For U.S. taxpayers living abroad or with foreign assets, navigating U.S. tax compliance can be…complicated lets say. Many Americans with overseas interests fall behind on their U.S. tax filing obligations not out of intent, but simply because they were unaware of the rules. Fortunately, the IRS Streamlined Filing Compliance Procedures offer a practical and more straightforward path back into compliance. At Advington Stone, we have extensive experience guiding clients through this process efficiently and correctly as part of our international service offerings. The majority of our clients have international interests and this is our specialty.

What Are the Streamlined Offshore Procedures?

The Streamlined Offshore Procedures allow eligible taxpayers to catch up on missing U.S. tax filings or information forms while avoiding the extreme penalties that often apply to international noncompliance.

Both programs require taxpayers to file:

• Three years of delinquent or amended U.S. tax returns, including all required information forms
• Six years of delinquent FBARs (FinCEN Form 114)
• A signed certification of non-willful conduct

The key distinction between Streamlined Foreign and Streamlined Domestic lies in where the taxpayer lives and how penalties are applied.

Streamlined Foreign Offshore Procedures

The Streamlined Foreign Offshore Procedures (SFOP) are available to U.S. taxpayers who meet the IRS’s foreign residency requirement. Generally, this means the taxpayer was physically outside the United States for at least 330 days in one of the most recent three tax years.

For qualifying taxpayers, this program is MUCH more favorable:

• No offshore penalty
• No failure-to-file or information return penalties
• Only taxes owed plus interest

This makes the foreign streamlined program the preferred route for eligible expatriates. Residency status must be analyzed carefully.

Streamlined Domestic Offshore Procedures

Taxpayers who do not meet the foreign residency requirement may still qualify under the Streamlined Domestic Offshore Procedures (SDOP), provided their conduct was also non-willful.

However, the domestic program includes a significant difference:

• A 5% offshore penalty applied to the highest aggregate balance of certain foreign financial assets during the covered period

While still far more lenient than traditional IRS enforcement programs, the domestic streamlined procedures require careful asset analysis to ensure the penalty is calculated correctly and only applies where required. We have experience in the types of foreign accounts required to be included and with calculating this penalty.

The Importance of Proper Execution

Although marketed as “streamlined,” these programs are not simple. Errors in FBAR reporting, foreign asset disclosures, or poorly drafted non-willfulness certifications can trigger delays or further IRS scrutiny. These submissions also tend to be large and must be filed by paper, requiring specific language and marking on certain forms to preserve eligibility.

At Advington Stone have deep experience handling streamlined submissions involving foreign bank accounts, foreign corporations, all international information forms, and mixed U.S. and foreign income. We understand how to position your disclosure clearly and defensibly while minimizing risk and avoiding unnecessary penalties.

Speak With Advington Stone

If you are behind on U.S. tax filings on international matters, the streamlined procedures may offer a clean, controlled solution. The key is choosing the right program and executing it correctly. Also an important note; you may not require these procedures depending on your circumstances. It is possible in certain situations to file missing information forms, but your scenario must be analyzed carefully.

Contact Advington Stone today to discuss your situation and take the first step toward full U.S. tax compliance with confidence. A majority of our business focuses on streamlined procedures and we know these procedures very well.