The Streamlined Offshore Procedures: Who Qualifies and How They Work

The Streamlined Foreign Offshore Procedures (SFOP) let US citizens and permanent residents who live abroad catch up on unfiled tax returns and unreported foreign accounts without the full penalty exposure of a standard late filing, as long as their non-compliance was non-willful. To qualify for the offshore version of the Streamlined Program, you must have been outside the US for at least 330 full days in at least one of the most recent three years for which the US tax return deadline has passed, and you cannot already be under IRS examination. The process requires filing three years of delinquent tax returns, six years of delinquent FBARs, paying all tax and interest owed, and certifying that your failure to file was non-willful. The offshore version carries no miscellaneous penalty on the highest year's unreported account balance, unlike the domestic streamlined version which charges 5%. Expats who may have willful violations should not use the Streamlined Program and should instead consult a tax attorney before making any disclosures to the IRS, since filing under the wrong program can be worse than not filing at all.