What to do if you missed your IRS Int’l Reporting

For many U.S. taxpayers, compliance with international tax laws can be a daunting task. Failure to report offshore assets and income can result in significant penalties, including civil and criminal sanctions. Fortunately, the IRS offers several programs that allow taxpayers to come into compliance and avoid or mitigate these penalties.

One of these programs is the Streamlined Domestic Offshore Procedures (SDOP). The SDOP is designed for taxpayers who are non-willful violators of foreign asset reporting requirements. In other words, taxpayers who did not intend to evade taxes or hide assets but failed to comply with reporting obligations due to negligence, oversight, or misunderstanding.

Under the SDOP, eligible taxpayers can file amended tax returns and Foreign Bank and Financial Accounts (FBARs) for the most recent three years and pay any tax due, interest, and a reduced penalty. The penalty is calculated as 5% of the highest aggregate balance of the taxpayer's foreign financial accounts during the three-year period. The penalty is subject to certain eligibility requirements, including that the taxpayer must have failed to report income from a foreign financial asset and must not have filed a required international information return.

The SDOP offers several benefits to taxpayers, including the potential for significant penalty relief, a streamlined compliance process, and reduced exposure to criminal prosecution. However, it is important to note that the program is not available to all taxpayers, and eligibility criteria can be complex. Additionally, participation in the program requires careful consideration of the taxpayer's unique circumstances, as well as a thorough understanding of the reporting requirements and potential consequences of noncompliance.

If you are facing international tax compliance issues, contact Safeguard Law, PLLC today to schedule a consultation with one of our experienced tax attorneys. We are here to help you navigate the complex world of international tax law and achieve peace of mind.