STREAMLINED DOMESTIC OFFSHORE PROCEDURES

Streamlined domestic offshore procedures are basically an IRS program — that lets eligible US residents correct past foreign account reporting mistakes — and pay a lowered penalty fee. SDOP is part of the streamlined filing compliance procedures for US residents — with missed offshore reporting or income on prior returns.

Under SDOP, recent returns are amended and late foreign account reports are filed, the tax and interest fee due are paid, and usually you face a single 5% miscellaneous offshore penalty — instead of multiple separate penalty payments.

Who qualifies for SDOP if you live in the United States?

You satisfy the qualification for SDOP — only if the offshore noncompliance was non-willful and you already filed US tax returns for the last three years — whose due dates have passed. Major eligibility criteria can be outlined as below:

• You are a US citizen or green card holder or fulfill the substantial presence test
• You live in the US
• You failed to report income linked with the foreign financial assets and you may have missed required offshore accounts tax reporting — like FBARs or Form 8938
• Your conduct arose from negligence or oversight or a good-faith misunderstanding of the rules — not from an attempt to conceal assets

If the IRS has already started a civil exam or criminal investigation — streamlined domestic offshore procedures are, in general, not available — so early advice is important.

What foreign assets are covered under SDOP?

Streamlined domestic offshore procedures focuses on foreign financial assets that should have been reported on FBARs or FATCA forms and that produced unreported income. Examples can be listed as follows:

• Bank accounts held at institutions — outside the United States
• Overseas brokerage and investment accounts
• Specific foreign pensions and life insurance policies or annuities with cash value
• Ownership interests in foreign corporations — or partnerships that belong on Form 8938

Real estate abroad is generally outside the penalty payment base — unless it sits inside a foreign entity that itself is reportable.

How do SDOP submissions work in practice?

The streamlined domestic offshore procedures process adheres to a defined sequence — so the IRS can assess the distinct cases and apply the rules consistently. A standard submission involves the following actions:

• Eligibility review — in order to confirm non-willful conduct and residency as well as filing history
• Information gathering — of foreign account statements and prior returns along with the IRS notices
• Three years of amended returns — that report omitted foreign income and necessary forms
• Six years of FBARs — for years when combined balances exceeded the reporting threshold
• Certification on Form 14654 — explaining the story & listing assets and calculating the 5% penalty — which you pay with tax and interest fee

What SDOP penalty applies compared with other options?

The IRS, in general, applies a single 5% penalty to the highest aggregate year-end value of foreign financial assets — that fall into the SDOP penalty base across the covered tax return & FBAR years.

Why work with Wasserman Accounting in South Jersey?

Wasserman Accounting is a South Jersey tax and CPA firm that proudly advises US residents — who use streamlined domestic offshore procedures as well as related programs. Our dedicated team bases each streamlined domestic offshore procedures submission on the client's records & timeline and risk profile — rather than generic forms. Our team focuses on the elements below:

• Careful testing of SDOP eligibility — before any filing
• Coordination of amended returns & FBARs and Form 14654 into one consistent package
• Professional guidance — on future offshore tax compliance

If you hold overseas accounts and think streamlined domestic offshore procedures or other streamlined filing compliance procedures might apply, contact Wasserman Accounting in South Jersey — in order to review your options. Our experts stand ready to provide 360-degree support for full compliance.