International Tax Consulting

Streamlined Domestic Offshore Procedure

Are You Eligible for the Streamlined Domestic Offshore Procedure?

The IRS Streamlined Domestic Offshore Procedure (SDOP) provides US taxpayers with an amnesty program.

The IRS SDOP allows non-willful delinquent filers to proactively become compliant with offshore accounts. Aggressive audits of unreported offshore bank accounts by the IRS and other moving targets in the tax reporting world mean the SDOP may be an option for you. Keep reading to learn more about the SDOP tax amnesty program and learn how working with a tax attorney under the attorney-client privilege can be a major benefit in these scenarios.

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SDOP Requirements for Compliance

U.S. citizens, legal U.S. residents, and their estates must meet the following eligibility requirements for the IRS SDOP:

  • Must have timely filed tax returns for the last three tax years. (Note: Only amended returns can be filed with the Streamlined Domestic Offshore Procedure, so originals must be filed prior.)
  • Must have been non-willful when failed to file timely or accurate returns.
  • Must not be under audit or investigation by the IRS.

SDOP Program Scope

A successful candidate for the IRS SDOP will:

  • File amended tax returns (Form 1040), and other information returns such as Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621) for the last three tax years.
  • Filed any delinquent FBAR (FinCEN Form 114), for the last six tax years.
  • Pay the Title 26 Miscellaneous Offshore Penalty, equal to 5 percent of the aggregate balance of the taxpayer’s foreign assets subject to the penalty.

Frequently Asked Questions About SDOP

Do I qualify for tax amnesty?

A taxpayer who complies with the Service’s Streamlined Domestic Offshore Procedures will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties.

Will I be considered a Resident?

If a taxpayer is not a U.S. resident, they will qualify instead for the Streamlined Foreign Offshore Procedures. If you have been outside of the United States for more than 330 full days during the last three tax years, you may be considered a non-resident.

Were my actions Non-Willful?

Non-willful conduct is conduct that is the result of a good faith misunderstanding of the law. It also encompasses conduct that is due to negligence or mistake. Willful blindness may disqualify a taxpayer from relief. 

I don’t qualify for SDOP. Do I qualify for Offshore Voluntary Disclosure or Other Similar Programs?

The Offshore Voluntary Disclosure program was closed by the IRS in September of 2018. Our team of experienced tax professionals can guide you through current programs for taxpayers with undisclosed foreign financial assets.

Get Advice from Our Tax Attorneys on Streamlined Domestic Offshore Procedure

Contact our international tax attorneys for a free consultation by clicking here to schedule a meeting or by calling us at (410) 497-5947 to get started today.

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