IRS Streamlined Filing Compliance Procedures
An IRS amnesty program for non-willful US taxpayers who failed to report foreign financial accounts and assets, allowing catch-up filing without standard penalties.
Detailed Explanation
Two tracks exist: Streamlined Foreign Offshore Procedures (SFOP) for taxpayers meeting non-residency requirements (generally living abroad in at least one of the past three tax years) and Streamlined Domestic Offshore Procedures (SDOP) for US-resident taxpayers. SFOP filers face no penalties; SDOP filers pay a single 5% miscellaneous offshore penalty on the highest aggregate balance. Both require filing three years of amended or original returns, six years of FBARs, and a non-willful certification (Form 14653 or 14654).
Key Points
- Amnesty program for NON-WILLFUL failures to report foreign income, accounts, and assets.
- Streamlined Foreign Offshore (SFOP), for those living abroad: no penalty.
- Streamlined Domestic Offshore (SDOP), for US residents: a single 5% penalty on the highest aggregate balance.
- Both require 3 years of amended/original returns and 6 years of FBARs.
- A non-willful certification (Form 14653 or 14654) is mandatory; willful conduct disqualifies the taxpayer.
Practical Example
A US resident discovers she never reported a $200,000 inherited account in her home country or filed FBARs. Because the failure was non-willful, she uses SDOP: filing 3 amended returns, 6 years of FBARs, and Form 14654, and pays a one-time 5% penalty (about $10,000 on the highest balance) instead of facing FBAR penalties that could exceed the account value.
Related TS CPA Service
Two IRS amnesty tracks for non-willful filers with unreported foreign accounts: SDOP gives U.S. residents one 5% offshore penalty, SFOP carries zero penalty for taxpayers who lived abroad. CPA-prepared, flat fee.
Learn about Streamlined Filing Compliance Procedures (SDOP & SFOP)Related Terms
FBAR (Report of Foreign Bank and Financial Accounts)
A FinCEN Form 114 filing required of US persons who hold foreign financial accounts with an aggregate value exceeding $10,000 at any point during the year.
FATCA (Foreign Account Tax Compliance Act)
A US law requiring foreign financial institutions and certain US taxpayers to report foreign financial accounts and assets to the IRS.
Form 8938 (Statement of Specified Foreign Financial Assets)
The FATCA disclosure of specified foreign financial assets, distinct from the FBAR in scope, thresholds, and the agency that receives it.
Form 5471 (Information Return of US Persons With Respect to Certain Foreign Corporations)
The disclosure regime for US owners and officers of foreign corporations, sorting filers into categories and carrying penalties that start at $10,000.
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