Tax
Streamlined Filing Compliance Procedures: Fixing Missed FBARs and Foreign Income
How to fix years of unfiled FBARs or unreported foreign income before the IRS finds them: the delinquent FBAR procedure, the Streamlined Domestic and Foreign Offshore Procedures, the 5% penalty, and the non-willful certification.
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Which Procedure Fits
- Delinquent FBAR Submission Procedures: you filed your returns and reported all the foreign income, you simply never filed the FBARs. File them late with a statement of reasons; no penalty when the income was reported and you are not under examination.
- Delinquent International Information Return Procedures: a missed Form 3520, 5471, or 8938 where the income was reported; file with a reasonable-cause statement attached.
- Streamlined Domestic Offshore Procedures (SDOP): you live in the U.S., you left foreign income off your returns, and the failure was non-willful.
- Streamlined Foreign Offshore Procedures (SFOP): the same, but you met the non-residency test in one of the last three years, for example you lived abroad for at least 330 days; no penalty.
- None of the above fits willful conduct. Deliberately hiding accounts is a different conversation that starts with a tax attorney, not a preparer.
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Educational content, not tax, legal, or accounting advice. Confirm with a CPA before acting.
Frequently asked questions
I never filed FBARs but I reported all my foreign interest. What should I do?
Use the Delinquent FBAR Submission Procedures. File the late FBARs electronically through FinCEN with a short statement explaining why they were late and confirming that the income was reported. When the income was reported and you are not under IRS examination, no penalty is imposed. Check the last six years, since that is the FBAR statute of limitations.
How much is the streamlined penalty?
Under the Streamlined Domestic Offshore Procedures it is 5% of the highest aggregate year-end balance of the foreign assets that were not properly reported, measured over the six FBAR years and three return years. Under the Streamlined Foreign Offshore Procedures, for people who met the non-residency test in one of the last three years, there is no penalty. Tax and interest on the amended returns are paid in both cases.
What counts as non-willful?
Negligence, inadvertence, mistake, or a good-faith misunderstanding of the requirements. Not knowing that tax-free Indian interest or a PPF account had to be reported in the U.S. is the typical non-willful fact pattern. Deliberately concealing accounts, answering no to the foreign account question while knowing about the accounts, or moving money to avoid detection point toward willfulness, and those cases need a tax attorney first.
Can I use the streamlined procedures if the IRS has already contacted me?
No. Eligibility ends once the IRS has opened a civil examination of any of your returns or a criminal investigation, even if the examination is about something unrelated. That is why the timing matters: a voluntary submission before any contact is treated very differently from a correction made after a notice arrives.
How long does a streamlined submission take?
Assembling the package usually takes four to eight weeks, driven by how quickly foreign bank and fund statements for six years can be obtained and by any PFIC computations. The IRS does not send an acceptance letter; absence of a follow-up within roughly a year, and processing of the amended returns, is the practical confirmation. Interest runs until the tax is paid, so the package is filed as soon as it is complete.
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