IRS Offshore Compliance Programs: Which One Is Right for You?

The IRS offers several programs for taxpayers with unreported foreign income or accounts to come into compliance, and choosing the right one depends on your facts and whether your non-compliance was willful. The Streamlined Foreign Offshore Procedures are for non-willful expats — no penalty, just file three years of returns and six years of FBARs with a non-willfulness certification. The Streamlined Domestic Offshore Procedures are for US-based taxpayers with non-willful violations — there's a 5% miscellaneous offshore penalty. The Voluntary Disclosure Program (formerly OVDP) is for taxpayers with willful violations who want to avoid criminal prosecution — penalties are higher but criminal risk is eliminated. A "delinquent FBAR submission" procedure covers those who have unreported accounts but no unreported income — they file the FBARs late with an explanation and typically avoid penalties. Quiet disclosure — simply filing amended returns without entering a program — is risky because it doesn't provide the legal protections of the formal programs if the IRS later determines the violation was willful.