Alexander Accountants, CPAs
Preparing your experience
Alexander Accountants, CPAs
Preparing your experience
Streamlined Domestic Offshore Procedures (SDOP) are simply an IRS option that let eligible U.S. taxpayers fix missed reporting — on foreign accounts & assets while paying a single 5% penalty instead of far higher fines.
This program sits inside the IRS streamlined filing compliance procedures — which are designed for people whose reporting mistakes were not intentional and who would like to get back on track with their U.S. tax filings.
SDOP is the domestic version of the IRS streamlined filing compliance procedures — for U.S. residents — who missed income or reporting related to foreign financial assets but qualify as non-willful.
Instead of the older Offshore Voluntary Disclosure Program — which targeted willful cases and carried much higher penalties SDOP targets taxpayers who made mistakes due to lack of understanding or bad advice or oversight. It is possible to outline the major points about SDOP as below:
It is only for individual taxpayers & specific estates.
It applies when the IRS has not already started a civil exam — or criminal case for any year involved.
It imposes a 5% "miscellaneous offshore penalty" — on covered foreign assets instead of multiple separate penalty payments.
In general, it is possible to SDOP if the taxpayer lives in the United States, has foreign assets that should have been reported, and their past noncompliance was non-willful. Eligibility criteria are listed as follows:
you satisfy the IRS rules for living in the United States — so you do not satisfy the qualification for the foreign streamlined option
you filed tax returns for the years in question — but left off some foreign income or information forms
your missed reporting came from misunderstanding or carelessness or similar reasons — not an effort to hide money
the IRS has not already opened an audit that covers those years
As a detailed written statement about the conduct is required, most taxpayers collaborate with a taxation professional — before deciding whether it is the correct path.
SDOP is meant for offshore tax compliance — covering foreign accounts and financial assets that should have been reported to the IRS — or FinCEN as exemplified in the table below:
| Type of offshore asset | Typical reporting form* |
|---|---|
| Bank and brokerage accounts | FBAR (FinCEN Form 114) |
| Investment accounts and funds | Form 8938 |
| Foreign corporations | Form 5471 |
| Foreign partnerships | Form 8865 |
| Foreign disregarded entities | Form 8858 |
| Certain trusts or gifts | Form 3520 |
*The right form varies in line with the structure and ownership as well as value under IRS rules.
It focuses on offshore accounts tax reporting — where income or balances or ownership details were missed on these forms — or on your income tax returns.
It presents to qualifying taxpayers a structured way to fix past offshore reporting problems — with more predictable exposure than they might face if the IRS discovers the issue first. There are major advantages as below:
on covered assets — rather than multiple FBAR and information return along with accuracy penalties across several years.
Relief from other specific civil penalty payments — once the IRS accepts the streamlined submission.
A clear path back into 100% compliance — which lowers future audit risk and lets you proceed with solid filings.
It should be recognized that the program doesn't erase the tax — or interest owed. Yet, it can sharply reduce the total penalty payment in case of qualification.
Based in Boston, Alexander Accountants, CPAs presents expert guidance with offshore issues — from the first risk review through final submission.
When you engage our professionals firm, you can expect expert aid with:
Reviewing the foreign accounts and entities as well as income streams
Evaluating whether your facts satisfy the non-willful standard & documenting that story professionally
Assessing the penalty fee base in parallel to the current rules — covering hard-to-value assets
Preparing amended returns & FBARs and Form 14654 (with consistent figures)
Coordinating timing and mailing & recordkeeping for the entire streamlined package
Planning future reporting — so you stay current after the SDOP case is 100% complete
SDOP, in general, involves amending three years of tax returns — and correcting up to six years of foreign account reports.
Yes, you often can — as long as the IRS has not already started an audit — or criminal investigation on those years.
SDOP is intended for non-willful cases — and, when accepted, greatly lowers the chances of a "criminal referral".
In specific cases, yes — as state returns might also should reflect the corrected foreign income figures.
Collect prior tax returns & foreign bank and investment statements as well as any letters or notices related to the offshore accounts.