| Links | Who the program is for . . . |
|---|---|
| 1. Delinquent FBAR | This program is for you if: (i) you were not willful in failing to file the FBAR, (ii) you don't need to amend your income tax returns (because you reported all the income from your foreign accounts on your income tax returns), (iii) you didn't file an FBAR, (iv) you are not currently being audited by the IRS, and (v) you haven't yet been contacted by the IRS. The IRS says that it will not impose FBAR penalties if you file late FBARs in this circumstance. |
| 2. Streamlined Foreign Offshore Procedures (SFOP) Form 14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures (PDF, 3 pages) Streamlined Generally and Streamlined FAQ (SFOP) Internal Revenue Manual (IRM) |
To qualify under this program, you must meet a non-residency requirement and you must have failed to report income from a foreign financial asset. You may also have failed to file an FBAR. The failures must have resulted from non-willful conduct. The non-residency requirement is met if, in one or more of the most recent 3 years for which the U.S. tax return due date has passed, you did not have a U.S. abode and you were physically outside the U.S. for at least 330 full days. Generally, you won't be subject to penalties under this program. Taxpayers must: (1) for each of the most recent 3 years for which the U.S. tax return due date has passed, file delinquent or amended tax returns, together with all required information returns (e.g., Forms 3520, 5471, and 8938) and (2) for each of the most recent 6 years for which the FBAR due date has passed, file any delinquent FBARs. |
| 3. Streamlined Domestic Offshore Procedures (SDOP) Form 14654, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures (PDF, 5 pages) Streamlined Generally and Streamlined FAQ (SDOP) Internal Revenue Manual (IRM) |
To qualify under this program, you must have failed to report income from a foreign financial asset. You may have also failed to file an FBAR and/or one or more international information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) with respect to the foreign financial asset. Under this program, you pay a penalty equal to 5% of the highest year-end balances/amounts of the foreign accounts/assets that were not reported on the FBAR or Form 8938. Taxpayers must: (1) for each of the most recent 3 years for which the U.S. tax return due date has passed, submit a complete and accurate amended tax return using Form 1040X, together with any required information returns (e.g., Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) even if these information returns would normally not be submitted with the Form 1040 had the taxpayer filed a complete and accurate original return and (2) for each of the most recent 6 years for which the FBAR due date has passed, file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the streamlined filing compliance procedures. |
| 4. Delinquent international information return submission procedures (DIIRSP) | DIIRSP is not a formal IRS voluntary disclosure program. The IRS web page says if you have "identified the need to file delinquent international information returns," then you should file them through normal filing procedures, such as by filing an amended return (Forms 3520 and 3520-A are filed separately). You can attach a reasonable cause statement, but the IRS web page says that penalties may be assessed without considering the statement (and that you may need to resubmit the statement). In late 2024, the IRS announced that it would start to review reasonable cause statements attached to Forms 3520 and 3520-A prior to penalties being assessed, if you write "Reasonable Cause Statement Attached" on the top of the first page of the form. The IRS used to consider DIIRSP-type filings to be "quiet disclosures," and they discouraged this type of filing. Up until 2024, the IRS would automatically impose late filing penalties for late filed Forms 3520 with Part IV completed (gifts from foreign persons). See Zhang v. IRS and NTA Blog (Changes to Foreign Gifts and Inheritance Filing Penalties). Some taxpayers may have missed international information returns but not have unreported income. These taxpayers would not qualify for SFOP or SDOP, but they would seem to be less culpable than taxpayers with unreported income and filing under SFOP or SDOP. DIIRSP may be appropriate here. Taxpayers filing under DIIRSP should understand that the IRS can still impose penalties. Whether a taxpayer has reasonable cause or not may be in the eye of the [IRS agent] beholder. |
| 5. Criminal Investigation Voluntary Disclosure Practice Form 14457, Voluntary Disclosure Practice Preclearance Request and Application (PDF, 19 pages) Internal Revenue Manual (IRM) |
The IRS criminal investigation voluntary disclosure practice deals with taxpayers who have willfully failed to comply with tax or tax-related obligations. Taxpayers in this situation should seek the advice of an attorney. |
DISCLAIMER: You should consult an attorney for legal advice regarding your own situation. The information on this page should not be relied upon for any purpose whatsoever.