalty computation due to an excluded asset, Form 14708 is the intended path. If you also need to correct elements of the Streamlined submission itself, follow the IRS instructions for amended returns and certification updates.