What is the Streamlined Filing Compliance Procedure?

The Streamlined Filing Compliance Procedures are an IRS program designed to help US taxpayers who have fallen behind on their tax filings and foreign account reporting catch up without facing the most severe penalties. The program was introduced in 2012 and significantly expanded in 2014 to make it more accessible.

There are two tracks within the program. The Streamlined Foreign Offshore Procedures (SFOP) is for taxpayers who have lived outside the US for at least one of the last three tax years and have not filed a US tax return for at least one of those years. Under SFOP, all penalties are waived — there is zero penalty for eligible taxpayers. The Streamlined Domestic Offshore Procedures (SDOP) is for US-based taxpayers and involves a 5% miscellaneous offshore penalty based on the highest aggregate balance of foreign financial assets during the most recent 6 years.

To be eligible, you must certify that your failure to file and pay taxes, file FBARs, and report foreign financial assets was due to non-willful conduct. Non-willful means it resulted from negligence, inadvertence, or a good-faith misunderstanding of the requirements — not from deliberate tax evasion. You sign a certification statement under penalty of perjury attesting to this.

The program requires you to file the last 3 years of federal tax returns (and any required information returns) and the last 6 years of FBARs. All returns must be properly completed with all required schedules and forms, including Forms 2555, 1116, 8938, and any other international information returns.

The Streamlined Procedures are generally considered the best option for most expats who need to get back into compliance. However, they are not appropriate for everyone — if your non-compliance was willful, this program could actually increase your legal risk. We recommend a confidential consultation to evaluate whether the Streamlined Procedures are right for your situation.