Confirming qualifications
a practitioner reviews the residency and filing history along with the foreign accounts as well as the intent — so you do not enter SDOP if another program fits better
Table of Contents
What Are Streamlined Domestic Offshore Procedures (SDOP)?
Streamlined Domestic Offshore Procedures (SDOP) are an IRS program — that lets specific US taxpayers fix past foreign account and asset reporting mistakes — with a single lowered penalty instead of multiple fine amounts. In short, SDOP presents a structured way to come clean — if you missed offshore income or filings and the mistake was non-wilful.
Under this option, several years of income tax returns and foreign account reports are corrected at once. You also sign a statement explaining why the issue happened and pay any unpaid tax and interest fee as well as one 5% "miscellaneous offshore" penalty payment that replaces many separate penalty amounts.
Who qualifies for SDOP in the United States?
The qualification is satisfied if you are a US tax resident with foreign financial assets and you missed required reporting or income & your conduct was non-wilful. In general terms, the eligible taxpayers share the traits presented below:
- You are a US citizen or green card holder or you satisfy the substantial presence test and live in the United States
- You previously filed U.S. income tax returns for the last three years — but left out some foreign income
- You should have filed foreign information forms — like FBAR or FATCA Form 8938 — but did not file them or filed incomplete versions
- Your mistake was "non-wilful". In other words, it came from negligence or misunderstanding as well as similar reasons — not from an intent to hide money
- You are not already under an IRS civil or criminal examination for any tax year
The formal submission also includes Form 14654 — where taxpayers certify under penalty of perjury that they satisfy the rules — and that all required foreign reports are now filed.
How do streamlined filing compliance procedures work in practice?
Streamlined domestic offshore procedures are one branch of the IRS streamlined filing compliance procedures and it follows a clear four-step path — from start to final touch as outlined below:
Gathering foreign account records
you collect bank statements and investment summaries as well as other documents for the prior six years — plus any prior tax returns that need correction
Amending income tax returns (3 years)
three years of Form 1040 are amended to include all foreign income — and related deductions or foreign tax credits
Filing FBARs and other forms (up to 6 years)
you file up to six years of FBARs — FinCEN Form 114 — and any missing information returns — like Form 8938 or 3520 or 5471, as needed
Paying tax amount, interest fee and the 5% penalty
with the package, you pay all additional tax and interest plus a single 5% penalty — on the highest aggregate balance of foreign financial assets covered by the rules
What offshore reporting issues does SDOP fix?
It fixes past failures in order to report foreign income and financial accounts on key IRS and Treasury forms — that relate to offshore tax compliance. The common items corrected in one submission can be listed as below:
- Unreported interest, dividends and rental income or business income from foreign accounts or property
- Missed FBAR filings for years — where the combined foreign account balance exceeded the reporting threshold
- Missing FATCA Form 8938 or other international information returns linked with foreign corporations or trusts or partnerships
| Item | Look-back period | What gets filed or paid |
|---|---|---|
| Income tax returns | 3 years | Amended Forms 1040 with full foreign income |
| FBARs - FinCEN Form 114 | 6 years | Electronic reports of foreign accounts |
| International information forms | 3 years | Forms like 8938, 3520, 5471 where required |
| Title 26 miscellaneous penalty | 6-year view | 5% of highest aggregate foreign asset value |
Within the presented framework, streamlined domestic offshore procedures cover offshore accounts tax reporting and related forms — in one coordinated filing.
Why work with Helium Day Tax & CPAs on SDOP?
Helium Day Tax & CPAs present professional guidance through SDOP from the first eligibility review to the final IRS submission — so that each form and calculation along with the explanation lines up with the official rules. Our dedicated team focuses on offshore accounts and foreign asset reporting as well as the specific paperwork the IRS expects in these cases. Our dedicated services can be summarized as below:
- A clear decision on whether SDOP is appropriate for your facts
- Expert preparation of amended returns and foreign reporting forms
- A well-supported "non-wilful certification" that fits the story and the records
- Calculations of the 5% penalty that fulfill IRS guidance
Helium Day Tax & CPAs has served U.S. taxpayers in Vancouver, WA and across the country for decades. If you have missed filings or unreported foreign income — and think SDOP or other streamlined domestic offshore procedures might apply, reach out to us today. Our dedicated professionals are ready to present 360-degree support.
FAQs
How many years of returns and FBARs does SDOP usually cover?
in general, it covers amending three years of income tax returns and filing up to six years of FBARs — in one package.
Does it remove all IRS penalties on foreign accounts?
It replaces specific & potential penalties with a single 5% miscellaneous offshore penalty — but you still pay tax amount and interest fee that were originally due.
Can I use SDOP if I already received an IRS audit or examination notice?
No. It is not available once you are under an IRS civil or criminal examination — even if the exam is not focused on foreign accounts.
Are joint foreign bank accounts and retirement plans included?
Yes, any foreign account or plan where you have an ownership interest or signature authority is usually included in the SDOP review.
How long does it typically take to prepare a submission?
The timeline varies in line with how quickly records are gathered — but, in general, cases take several weeks or months from first review to final filing.
Disclaimer: This Content is for informational purposes only. Nothing contained herein constitutes accounting, tax, financial, investment, legal or other professional advice, and, accordingly, the author and the distributor assume no liability whatsoever in connection with its use. This Content is not an exhaustive explanation of any topic, practice or process. You should seek the advice of a licensed professional before making any accounting, tax, financial, investment or legal decision.